What should an HOA treasurer do with an owner's check marked paid in full for less than the balance?

By OurHOA · General information · Revised November 13, 2026

What an HOA treasurer should do with a short check marked paid in full: the accord and satisfaction rule, Florida's override, the 90-day refund, and a return letter.

Part of the HOA board handbook: treasurer and money.

The short answer: read it before you deposit it

When an owner who disputes a charge mails a check for less than the balance with 'paid in full,' 'final payment' or 'full settlement' on the memo line or in a cover letter, do not deposit it on autopilot. In Texas and Colorado, cashing that check can wipe out the rest of the disputed balance under the accord and satisfaction rule in the Uniform Commercial Code. Florida HOAs are in a stronger position, because the HOA statute says its payment order applies regardless of that rule. In every state, the safe sequence is the same: stop, copy the check and anything sent with it, tell the board, and ask the association's attorney before the money goes into the bank. If the check was already deposited, there may still be a fix, but it has a deadline. Rules vary by state and by the governing documents. This guide is general education, not legal advice for a particular account.

What the accord and satisfaction rule requires

Texas adopted the rule as Business and Commerce Code section 3.311, Colorado as C.R.S. 4-3-311, and Florida as section 673.3111. The wording is nearly identical. The owner has to prove three things: the check was offered in good faith as full satisfaction of the claim, the amount owed was unliquidated or subject to a bona fide dispute, and the association obtained payment of the check. Then the owner has to show that the check or a written communication sent with it carried a conspicuous statement that it was tendered as full satisfaction. If all of that holds, the claim is discharged. Two limits matter for a treasurer. First, the dispute has to be real. An owner who simply forgot a special assessment and wrote 'paid in full' on a short check is in a weaker spot than one who has been contesting a fine in writing for three months. Second, the statute speaks of an instrument, meaning a check or similar paper. Ask counsel how it treats an online payment with a note attached, rather than assuming either way.

How Texas, Florida and Colorado differ

Florida section 720.3085(3)(b) tells an association to apply any payment it accepts first to accrued interest, then to the administrative late fee, then to collection costs and reasonable attorney fees, and then to the delinquent assessment. The statute says that order applies notwithstanding section 673.3111, any purported accord and satisfaction, or any restrictive endorsement, designation or instruction on the payment. In practice, a Florida HOA that accepts a short check marked paid in full applies it in the statutory order, and the rest of the balance stays on the ledger. Texas has a payment order too. Property Code section 209.0063 applies owner payments to delinquent assessments first, then current assessments, then collection-related attorney fees and costs, then other attorney fees, then fines, then anything else, with different rules when an owner is in default on a payment plan. But section 209.0063 does not mention accord and satisfaction, so section 3.311 still governs a full-satisfaction check. Colorado is similar. C.R.S. 38-33.3-316.3(4) puts assessments ahead of fines and fees, and the Colorado act has no override, so C.R.S. 4-3-311 applies as written. Even in Florida, have the attorney confirm before relying on the override for a large disputed balance.

Steps when one of these checks arrives

Do these in order. One: do not endorse or deposit the check, and do not scan it into the bank's mobile deposit app. Two: photograph or copy the front, the back and every page that came with it, including the envelope. Three: pull the owner's ledger and the correspondence about the disputed charge, so the board can see whether a real dispute exists. Four: send the copies to the president and the attorney within a day or two, and keep the original in a locked file. Five: decide with counsel whether to accept the check on its terms, return it, or negotiate. If the board would take that amount to settle the dispute anyway, accepting it may be the cheapest outcome; record that decision in the minutes so it is a choice and not an accident. Six: if the board will not settle, return the original check promptly with a short letter, and keep a copy and proof of mailing. Seven: post nothing to the ledger for a returned check, and note the return in the account history so the next treasurer knows what happened.

The 90-day refund and why it is not a plan

If the check was deposited before anyone noticed the notation, the statutes give a way out: the claim is not discharged if the association repays the amount of the check to the owner within 90 days after the check was paid. Send that refund by a method you can prove, with a letter stating that the association does not accept the payment as full satisfaction. Two cautions. The refund rule does not help if the association, or an agent with direct responsibility for the disputed account, knew the check was tendered in full satisfaction within a reasonable time before it was deposited. A treasurer who reads 'paid in full' on the memo line and deposits it anyway has used up the escape hatch. And the 90-day option is lost for an organization that has sent owners a designated-address notice, described next. Treat the refund as a rescue for a check nobody caught, never as a reason to deposit first and decide later.

Set a designated address for disputed payments

The statutes let an organization protect itself in advance. If the association sends owners a conspicuous statement, within a reasonable time before the check arrives, that communications about disputed debts, including a check offered as full satisfaction, must go to a named person, office or place, then a full-satisfaction check sent anywhere else does not discharge the claim. This matters most when dues go to a bank lockbox, where a processor scans checks without reading memo lines; our guide on setting up a bank lockbox or remote deposit for HOA dues checks covers that setup. Print the statement on the annual statement and the payment coupon, in bold, for example: 'Any payment offered as full satisfaction of a disputed amount, and any letter about a disputed balance, must be mailed to the Treasurer, [Association name], [address], and not to the payment lockbox.' Then make sure someone actually checks that address. Remember the trade-off: once the notice goes out, the 90-day refund is no longer available, and a check that reaches the designated person still counts.

A return letter the board can adapt

Have counsel review the wording, then keep it on file. 'Dear [Owner]: The association received your check number [number] dated [date] for $[amount], marked [quote the notation]. The association does not accept this check as payment in full or as settlement of any amount on your account, and is returning it uncashed. Your account shows a balance of $[balance] as of [date], itemized on the enclosed statement. If you dispute any item, you may [describe the hearing, appeal or written dispute process in your governing documents]. You may also pay any undisputed portion by check without a full-payment notation. Sincerely, [Name], Treasurer.' A short board motion keeps the record clean: 'Motion to return check number [number] from the owner of [lot or account number] uncashed, with the attached letter, and to refer the disputed balance to the association's attorney.' Refer to the account by number in open session, not by name.

Mistakes boards make with these checks

The most common is speed: a volunteer deposits a stack of checks from a phone app on a Sunday night and never looks at the memo lines. Give whoever opens the mail one rule, which is that any check with words beyond a lot number goes to the treasurer before deposit; our guide on who should pick up HOA mail and handle incoming checks covers the rest of that routine. The second mistake is ignoring the cover letter. The conspicuous statement can be in a separate writing, so read everything in the envelope. The third is negotiating a reduction by phone and then treating the check as a surprise, when the owner will say the board agreed. Put any compromise in writing. The fourth is overcorrecting and refusing every partial payment. An undisputed partial payment with no conditions should usually be deposited and applied in the order your state requires. Finally, write the procedure into the collection policy, so the next treasurer follows it without having to rediscover it.

Sources

These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.

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