Deal or no deal?

[jonic]

Right everybody STOP!

As Jwilson has said the system is in place as both sides have to be protected.

For a start you do not have to have a survey or even a contract.

You can (and many do) for example see a 20 year old second hand boat for sale at £x and buy it at £x or whatever you agree.

Understanding that a 20 year old boat will have 20 year old equipment and 20 years worth of wear to the sails and engine etc but that's why it is for sale 50% less than an equivalent new one.

It's done with an unconditional contract- or sometimes none at all.

A 10% part payment paid upfront secures the deal whilst everyone gets their ducks in a row regarding getting the owners personal effects off and putting together the paperwork. The balance is paid and the boat changes hands.

That's fine if you know what you are doing and for boats involving relatively small sums of money.

But once you get into tens of thousands or hundreds of thousands lots of people get uncomfortable handing over large sums for old boats to strangers.

So now things may change a bit. You have seen the boat for sale you want at £70k but probably want a survey, just in case there are some large hidden issues outside the norm on a 20 year old boat.

You probably also want to know the title history is correct, that there are no outstanding loans and the VAT paperwork is good and the boat is or is not RCD compliant.

If you know what you are doing you can examine these things yourself or you can have a yachtbroker, who is qualified and appraised of the changes in the legislation as they happen, to do it for you.

So you make your offer subject to survey. A contract is drawn up and a deposit paid. The deposit is held by a professional third party and it's use and distribution is bound by a written contract.

That does two things.

The buyer is now assured that he cannot be gazumped as in the housing world of the UK.

The considerable money and time he now spends on the survey and lifting out of the boat is protected as the boat cannot be now sold to another higher bidder who rings up the next day with a better offer.

The seller is protected as he now has assurance that any damage caused by the survey, lift out, or sea trial will be covered straight away rather than have to wait for a lengthy court case to decide.

He also now knows that turning down other offers in the interim is not a waste of time for him.

If the survey reveals unforeseen major problems the buyer can table an adjusted offer.

If it is not acceptable he can have his deposit back and the boat is free to be re-marketed again.


A yacht survey can in no way be compared to a house survey.


Sellers do not want their £200k boat lifted in and out, hulls scrapped and engines and systems run without some financial protection if things go wrong (examples are boats having props broken or bent in the slings, boats hitting the dock on sea trial, engines being started without the seacocks open, batteries shorted, watermakers run incorrectly etc etc)

And buyers do not want to spend anything from £500 to well north of a £1000 on surveyors charges, boatyard charges and skippers for sea trails without having some contractual protection that the boat will be made available to them at the price they agreed (and with all the correct paperwork and title history) at the end of it all.

You can of course do it on a handshake and a nominal deposit or none at all, but try getting your deposit back from a private individual when the survey is in dispute, or when the paperwork turns out to be incomplete. Or conversely stopping the seller selling for the £5k better offer the day after you have had your survey or claiming for the impeller that was ruined when your engine was run dry.

People get very emotional buying and selling boats. Boats are far more complex than houses and a happy handshake deal can quickly deteriorate.

A pre-defined contractual time-scale and framework and a secure deposit goes a long way to keeping it all on track when the unexpected happens.

 

[JumbleDuck]

Boats are far more complex than houses and a happy handshake deal can quickly deteriorate.

While I am sure that some boat sales are complicated, are they really more complicated than house sales? When I bought my house, for example, my solicitor had to negotiate with the seller, lender, surveyor, local council, SEPA (septic tank discharge) and Scottish Power (wayleave for poles). The place I bought before that involved substantial negotiation with the feudal superior as well, though that aspect is now gone. The survey covered just as many aspects as any boat survey I have seen, too.

I think it's interesting (this isn't a criticism of anyone - I just find it interesting) that boat sales follow more-or-less the English model of "agree to buy, then do due diligence" rather than the Scottish model which puts the due diligence first.

