Advice on buying a yacht without a broker?

[Ayachtie]

Buying a yacht privately. Vendor wanted us to pay a 10% deposit to him directly. We have both signed a S&P agreement.

I said I wouldn't pay 10% directly and suggested I sent it to a broker to hold (broker in question was my suggestion, and one that I know personally).

Vendor happy with this but asked that the deposit be released to him at the moment of 'acceptance' after survey and subsequent negotiations.

We have now had survey and negotiations and the vendor has asked for his deposit.

I now get the willies because this is not a small amount of money for me, and suggest that the vendor sends his original documents proving ownership (his previous bill of sale, ssr cert and vat cert) to the same broker as before, again to hold until both parties are happy.

Vendor not happy as he is concerned the broker might give us the ownership docs before we give the vendor the balance of payment. Vendor wants the full deposit ASAP.

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I suppose I'm being paranoid as we have signed a P&S agreement. But now that the vendor is un-keen to send ownership docs, I'm feeling a bit worried that the whole thing is a con.... I'm sure it isn't... I think.... aaaaagh!

Am I being unreasonable to expect the ssr, vat and previous bill of sale to be lodged with the broker?

Thank you!!

 

[concentrik]

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You say you're a bit worried that it might be a 'con' and I guess this could take two forms (leaving aside the state of the boat).

Perhaps the person you're paying doesn't really own the boat? Perhaps he does but you're worried he'll just take the money and refuse to hand the boat over?

In the latter case your recourse would be to the police as an offence of some kind would have been committed (obtaining by deception, fraud etc).

In the former case you have a problem of 'title' and as far as I know there's no absolute guarantee of title for boats, even Part one registration. Unlike with houses where the Govt guarantees title via Land Registry.

If you are truly concerned about this I would be looking for historical evidence of ownership rather than SSR documents. A bill of sale is OK but easy to forge - it would be best to have several such bills showing a trail of ownership and contacting previous owners to verify.

You should at least have the vendors address and identity verified - council tax bill and photo ID (passport) should suffice.

Bills for boat related expenses (who hasn't got heaps of those!) may further allay your concerns.

In the end it's unlikely that the vendor is deliberately trying to con you; there are far easier ways to steal. More likely is a subsequent challenge to title (from a co-owner for example) but again, pretty rare I'd have thought.

Just pay him the money, enjoy the boat and make sure you know where he lives!

 

[Tranona]

Really no need to involve a broker - except that he will check the paperwork for you to ensure that there is good title before he hands over your money. He will act (for a fee) as the stakeholder and will only hand over the money in return for title. It would make sense to see all the documents before you part with any money other than the deposit.

If you do use a broker, make sure he operates a proper client account - see the YDSA website for details.

 

[RivalRedwing]

If you are that worried use a pukka solicitor.

 

[Bobc]

"Vendor wanted us to pay a 10% deposit to him directly. I now get the willies because this is not a small amount of money for me"

Either this is a VERY expensive boat, or if 10% of the price is a lot of money for you to lose, can you really afford the boat?

 

[angelsson]

Buying a yacht privately. Vendor wanted us to pay a 10% deposit to him directly. We have both signed a S&P agreement.

I said I wouldn't pay 10% directly and suggested I sent it to a broker to hold (broker in question was my suggestion, and one that I know personally).

Vendor happy with this but asked that the deposit be released to him at the moment of 'acceptance' after survey and subsequent negotiations.

We have now had survey and negotiations and the vendor has asked for his deposit.

I now get the willies because this is not a small amount of money for me, and suggest that the vendor sends his original documents proving ownership (his previous bill of sale, ssr cert and vat cert) to the same broker as before, again to hold until both parties are happy.

Vendor not happy as he is concerned the broker might give us the ownership docs before we give the vendor the balance of payment. Vendor wants the full deposit ASAP.

.

I suppose I'm being paranoid as we have signed a P&S agreement. But now that the vendor is un-keen to send ownership docs, I'm feeling a bit worried that the whole thing is a con.... I'm sure it isn't... I think.... aaaaagh!

Am I being unreasonable to expect the ssr, vat and previous bill of sale to be lodged with the broker?

Thank you!!

This is not the first time a boat has been bought and sold, and therefore many others had similar emotions.
There is however a well practiced system which you can use which protects both buyer and seller.
There are many organisations to assist, i would recommend either the RYA or the Cruising Association, experts there at both.
Or, if you are still undecided, as has been previously suggested a solicitor could act for you, find one with marine experience.

 

[Simondjuk]

What a peculiar thing to say, BobC.

