If a tenant makes a partial payment, writes “Paid in Full” on their check, and you deposit it, are you bound by that? Can you still collect the balance of the money owed to you?
It depends. The legal principle involved is something called “accord and satisfaction,” in case you want to research this further yourself.
If you’ve already deposited the check, don’t panic. It might not be payment in full, or it might be fixable if you act quickly.
If the debt is for rent and/or late fees, then I’m pretty sure that debt is something called a “liquidated claim.” The amount of the debt can be calculated by referring to the lease and your records, and by doing some simple arithmetic. In the case of a liquidated claim, marking the check “paid in full” is meaningless unless there is a bona fide dispute as to the amount due, AND you agreed to accept less than full payment. Depositing the check, by itself, does not amount to an agreement to accept less than full payment. For the lawyers, the two cases you should examine are Madden v. Deere Credit Services, 598 So.2d 860, 862 (Ala. 1992) and Wilson v. Monette, 224 Ala. 106, 109, 139 So. 264, 266 (1912).
Black’s Law Dictionary says a liquidated claim is one that can be determined with exactness from the parties’ agreement or by arithmetical process or application of definite rules of law. I would guess that rent and late fees would constitute liquidated claims.
If the debt is an “unliquidated debt,” meaning the charges are not definite or exact, then Ala. Code Section 7-3-311 applies. I would think claims for repairs or damages would be unliquidated, but cannot find any guidance in the case authority.
Ala. Code 7-3-311: Accord and satisfaction by use of instrument.
(a) If a person against whom a claim is asserted proves that (i) that person in good faith tendered an instrument to the claimant as full satisfaction of the claim, (ii) the amount of the claim was unliquidated or subject to a bona fide dispute, and (iii) the claimant obtained payment of the instrument, the following subsections apply.
(b) Unless subsection (c) applies, the claim is discharged if the person against whom the claim is asserted proves that the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim.
(c) Subject to subsection (d), a claim is not discharged under subsection (b) if either of the following applies:
- The claimant, if an organization, proves that (i) within a reasonable time before the tender, the claimant sent a conspicuous statement to the person against whom the claim is asserted that communications concerning disputed debts, including an instrument tendered as full satisfaction of a debt, are to be sent to a designated person, office, or place, and (ii) the instrument or accompanying communication was not received by that designated person, office, or place.
- The claimant, whether or not an organization, proves that within 90 days after payment of the instrument, the claimant tendered repayment of the amount of the instrument to the person against whom the claim is asserted. This subdivision does not apply if the claimant is an organization that sent a statement complying with subdivision (1) (i).
- A claim is discharged if the person against whom the claim is asserted proves that within a reasonable time before collection of the instrument was initiated, the claimant, or an agent of the claimant having direct responsibility with respect to the disputed obligation, knew that the instrument was tendered in full satisfaction of the claim.
The lesson here: Don’t panic. Talk to your lawyer. It will probably be okay.