Methods for Paying HOA Assessments
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METHODS FOR PAYMENT OF ASSESSMENTS

Associations can set their own policies for how assessment payments are received.

1. Checks. All associations accept checks for the payment of regular and special assessments. If a check is returned due to insufficient funds, associations can charge a fee.

2. Credit Cards. Some associations are setup to receive payment by credit card. If so, they are allowed to charge a surcharge. Civil Code §1748.1 prohibiting surcharges was held unconstitutional by the Ninth Circuit. (See: Italian Colors Rest. v. Becerra.)

3. Cash. Most associations refuse cash because of the risks involved. The U.S. Treasury addressed the issue as follows:

I thought that United States currency was legal tender for all debts. Some businesses or governmental agencies say that they will only accept checks, money orders or credit cards as payment, and others will only accept currency notes in denominations of $20 or smaller. Isn't this illegal?

The pertinent portion of law that applies to your question is the Coinage Act of 1965, specifically Section 31 U.S.C. 5103, entitled "Legal tender," which states: "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues."

This statute means that all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise. For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy. [See "Legal Tender Status".]

ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.

Adams Stirling PLC