If the boat, for arguments sake, is £100K, then he stands to lose £10K. Can I afford a £100K boat? Yes. Can afford to casually lose £10K. Not particularly, no, and I certainly wouldn't want to whether I could afford to or not.

Next time you plan to wander along, casually littering the pavement with £50 notes to the tune of ten grand, since it's no more than trivia to lose such a sum, please let me know where. I'll happily follow behind collecting them.

 

[Phoenix of Hamble]

why not get the vendor to give copies to the broker, with the words 'For proof of existence' or similar scrawled all over them (and maybe with broker having sight of originals as part of the transaction)... that way you see the docs exist, but vendor has peace of mind that you can't take them and use them.

 

[lenseman]

What a peculiar thing to say, BobC.

If the boat, for arguments sake, is £100K, then he stands to lose £10K. Can I afford a £100K boat? Yes. Can afford to casually lose £10K. Not particularly, no, and I certainly wouldn't want to whether I could afford to or not.

Next time you plan to wander along, casually littering the pavement with £50 notes to the tune of ten grand, since it's no more than trivia to lose such a sum, please let me know where. I'll happily follow behind collecting them.

Simon, you will have to let him off as he is new hereabouts and wants to look big and piss in the long grass like all the other big dogs!

 

[maby]

It is a problem and I sympathise, having been faced with similar dilemmas recently.

I don't think it's unique to buying without a broker, or even to buying second hand - even if you had a broker involved, you are trusting them to look after your money and they can go bankrupt too. OK - I know that the broker is supposed to hold the money in his Client Account, which would protect it from the receivers in the event of bankruptcy, but there certainly have been cases of brokers (and solicitors) abusing the Client Account, so the protection is not absolute. After several nerve wracking experiences trying to buy second-hand, we decided to go for a brand new boat, but the dealer is still sitting on a significant deposit for multiple weeks and could go bankrupt.

If you have a broker (or solicitor) involved, then all the money should stay in the client account until the moment of completion, at which point they give you the ownership documentation and release the money to the seller. If either of you is unwilling to trust the third-party, this really isn't going to work. You could try the approach we took with the dealer that we are buying from - as we handed over the deposit, they gave us the documentation to confirm that we are now part-owners in the boat. So long as the owner is still holding a document confirming that he owns nine tenths (or what ever other figure) of the boat, he should be happy to allow you to see all the relevant documents. That way, you just make the final payment in exchange for a bill of sale granting you the final fraction of the boat...

 

[Tranona]

That is making it over-complicated. Your type of arrangement is fine if buying a new boat - which might not even exist when the deposit is paid. But with an existing boat it is quite normal to use an intermediary as a stakeholder to check the documentation and title is good and then exchange the funds for the title documents and keys. Does not have to be a broker, although that is convenient as they are familiar with the process. An escrow account through a solicitor would also work, but will cost and you still have to check the title is good.

 

[maby]

That is making it over-complicated. Your type of arrangement is fine if buying a new boat - which might not even exist when the deposit is paid. But with an existing boat it is quite normal to use an intermediary as a stakeholder to check the documentation and title is good and then exchange the funds for the title documents and keys. Does not have to be a broker, although that is convenient as they are familiar with the process. An escrow account through a solicitor would also work, but will cost and you still have to check the title is good.

I do agree - it was just a suggestion as to a possible way round the situation where it is proving difficult for both parties to find a single intermediary that they both trust...

 

[Spyro]

Am I being unreasonable to expect the ssr, vat and previous bill of sale to be lodged with the broker?

Thank you!!

In my opinion yes.
The guy is selling privately now you are wanting him to jump through hoops. 10% is a reasonable deposit to ask.
If it's held by "your personal broker" it's not much good to him.
Suggest you pay the deposit then meet him personally hand over the final amount then he gives you what is necessary.
That's how a private sale usually goes.

 

[maby]

It's not unreasonable to ask to see copies of the Bill of Sale and VAT status documents - just not the originals. You have a right to see the documents in order to protect yourself. When we sold our yacht through a broker a few weeks ago, he certainly wanted to see those documents in order to verify that we were in a position to sell the boat. In many respects the VAT certificate is more important - without that, you could find yourself in trouble as soon as you cross the channel.

 

[fastjedi]

I would rather buy from an individual than a broker. You have the opportunity to meet the seller, understand how the boat has been used and benefit from the previous owners experience. Most owners keep a pile of paperwork / receipts and are only too keen to show you as part of the selling process. This will reveal how long they have owned the boat, where the boat has been moored, where the owner lives and much more.

