Paid HOA Asset Given Away to Board Member

Good Afternoon,
Possibly you more experienced HOA members can help me to understand how our HOA here in Maryland was to record on our financials a boat slip as an asset which it paid $3000. in 2010 (appraised value $40000 since we are on the Bay) and then in 2016 the Board of Directors gave this boat slip to one of its Board Members without recovering the initial boat slip costs nor the Reserve Fund Maintenance/Repair fees which the HOA should have paid.

In 2010 the HOA had constructed 6 boat slips, 3 on each side of the HOA's community dock. These boat slips were for the exclusive use of the homeowners who wanted a boat slip and each were to reimburse the HOA for an equal share of the construction costs.

Only 5 homeowners wanted to pay for boat slips at that time with the 6th slip being paid for by the HOA pending the desire of a future homeowner wanting a boat slip w/ the expectation that the HOA would get reimbursed for the initial $3000. construction cost as well as the levied maintenance/repair reserve fund fees.

This HOA-paid fixed asset was never recorded in any of our financials as an asset on our balance sheet as were the other 5 boat slips.

It seems as if they treated this fixed asset 6th boat slip as an ordinary expense rather than a paid for asset being held in safe keeping for a future homeowner.

Whenever the HOA levied to the 5 boat slip owners maintenance/repair fees for the reserve funds it never levied an equal fee to itself (for later recovery by a homeowner who wanted a boat slip).

Then in 2016 the Board of Directors assigned this 6th boat slip to one of the homeowners for its exclusive use but did not collect the HOA's original construction costs nor the share of the reserve funds which should have been paid. This homeowner is also a Board Member.

Once the BoD assigned the boat slip it then showed up on the HOA's balance sheet as an asset assigned to this homeowner.

This was brought to our various committees and BoD in writing who just ignored our questions and desire that the homeowner/board member reimburse the HOA for the boat slip.

So my questions are:

A) using GAAP how was the HOA supposed to record this boat slip as an HOA asset back in 2010, and
B) is this transference of a community asset to a homeowner and board member legal?
C) since this asset never showed up on our financials what exposure do we have given that it was these defective financials which were used for general membership annual approval and sent to our accountant for tax purposes?

What laws if any were broken here in Maryland? Embezzlement? Not meeting fiduciary responsibilities? Self dealing? Misappropriation of funds?

What actions can or should we take? Civil requiring we get our own attorney or possibly criminal where we could go to the local prosecutor? Or just leave it and them give the boat slip away to one of their friends and Board Members?

Thanks for any and all help...

The legal questions should go to an attorney (because we aren’t attorneys) and the accounting question should be referred to an accountant (I don’t know if we have very many of those on this site either). Even if we did, Maryland law differs from Indiana, which differs from Hawaii, so you need to refer to people in your state. Talking to your friend is a start, but if you’re correct that the association gave away a major asset to a board member for whatever reason, you’ll need more help than what you can get on the internet.

As for a crime, you have to first figure out what happened – and how to prove it- before you can say this is a crime and who was responsible. A prosecutor may very well say all of this is a huge civil matter and the association will have to duke it out with the board or whoever it can identify as being primarily responsible for this.

Do your documents say anything about how these boat slips are to be handled – that’s where you should begin. You may also need to go through several years of board meeting minutes (perhaps starting with 2010) to see if there was any mention of this boat slip, how the association wound up with it and how it was supposed to be sold.

And did you ask the board these questions? If so, what was the response? How do you know the boat slip was simply handed over to the board member (perhaps he paid some other fee?) Who was doing the association’s accounting at that time? Did anyone talk to them?

How many people are concerned about this? It may be all of you need to rally together and demand answers of the board and if they can’t/won’t respond, you might want to consider voting them out in the next board election or check your documents to see how a recall should be done – and then do it. Once you get those folks out, get your attorney and a good accountant (especially if you think the current one may have had something to do with all this) to review everything and then see if the homeowner needs to pay a more appropriate amount (just because it was appraised at $40K doesn’t necessarily mean it will sell at that amount, but that’s another issue).

