buying a boat via a broker

[Novachris]

Hi I have found a boat I like and I think I am going to make an offer on her, the boat is being sold through a brokerage. what is the procedure please? is the deposit refundable?
thanks.

I must say the broker has been very helpful, ok I know he wants to sell the boat.

 

[CFarr]

Once you make your offer the broker will reply letting you know if it has been accepted or not.
If yes then essentially you are agreeing to buy the boat at that price.
Make your offer subject to survey if indeed you are planning to have one.
The deposit is paid before you can go ahead with the survey and is non refundable unless the survey throws up some significant issues which you were not made aware of, at which point you can either negotiate or withdraw.
The survey is your cost entirely.
Assuming all is good then pay the balance and off you go
Good luck.

 

[FullCircle]

We have a resident broker of the highest calibre on this Forum: jonic, who has been kind enough to write a web page with a yacht buyers guide. I suggest you read and digest....

http://www.jryachts.com/buyers-guide

 

[Jcorstorphine]

I would always be worried about my money not going direct into the Brokers "Client Account" and being siphoned off if the broker was in financial difficulties.

If you go ahead write two cheques, one for the broker's commission (usually 8% of the price +VAT) and one for the seller at purchase price less the brokers commission.

That way you ensure over 90% of your dosh going direct to the seller. If the broker does not like it, walk away.

 

[Uricanejack]

I would always be worried about my money not going direct into the Brokers "Client Account" and being siphoned off if the broker was in financial difficulties.

If you go ahead write two cheques, one for the broker's commission (usually 8% of the price +VAT) and one for the seller at purchase price less the brokers commission.

That way you ensure over 90% of your dosh going direct to the seller. If the broker does not like it, walk away.

What's the point of that?
As a buyer I have no interest in the financial arrangements between the seller and his broker.
The brokers account is supposed to be trust account so the money is not on his books it just passes through the trust account and the sale is completed. If the broker is in financial difficulty only the income from the brokerage fee goes to his business account and to pay his liabilities.
The advantage is if the seller is in financial difficulty. A broker should not release your funds to the seller until the boat is free of liens. Or the funds are distributed to free the boat of liens and the balance going to the seller.
I suppose it remotely possible both seller and broker are crooks which is why brokers join associations in which case separate checks would make no difference.

 

[grumpy_o_g]

Anyone got the popcorn icon handy?

 

[jonic]

Ok Popcorn at the ready!! :encouragement:

A registered, qualified professional yacht broker is required by his or her professional association to have a wholly separate written in trust client account with the bank.

Ii is exactly the same client account as offered by the banks to a solicitor or accountant.

It does not form any part of the day to day business of the brokerage and there is a written acknowledgment from the bank that the funds remain the clients at all times. They cannot be offset by the bank to pay any other liabilities or paid out to creditors, nor can the account be accessed by the vendor. In the event of bankruptcy the funds remain entirely the property of the client and can not be seized by an administrator or receiver.

During the sale and purchase of the yacht, the funds remain in the client account and are not released until both vendor and purchaser have completed their contractual obligations.

Nowadays nearly all payments are made by electronic transfer- so the client is actually the person who controls where the deposit is made.

If you are at all worried, ask the bank to confirm the account is a written in trust client account and only make deposits direct to that sort code and account number.

If there is a dispute at any point in the sales process you are far more likely to have your funds returned by a professional yacht broker operating strictly to the rules of the contract and their association, than a disgruntled private individual.

The yacht broker should also carry professional indemnity insurance - usually in the £millions.

Ask to see the brokerage firms current indemnity insurance certificate, written in trust client account agreement with the bank and if applicable their current (in date) membership of their professional association.

Any professional will be more than happy to present these documents to you on demand.

A full service yacht broker has three roles namely: marketeer/agent, secure banker and the administrator of the legal process.

The full service broker will have as a matter of course checked the legal ownership/status of the vessel, the VAT status and the RCD status before marketing the vessel.

Once the sales process is complete the broker will transfer legal title via the MCA Bill of Sale, keeping a full paper trail, issue the completion documents and transfer the funds. This exchange will only take place once the vendor has delivered all of the correct original title, VAT and RCD paperwork to the brokerage firms office, and (if part one registered) the broker has obtained a transcript from the registry.

The full service broker will also obtain and keep records of passports/photo id and verifiable address documents of all parties.

Most professionals will also go on to assist with ships registration, radio and epirb registration.

If as a buyer or seller you are always expecting this full service when selling or purchasing a yacht be aware of the broker who is actually little more than an advertising agent, re-selling advertising on websites, usually for a non-refundable upfront fee. There is often no inspection of the vessel and the advertising material may be uploaded through an entirely automated process by the seller with little or no involvement by the agent. But crucially there may also be no examination of the title documents, RCD status or VAT status, no administration of the legal process and no secure handling of the client funds through a client account.