10 minutes on the web will often reveal more information about the owner too (employment, social networking, sailing clubs, forums etc)

On the one occasion I tried to buy a boat from the marine industry I lost a life changing amount of money! On the two occasions I have bought a boat privately I have gained both a boat and a good friend.

 

[maby]

I would rather buy from an individual than a broker. You have the opportunity to meet the seller, understand how the boat has been used and benefit from the previous owners experience. Most owners keep a pile of paperwork / receipts and are only too keen to show you as part of the selling process. This will reveal how long they have owned the boat, where the boat has been moored, where the owner lives and much more.

10 minutes on the web will often reveal more information about the owner too (employment, social networking, sailing clubs, forums etc)

On the one occasion I tried to buy a boat from the marine industry I lost a life changing amount of money! On the two occasions I have bought a boat privately I have gained both a boat and a good friend.

I think you're confusing "broker" with "second-hand yacht dealer" - when we've bought through brokers, we have always met the owners and had the opportunity to talk to them in detail. When we bought our new boat, the dealer took our old one in part-exchange - the purchasers of that boat will have no contact with us.

But there is a distinction between making a friend and being foolhardy - unless the purchase price is very small within the standards of the purchaser, he does need to protect himself. We bought a little 35 year old dayboat off eBay for £250 - I just handed over the money without seeing it float - for us, it was a tiny amount of money. We bought a Hunter Ranger 265 for £22,000 and we went to a lot more trouble to protect ourselves! I could have afforded to lose £22k, but I certainly wasn't going to do anything to increase the risk!

 

[Tranona]

In many respects the VAT certificate is more important - without that, you could find yourself in trouble as soon as you cross the channel.

That, I am afraid is a myth. Nobody is usually interested in VAT documents unless the officials believe a VAT offence has been committed - even then once they see that the last transaction was in the UK, there is nothing they can do about it.

Does not mean that it is not helpful to have the document, but there are thousands of boats that do not have it - simply because until recently it was not considered important, and anyway there is no legal requirement to have it. This may all change in the future as there is pressure make it a legal requirement, but the difficulty in enforcing it on all the boats where there is no current requirement are immense. VAT is not a tax on boats, but on specific transactions that may include boats. There is no record that confirms payment of VAT except the commercial invoice - and that only shows that the trader (who is responsible for accounting for VAT) has raised an invoice.

Where customs tend to be interested is on high value new(ish) boats, particularly where there is evidence of crossborder transactions or corporate ownership, or in boats that have been brought in privately from outside the EU. In these situations there are more opportunities (and benefits) for tax avoidance/evasion so naturally customs will focus on them rather than a private owner who cannot (except in certain narrow circumstances) commit a VAT offence.

 

[Bobc]

What a peculiar thing to say, BobC.

If the boat, for arguments sake, is £100K, then he stands to lose £10K. Can I afford a £100K boat? Yes. Can afford to casually lose £10K. Not particularly, no, and I certainly wouldn't want to whether I could afford to or not.

Next time you plan to wander along, casually littering the pavement with £50 notes to the tune of ten grand, since it's no more than trivia to lose such a sum, please let me know where. I'll happily follow behind collecting them.

Apologies, I didn't really mean it to come across in the way it did. What I meant to say really is that anything you buy from anyone comes with risk. You have to assess the risk and see if you are prepared to take that risk. Personally I would want to see the ships documents, and I would also want proof of the owner's identity before handing over any money.

When people buy second-hand cars privately, they will give a holding deposit, and there is always a risk that you'll lose it, but you take that risk having assessed the situation.

We've even recently heard of people giving deposits to brokers for them to then go bust, and people are now even starting to get worried about giving money to Countries! So it's all a risky game, and I think that if you think it migh be a scam and you're not prepared potentially to lose your money, don't pay a deposit and don't buy the boat.

 

[KellysEye]

>I know there's no absolute guarantee of title for boats, even Part one registration

The Part One certificate has the owner(s) name on the back detailing the number of shares owned, our is Jane and me 32 shares each. If you contact the Ship's Registry they can tell you if there is a mortgage on the boat. This is a good reason to go Part One.

 

[Tranona]

>I know there's no absolute guarantee of title for boats, even Part one registration

The Part One certificate has the owner(s) name on the back detailing the number of shares owned, our is Jane and me 32 shares each. If you contact the Ship's Registry they can tell you if there is a mortgage on the boat. This is a good reason to go Part One.

That is still not definitive title - only a registered record of title. As there is no legal requirement to register any change in ownership, title could still be with somebody other than the name on the register.

You are right that it can give a record of any charges against the boat, but again there is no legal requirement to register a charge, although it might be difficult to enforce if not registered.