Oh, our Bylaws clearly state that each homeowner who wants a boat slip must pay for and reimburse the HOA for the cost of the boat slip upon receiving a Notice of Payment. The BoD did not send a Notice of Payment to the homeowner/board member for the past year. The BoD is just ignoring the Bylaws and the homeowners who are objecting to their behavior.

How is the boat slip given to an owner? Is there a real estate deed or just permission to use it? If an owner sells his house, does the boat slip go to the new owner of the house or does it revert to the association?

The board can say they are just allowing the board member to use the boat slip since no one else wanted it.

Is it fair to charge a new “owner” of the boat slip for past maintenance when the owner did not have possession of the boat slip at the time the maintenance was needed?

You may want to offer to buy the boat slip from the association to see what happens.

Thank you for replying and your input.

Per our Bylaws and Deed of Dedication a boat slip is thru an "irrevocable license" for the exclusive use of the homeowner who pays for it along with any associated Reserve Funds which are periodically levied by the HOA for each boat slip.

Yes, the boat slips are transferable and convey when someone sells their home. In fact homeowners can transfer their license to other homeowners within the community.

The boat slip in question was paid for by the HOA during the initial construction phase in 2010 because no homeowner opted for it at that time; though in hindsight this was possibly a ruse or pretext for the BoD to have the HOA pay for the boat slip and then "give it away" in 2016 to a selected friendly homeowner/board member.

The other 5 boat slips which were paid for by the individual homeowners were each listed in our financials as assets for that homeowner and subject to yearly Reserve Fund and Maintenance fees. The 6th boat slip paid for and owned by the HOA was not included on that list.

While the cost of the boat slip to the HOA and Homeowners was only $3000. with about $1000. in Reserve Fund fees, the actual 2016 appraised value is $40000. or more.

Our bylaws are clear about homeowners being required to pay for construction costs and reserve funds. The HOA essentially paid for the extra boat slip and in its fiduciary responsibility was holding it for safekeeping for a future homeowner who would then be subject to reimbursing the HOA for the costs and fees.

One of the questions in moving forward was/was not the boat slip that the HOA paid for an asset of the HOA and therefore should have been included and indicated as such in the HOA's financials. And then when the requesting homeowner reimbursed the HOA for the costs/fees associated with the boat slip the transfer on the financials should have changed from HOA to HomeownerXYZ.

It seems that since the HOA did not properly identify the payment for the boat slip as an asset which should have shown up on our financials (as opposed to treating the payment as an expense which essentially does not show up) then it was a misappropriation of funds, and the transfer of ownership of the boat slip without obtaining cost reimbursement was at best inappropriate, and since the homeowner is also a Board Member at best this is a conflict of interests, at worst self-dealing.

We are trying to PREVENT having to go to court - civilly or criminally - by presenting the BoD with factual evidence that what they did was legally wrong. The moral argument just does not work with them.

(I didn't want to murky up the waters, but some members of the BoD/Homeowners also have dubious real estate dealings with each other and getting a "free" $40000. boat slip on the Chesapeake Bay could be payment for something other than just a "vote" of thanks)

Yes, just like the other 5 owners.

Nope. Apparently the homeowner quietly requested in writing the exclusive use of the 6th boat slip per our Bylaws and in a BoD meeting the request was granted and the boat slip assigned to him for his exclusive use.

Subsequently the HOA needed to do some electrical work which it did and charged the homeowner for it, again as per our Bylaws.

But the BoD never issued a bill to the homeowner for the original cost and any past reserve fund fees as levied against the other 5 homeowners.

Nobody in the HOA was paying real close attention to what the BoD was doing and we were all assuming that everything was being done above board until two of the Directors resigned because of this and other corruption taking place (which is not germane to this discussion)

It was the resignation of the two Board members then which began the unraveling of what took place.

When the BoD was confronted with what they did (or did not do) all they do is ignore and stare at you - and then move on to other business without even acknowledging that you even discussed anything.

