Brokerage dilemma

[Swagman]

[ QUOTE ]
I was an ABYA / YBDSA yacht broker for a number of years and it appears to me that you are about to fall into a very deep black hole, where the boat could be arrested and/or funds arrested with lawyers involved and costs incurred by everyone.

Most contracts between vendors and their brokers (called Listing Agreements) require the vendor to pay the broker his commission if the broker should introduce a potential purchaser who subsequently purchases the boat. So if the vendor sells to you through the second broker after the first broker made the introduction, then the vendor could well have to pay the commission twice. If he does not then the boat could be arrested. Even if the sale has been completed then the boat can still be arrested. So you may well be involved.

Suggestions.
Speak to the owner and confirm that he is aware that he may have to pay the commission twice if sold through the second broker.
Speak to ABYA and ask for their advice.
Do not sign anything nor make any payment until you have completed both the above.
Or walk away from it and find another boat.

If I was buying the boat I would only deal with the first broker, but as suggested above make sure you are signing an RYA or similar document, to purchase the vessel subject to survey, that the broker has a clients’ account and that he has third party insurance cover that will cover you should anything go wrong.

Good luck, you may need it, George.

[/ QUOTE ]

Eh?
Some kind of charge put onto a vessel (arrested) even once it belongs to someone not cotractually obliged to the other party?
Appreciate you sharing with us how this happens - ideally with an actual example or two of when its been applied.
Cheers
JOHN

 

[bedouin]

[ QUOTE ]
Eh?
Some kind of charge put onto a vessel (arrested) even once it belongs to someone not cotractually obliged to the other party?
Appreciate you sharing with us how this happens - ideally with an actual example or two of when its been applied.
Cheers
JOHN

[/ QUOTE ]
Yes - debts go with the vessel - so in theory you can be chased for any unpaid bills (e.g. boatyard or mooring costs) from before you owned the boat.

The person owed money can apply to the court and get the boat arrested until the debt is paid.

 

[GeorgeLlewellin]

Answer to “Swagman” above.
According to the 1894 Merchant Shipping Act and subsequent amendments, claims against a vessel are passed to the new owner along with assets.

That is why the Bill of Sale clearly states that the vessel is “Free from encumbrances” at the time of sale. If the new owner finds later that it was not “Free from encumbrances” then he may have a claim against the vendor. If he pays a claim in order to free an arrest it is then up to him to claim the monies back from the former owner. So beware you have been warned.

This case (the original post)
It is not a matter of who you as purchaser would prefer to deal with, it depends on the contract between the vendor and the broker who made the introduction. Under a normal listing agreement if you purchase then the broker who made the introduction is entitled to his commission. So if you use the second broker, the first broker would no doubt pursue the vendor for payment and the boat could be arrested.

My own experiences.
I am no longer a yacht broker, but when I was, I was involved in an arrest of a boat after the purchase had been concluded. This was because the vessel was being imported and was supposed to have the full UK VAT paid. I had retained on clients account the value of the VAT so the whole thing was resolved without litigation. For obvious reasons, I do not intend to go into any further details.

I have bought and sold boats without using a broker both before and since I was a yacht broker myself. There is no legal reason why anyone should not do this. But if you are not using a broker then please be aware that when you purchase a vessel you also purchase any liens (whether registered or not) along with the vessel, you therefore need to make sure, as far as possible, that you are not also taking on debts. You also have to make sure that the vendor has good title and a whole lot of other things mentioned on this forum and else where.

For more definitive information read “Buying a Secondhand Yacht” by Edmund Wheland Barrister-at-Law. This booklet is not heavy reading and used to be available through the RYA.