I’m intimidated just thinking about all the paperwork involved in a boat sales transaction. How versed are brokers in general and specifically?
THE CARDINAL RULE is to get it in writing. Your boat broker will outline the terms of the sale in writing to protect your interests. That includes spelling out obligations that you and the seller have agreed to, and when these obligations will be fulfilled. It’s a legally binding contract of each party’s intentions.
Your sales agreement and contract should contain a description of the boat and engine (if it’s outboard powered), including the make, model, year, Hull Identification Number and (outboard) engine serial numbers. You can get the equipment list from the survey and the written specification sheet from your broker. This should include:
- The purchase price, including any deposits you have paid and how you will pay the balance — by cashier’s check, for example
- Details about when and where the boat will be delivered and the sale finalized
- Language specifying that the sale depends on a satisfactory survey and sea trial and your ability to get acceptable financing and marine insurance
- A statement confirming the boat is free of liens and encumbrances that might block the sale; the seller should also take responsibility for debts incurred during the seller’s ownership
This answer comes from “Buying a Used Boat,” a booklet offered by the California State Parks Division of Boating and Waterways (dbw.parks. ca.gov/?page_id=28974).
BOILERPLATE FORMS COVER every aspect of the transaction, but where the yacht sales professional really shines is in the additional provisions section. Here’s where she helps the provision clearly state that when the boat is launched/ hauled out for survey, the buyer will pay for the launch/haulout. And if the boat is rejected, the seller pays to have it put back on land. These points, and potentially many others, need to be clarified based on the boat’s condition.
Is There a Lien on the Boat?
Various liens and encumbrances can be placed on vessels, yet such impediments to a clear title might not be discovered until the end of the sales process. A yacht sales professional works diligently to make sure the buyer gets a clear title, so he can get the boat registered or documented.
This answer comes from a feature in our August 2017 issue called “Learn the ABCs of Yacht Brokerages,” written by Doug Thompson.
Understand the Boat Sales Contract
THE AMOUNT OF paperwork in a vessel transaction can be mindboggling, and competence with contracts and documentation is key. Jody McCormack, a San Francisco-based maritime attorney, noted that sometimes boat brokers are carried away by the enthusiasm to sell and they can get in too deep.
“Brokers need a solid understanding of their contracts and be mindful of the limits of those forms,” she said. “Sometimes the transaction calls for specialized knowledge, because there are specific variables.”
Boat brokers need to know when to consider custom agreements. Are they dealing with a sophisticated racing yacht that may have survey contingencies? What’s the dollar value of the asset? Will the vessel be flagged offshore, and what about taxation issues?
“Precedents go back a long way in this industry and they may not be intuitive,” she said, “so brokers need to have a willingness to go beyond the standard forms.”
This answer comes from a feature in our August 2018 issue called “8 Qualities of a Yacht Sales Professional,” written by Zuzana Prochazka.