Accord and Satisfaction: Florida’s 2nd DCA Overturns St. Croix Confirming Condominiums Can Accept Partial Payments Without Risk of Compromising Claim

Recent assessment disputes between condominium associations and unit owners has resulted in a clarification of a Florida law. The clarification changes the way that acceptance of money intended to be accord and satisfaction is understood by the court in the condominium context.

As background, in March 2012, a unit managed by the St. Croix at Pelican Marsh Condominium Association was foreclosed on and put up for auction. The winning bid of $100 came from the St. Croix Lane Trust. After winning the bid, the association demanded the trust pay the amount of $36,584.54 for past due assessments, interest, late fees, costs, and attorney’s fees accrued by the previous owner.

The trust refused the pay the amount, arguing that they were not liable for money owed by the previous owners. Instead, the trust sent the association a check for $840 accompanied by a letter from its attorney stating “negotiation of the enclosed check shall be deemed an acceptance of the offer of settlement made herein, and shall be in full and final satisfaction of all claims against the Trust.”

Despite its receipt and retention of the $840 tendered in settlement of its claims, the association threatened to file an action to foreclose its claim of lien against the trust’s condominium unit. The trust responded by filing an action against the association.  After losing at trial, the trust appealed arguing that because the association accepted the check, it was considered accord and satisfaction, even though the association stated that it was not satisfied with the check but was accepting it and using the amount of the check toward the total amount owed.

In August 2014, the Second District Court of Appeal overturned the trial court finding that nothing in Fla. Stat. §718.116(3) indicates it was intended to make Fla. Stat. §673.311 Fla. Stat. (Accord and Satisfaction) inapplicable to condominium associations or that the statute would otherwise alter Florida law concerning accord and satisfaction solely for the benefit of condominium associations. St. Croix Lane Trust v. St. Croix at Pelican Marsh Condominium Ass’n., 144 So.3d 639 (Fla. 2d DCA 2014).

Thereafter, the legislature amended §718.116(3) Fla. Stat. (2015), to enforce the order of priority set forth in the statute “notwithstanding s. 673.311, any purported accord and satisfaction.” This legislative amendment led to the Second District Court of Appeal to overrule its own ruling in St. Croix.

In Madison at Soho II Cd’m Ass’n, Inc. v. Devo Acquisition Enterprises, LLC, No. 2D 15-2067 (FLW 2d DCA, August 24, 2016)  the previous owners of the unit had been delinquent in paying assessments and other related charges. When Devo acquired the property, the association attempted to obtain the owed money from the new owners of the unit. The association demanded that Devo pay nearly six years of delinquent assessments which reached about $28,000.

Devo disputed the amount charged by the association and sent an offer check of $2,412 in January 2014 to the association as an accord and satisfaction. In February, the association responded to the offer with a rejection. With Devo still refusing the pay the amount owed by the previous owners of the unit, the association filed suit to foreclose on the unit for failure to pay $40,645.70 in assessments and other fees.

The disagreement took a turn in October 2014 when Devo found that the association had deposited the $2,412 check two days after Devo had sent the offer. That was 18 days before the association rejected the offer. With this new information, Devo filed a motion for summary judgment arguing that the acceptance of the check was accord and satisfaction. Relying on the St. Croix decision as a guideline, the court ruled in favor of Devo, stating that the acceptance of the check was considered accord and satisfaction.

During the pendency of the appeal, the legislature amended §718.116(3).  Although Devo challenged the retroactive application of the new law, the District Court ruled the legislation stated that it was “intended to clarify existing law,” and since it was adopted shortly after the St. Croix decision’s issuance, the clarification can be utilized as a guide.  Thus, the challenge was rejected and the Court applied the statute to rule against a finding of accord and satisfaction.

For condominiums, this means we now return to the pre-St. Croix understanding where a restrictive endorsement will not bind an association, and an association may accept a check, and apply it as set forth in the statute.  A similar clarification in Fla. Stat. §720.3085 should lead to the same result in a homeowners association context.