Again, we are trying to put together a case which even they cant just ignore and resolve the situation, without having to get an attorney to file a complaint with the local state attorney.

Yes, we have the BoD minutes giving the homeowner exclusive license to use the boat slip. We have the 2016 financials which now shows the 6th boat slip belonging to the homeowner. We do not have an Invoice by the HOA nor a payment made by the homeowner for the boat slip.


One of the board members who resigned wasn't at the board meeting where the license was given. The other board member said she didn't quite understand and thought the payments were made previously or were to be paid in sometime in the future. Only much much later did she realize what happened when it was brought to her attention. That was when they both resigned.


Yes, right now there are 7 board members from the last election in December 2016. 5 of those Board Members have been on the board for at least 15 years and control the board. The other 2 board members are just tokens for appearances. There are 3 other homeowners not on the current board who are part of the 8 homeowners voting bloc who always vote for each other.

As a side note, one of the longstanding 20 year board members fancies himself as the local community protector and cop and has put together files that he has collected on all of the other homeowners about their activities in and out of the community.

He and his wife have actually traveled to remote places where some of the homeowners previously lived in trying to get information or dirt on them. He actually found that one of our neighbors children got caught smoking pot 4 years ago where they used to live and had another homeowner here who is a school teacher begin to spread rumors around the local high school that the kid is a drug user and dealer and to keep away from him and his family. The kid appears to be a great kid, smart and gets straight A's and gotten scholarships to 3 of the colleges he has applied to. Yes, some of these people suck.


The Bylaws state that the exclusive use license is in the homeowners name after they paid for the construction fees of $3000. All of the 5 homeowners each paid that amount and were given the exclusive and assigned a boat slip. The 6th boat slip was paid by the HOA at the time of construction in 2010. The BoD gave this 6th boat slip to one of the homeowners and now a board member without getting reimbursed $3000. by the homeowner for the initial construction costs and $1000. reserve fund fees. This is all pretty simple.

Yep, all brought to the BoD's attention with documentation backing up the allegations. The Board only responds to any controversy if they feel/know that they have criminally done something wrong, that they would respond to and fix. If they feel that it is only something civil which would force someone to get an attorney to prosecute then they really don't care so much as the cards are in their favor. We are trying to find something such as:

"not putting this 6th boat slip as an asset into our financials is a misappropriation of funds"..

"assigning the boat slip to the homeowner without collecting the required payment was not acting in the fiduciary interests of the HOA"

"the homeowner is essentially knowlingly in receipt of stolen goods since what it received by the BoD was a misappropriated asset stolen from the HOA"

"the homeowner as a member of the Board of Directors is evidenced as "self dealing"


We are considering all resolution alternatives including hiring a paralegal to put all of this into a text and format that a local prosecutor could understand and then submit it to the state along with documentation as a complaint.

MichaelS55 Md 1- You may want to sort out whether what is the actual legal term that should be applied to the rights /privileges/ whatevers being endowed onto property owners who obtain whatever rights or interests or permit they have obtained as to each of the 6 dedicated moorings.

Concurrently citing both "ownership' and "licence" respectfully is going to make it additionally confusing.

2 - It may be worth 'de-constructing the factuals' to try to simplify : instead of trying to sort out something that occurred as to a single berth 6 years after a joint venture or HOA project or whatver, consider what the scenario would have looked like if in 2010 the Directors immediately allocated All the berths to themselves without contributions or capital contributions by them. ie a big upfront scam.

In such a scenario respectfully it would be easier to see such a stunt in 2010 as breach of trust or unjust enrichment or some sort of false pretences.

At the very least it would be easier to see a breach of Directoral duty in excess of legitimate authority - ultra vires - as if someone was told "You can have a 2 year holiday from paying association fees . . . ."

But getting any police or state interest may not be easy even if they can figure out what to label.

( 3 - My own association platformed 2 sets of docks floating outside the monumented survey boundaries of the common-owned waterfront. The docks were/are technically shared chattels not within any jurisdiction of my own HOA, which fortunately has none such anyway. It got purchasers for every berth. Too bad yours did not )