Whilst there is no problem using just an advertising agent (it can be very cheap) always clarify upfront -especially if buying- what the agent has checked with regard to the vessel ownership RCD and VAT status, what parts of the legal process you will be required to do on your own, who will be administering the exchange of contracts and documents, who will be handling the transfer of funds and the level of indemnity insurance.

 

[mainsail1]

As a buyer I had a very near miss with Opal Marine and will always be very careful when it comes to Brokers as a result. Until then I thought an Escrow account protected the purchaser. No such luck.

 

[Tranona]

As a buyer I had a very near miss with Opal Marine and will always be very careful when it comes to Brokers as a result. Until then I thought an Escrow account protected the purchaser. No such luck.

They are not escrow accounts but trust accounts. Despite the popular myth about Opal, no brokerage clients lost money. The losses where with buyers of new boats where Opal had taken deposits but not paid them into a client account correctly. In these transactions Opal were not acting as broker but trading on their own account. An important distinction.

 

[Jcorstorphine]

They are not escrow accounts but trust accounts. Despite the popular myth about Opal, no brokerage clients lost money. The losses where with buyers of new boats where Opal had taken deposits but not paid them into a client account correctly. In these transactions Opal were not acting as broker but trading on their own account. An important distinction.

Very good point about the distinction between companies acting as brokers and those acting as dealers but in many cases, the companies are involved in both the second hand and new boat sales. So, what is to stop a broker from paying a clients money into his normal new boat business account?

Still on the subject of buying and selling boats, I had situation back in the 90's when I sold a boat privately to a guy from the South Coast and my boat was in Scotland. The buyer and I discussed at length the safest way to transfer the cash and we decided that he would pay the funds into our solicitors account and that the funds would not be released until I had loaded the boat onto his transport and the driver had phoned our solicitor and the new owner to advise he now had possession of the boat. Within the day, the funds were in my bank and all for the very modest fee of about £50 with the sum involved being in the order of £25,000.

All in all, it seemed like a good way of buying and selling boats. However, several years later, I found that our solicitor had left the company and the senior partner (her boss) was headline news as being involved in shady dealing with Client's account and was subsequently barred from working unsupervised. Basically he was using clients money for other activities. So not so safe as I thought, and in fact no different from using a broker.

I will stick to my plan of two cheques or two electronic transfers if and when I can decide what boat to buy.

 

[Tranona]

Very good point about the distinction between companies acting as brokers and those acting as dealers but in many cases, the companies are involved in both the second hand and new boat sales. So, what is to stop a broker from paying a clients money into his normal new boat business account?

Still on the subject of buying and selling boats, I had situation back in the 90's when I sold a boat privately to a guy from the South Coast and my boat was in Scotland. The buyer and I discussed at length the safest way to transfer the cash and we decided that he would pay the funds into our solicitors account and that the funds would not be released until I had loaded the boat onto his transport and the driver had phoned our solicitor and the new owner to advise he now had possession of the boat. Within the day, the funds were in my bank and all for the very modest fee of about £50 with the sum involved being in the order of £25,000.

All in all, it seemed like a good way of buying and selling boats. However, several years later, I found that our solicitor had left the company and the senior partner (her boss) was headline news as being involved in shady dealing with Client's account and was subsequently barred from working unsupervised. Basically he was using clients money for other activities. So not so safe as I thought, and in fact no different from using a broker.

I will stick to my plan of two cheques or two electronic transfers if and when I can decide what boat to buy.

If the broker is using the recommended type of account, clients will pay any money direct to that account and receive a receipt
from the bank confirming that. The money goes nowhere near the business account. The recommendation comes as a result of the Opal case although most brokers already acted in that way already.

 

[wooslehunter]

I've pulled out of two purchases & had my deposites returned. Both had substantial problems.

1. Prior to making the offer, I asked the owner, who was a professional skipper working in a boat yard, if the boat had any signs of osmosis. He said no. Within a few minutes of the boat being pulled out, the surveyor showed me the bottom covered with large blisters.

2. A smaller boat that had been converted from outboard to have a nice new Lombardini inboard. The surveyor found big problems with the installation & also that the boat had had a side on impact. Gel coat cracks outside went right through to difficult to see internal spaces.

Here's a tip for the survey too. The surveyors I've used we're happy to cut short the survey if major problems we found. That saves their time & the clients' money. I've been around for some surveys & not for others. But, either way if the surveyor is happy with the arrangement up front, then you only pay for what you need. I.e. why pay for a full written up survey on a boat you know you will pull out of.