Accepting Partial Payments

“All or nothing”  may not be an option for owners associations anymore.

On June 11, 2008, Florida’s Third District Court of Appeal ruled in favor of a homeowner who was being foreclosed on because he did not present the maanagmeent company with full payment, but only offered partial payment.  The Court in that case said the managmeent company was assured of eventual full-payment by 718.116. The association should have mitigated its possible damages and accepted the partial payment offered, therefore leaving a “miniscule” amount and making the foreclosure unnecessary.

This ruling, intended by the Court or not, gives support to homeowners who want to dispute some smaller part of their overal obligation, such as a charge for attorney’s fees, or to withhold a special assessment because they take issue with the quality of pool maintenance. The association’s right to record a lien on the property and then foreclose that lien, is weakened from a practical standpoint. In this case, the offered payment only left $25 outstanding. A court is unlikely to order a foreclosure over such a small amount and, probably, will chastise any association’s lawyer for pressing such a suit and even award attorney’s fees and costs to the homeowner.

Therefore, in practical terms, the Court just handed homeowners a powerful weapon. If they do not want to pay some particular charge on their statement, they can offer partial payment withholding that amount, and the Association must accept it. If it is “miniscule” enough in the Court’s eyes, it is unlikely that the association will ever be able to realistically threaten an action to collect the money.