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Per our state's rule on HOAs:

(4) OFFICIAL RECORDS.—The association shall maintain each of the following items, when applicable, which constitute the official records of the association:

[...]

(j) The financial and accounting records of the association, kept according to good accounting practices. All financial and accounting records must be maintained for a period of at least 7 years. The financial and accounting records must include:
[...]
4. Any other records that identify, measure, record, or communicate financial information.

This makes a money order (MO) an official record.

We recently had a situation where we used an older money order (1+ year) to take care of a bill paid on time to our association. This was done a few months ago. Recently we found out that they couldn't cash the money order and the balance was not settled. We still owe money for that month and they recorded a NSF (Insufficient Funds) Fee for that MO. An MO is a guaranteed form of money and can be used like cash but I suppose if there is an issue with the age of the MO, that could have caused an issue even though the issuer told us that they don't expire. We asked for the MO to be returned to us so we can resolve the issue with the issuer but the HOA later told us that they shredded the MO and they no longer have it in their possession. We are beyond fuming at their lack of communication, nature of aggressive language regarding to recover association fees, their NSF fee and also the destruction of our MO.

We need proof of what was wrong with the MO (it's a guaranteed form of payment) and we have no evidence of why they claim NSF fee on us. Can we request the MO back as an official record per 4.j.4 as we have no way of knowing what happened once we handed the MO over to them? Can we request receipts? How do we know what they did?

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    What would you hope to accomplish by such a request? If they destroyed it then it's gone. The law can't magically make it reappear. Commented Dec 15, 2021 at 17:57
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    If they cannot provide official records, they are barring us from records and are subject to fines themselves which is compensation directly payable to us.
    – LeanMan
    Commented Dec 15, 2021 at 18:02
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    It helps level the playing field and keeps them from taking advantage of us. They feel empowered to use the law against us and throw away our hard earned money but they feel like they are not responsible to keep accurate records and destroy proof of payment (or in the case of the NSF, proof of the bounce).
    – LeanMan
    Commented Dec 15, 2021 at 18:08
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    Okay, so your ultimate goal is to receive some kind of compensation. These things are usually governed by state law - what state are you in? Commented Dec 15, 2021 at 18:15
  • Florida. leg.state.fl.us/statutes/… See 4.j.4.
    – LeanMan
    Commented Dec 15, 2021 at 19:20

1 Answer 1

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Check rules apply here, including Check21

This is a bit complicated because of "old school" check rules and the Check21 changes.

First, a money order is basically a "bearer document" much like cash. After all, but for your copies, you would have had no data from which to establish its existence.

In fact, that's why WU has their $1.50 holding fees. It allows them to seize and extinguish small-value money orders, so they don't have to keep records of them for 50 years. A $50 money order 3 years old is entirely forfeit. Note that the Post Office does not do that.

The fraud here works like this: A) you pay the payee by a money order. B) a blackguard employee takes the money order but claims to have lost it (bonus points, some sniveling excuse to let them blame-shift this onto you, like "it bounced"). D) you reissue payment to the payee. E) the payee will cash and credit the second payment. F) the blackguard cashes the first money order, stealing that value from you.

In the checking system, the defense against that fraud is that the pwhen your check or money order bounces, the bank will return to the payee that check or money order with a bunch of codes and markings which document the steps the check passed through the clearinghouse system. Then, the payee returns that check/MO back to you, with the markings proving that it bounced.

So they must return the instrument to you. That is the payee's proof to you that the fraud did not and will not happen. It's not optional unless they trick you.

Check21 changes the process, but only somewhat. At any step in the process, the bank may take a high resolution digital scan of the check/MO. For instance, if you deposit into an ATM machine, all those whirrs and clicks might be the ATM machine scanning and uploading the check image to the server, at which point the server authenticates the image as "looking like a cheque" and tells the ATM to route the cheque into the "shred" bin. (Or shreds it on the spot). In fact you are doing that very process when you deposit checks with your phone camera.

How are returned checks handled? Check21 provides for a mechanism for a bank to turn the digitized check back into paper, by issuing a certified copy of the check. This will include both sides and all relevant notations from its journey through the clearinghouse system.

This is the certified copy that MUST be returned to you if the HOA intends to claim your check bounced. And yes, this costs money, but that is what bounced-check fees are for. They are paying for things like that certified copy. So there isn't a second fee to get that certified copy; that's included in the fee they are trying to charge you, and the fee the bank is supposedly charging them.

Produce that certified copy!

So if your HOA is dealing honestly, the "shredding" they spoke of may have been done by the bank, as part of the Check21 process. And that's fine; if they are not lying they can produce a certified copy in lieu of the original.

If THEY DO produce that certified copy, then you need to make good on it plus their bounced payment fee. You take the certified copy back to the issuer and say "WTH" and work it out with them.

If THEY DON'T produce that copy, then they blew it. You get to teach them an expensive lesson, e.g. by claiming that one of their staffers probably stole it. They must credit the payment to your account.

They can threaten to lien your house, but tell them they can't make it stick. In court, the judge will say "produce the bounced check". If they try to say they shredded it, it will sound like "the dog ate it". That will put them on their back foot, and make their lawyer nervous and tell them to work with you.

It won't actually work. Since you do have enough data to recover your money from WU, you must do so, because of the duty to mitigate damages. You also have the duty to turn over all data, so they'll know it. But it's a fun intimidation position.

So really, you have access to a spectrum of returning their jerkishness:

  • force them to credit your account with the schadenfreude of knowing they probably didn't get paid, at very small risk of losing in court.
  • go to WU and retrieve most of your funds, point out how they mishandled it, and meet them at some halfway point (e.g. waive the penalty fee if you make good the amount)
  • retrieve funds from WU, suck up and pay them everything they ask for.

...although I must say, I don't quite understand the value of cheating an HOA. The HOA is you. They pay you back in the value they bring to your development, of which you are an equal beneficiary. Those commons-area roads and lawns don't pave and mow themselves.

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    It could be t hat the hired management firm is cheating both the HOA and its members by charging excessive fees and retaining a commission or fee on each. Commented Dec 20, 2021 at 2:07
  • It seems like there is a bit of tight rope walk going on here. Much of that can be cleared up with some additional information. If we are indeed in a position to claim "fishy" behavior, we would need to know if the processor shredded it and provided a certified copy of the bounce. So they should probably be able to return this to us. If they don't, then they can't claim NSF fee on us. Does that sound right?
    – LeanMan
    Commented Dec 20, 2021 at 3:59
  • On the note about the HOA, after digging into the bylaws, articles of declaration and reading others' experience with HOAs on the interenet, HOAs are a Developer function. The Developer creates the rules before starting on a project and its representatives enforce it through the HOA. As units are being sold, the HOA is progressively turned over to members (homeowners) but until 100% sold, the Developer maintains powerful clauses to override decisions etc. Its basically a tool in the Developers' tool chest to sell the homes but after that, lay persons (i.e., homeowners) take over.
    – LeanMan
    Commented Dec 20, 2021 at 4:22
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    @LeanMan yes, your first comment is what I think, but you are much nicer than I am. I would open at extremes since they did, and happily meet them where you said. In informal negotiation you don't have to be honest. So I would allow them to think I had no documentation of the money order, just to squeeze them into realizing the depth of their blunder. Just to put them on their back foot. Commented Dec 20, 2021 at 4:35
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    @LeanMan Yeah, that lets the air out of the "don't have any records" ploy. I would forget pursuing it under the rights-to-records-access law, for now I would stick to "Credit my account or give me back the check". Don't let them send you on errands. Commented Dec 20, 2021 at 4:50

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