 

[grumpy_o_g]

While I am sure that some boat sales are complicated, are they really more complicated than house sales? When I bought my house, for example, my solicitor had to negotiate with the seller, lender, surveyor, local council, SEPA (septic tank discharge) and Scottish Power (wayleave for poles). The place I bought before that involved substantial negotiation with the feudal superior as well, though that aspect is now gone. The survey covered just as many aspects as any boat survey I have seen, too.

I think it's interesting (this isn't a criticism of anyone - I just find it interesting) that boat sales follow more-or-less the English model of "agree to buy, then do due diligence" rather than the Scottish model which puts the due diligence first.

It's "agree to buy, pending the result of due diligence" which is very different. At the end of the day there's a degree of risk to both parties and the best you can do is try to agree a satisfactory compromise. If one party isn't willing to take a reasonable proportion of the risk you are unlikely to get a deal. That's really what the broker's role is - to arrange a deal that is satisfactory to both parties. A good broker will understand the stance of vendor and buyer and try arrange something that is acceptable to both.

 

[JumbleDuck]

It's "agree to buy, pending the result of due diligence" which is very different.

I've only once bought a house in England, and that fell through when the owner decided not to sell, but it seemed pretty similar to me. I made an offer, subject to survey, which was accepted. Of course the actual contract came at a different stage, but the basic idea that you have to make an offer before being allowed to inspect the goods fully is the same.

 

[jonic]

It's "agree to buy, pending the result of due diligence" which is very different. At the end of the day there's a degree of risk to both parties and the best you can do is try to agree a satisfactory compromise. If one party isn't willing to take a reasonable proportion of the risk you are unlikely to get a deal. That's really what the broker's role is - to arrange a deal that is satisfactory to both parties. A good broker will understand the stance of vendor and buyer and try arrange something that is acceptable to both.

Extremely well put.


jumbleduck to answer your question.

Yes they can be much more complex than a house sale.

I once sat down with a good friend who is a lawyer and showed her one of our yacht conveyancing files. She was horrified at the size of it!

Proving title on a house is relatively easy - check with the land registry.

and a house is also not often subject to needing to be proven to be VAT paid.

A yacht could be either on the SSR (useless when it comes to proving title) on part 1 of the British register, on a foreign register or not registered at all!

It may also have a hidden beneficial owner, be tied up in a company or overseas trust, have missing title documents, incorrectly filled in title documents, a mortgage that has not been discharged, lost it's VAT paid status, have incorrect VAT papers, still be registered on a foreign registry even though it is now flagged in a different state, have been subject to a VAT avoidance leasing scheme, RCD compliance issues, subject to a will, subject to a lien and so it goes on.

All of which has to be unravelled before we even get to the nitty gritty of sales negotiation, the survey and any post survey negotiation.

Then title has to be correctly transferred and the funds and disbursements correctly distributed.

A good professional yacht broker will be able to do this or refer to and work with the relevant lawyers and agencies - and carry the relevant PI insurance.

 

[jonic]

I've only once bought a house in England, and that fell through when the owner decided not to sell, but it seemed pretty similar to me. I made an offer, subject to survey, which was accepted. Of course the actual contract came at a different stage, but the basic idea that you have to make an offer before being allowed to inspect the goods fully is the same.

With a boat sale the seller would have been contractually obliged to sell to you once you had gone to conditional contract and started your survey.

 

[grumpy_o_g]

I've only once bought a house in England, and that fell through when the owner decided not to sell, but it seemed pretty similar to me. I made an offer, subject to survey, which was accepted. Of course the actual contract came at a different stage, but the basic idea that you have to make an offer before being allowed to inspect the goods fully is the same.

The vendor insist on an offer being he/she allows a survey but that is the vendor's decision. Some people will insist on it and some won't. If I wanted to test drive a Mclaren P1 I would be politely told to go away, especially as they're all sold and it's pretty obvious I couldn't afford to spend best part of £1MM on car. If I wanted to test drive a Hyundai Santa Fe to replace my existing model they'd offer to bring to my workplace or home, never mind allow it. The risk of my wasting their time on a Mclaren is pretty high whereas the risk on my buying a Santa Fe is much lower - well within the risk boundaries of doing business. The only way I could get a test drive on a very expensive and exotic car is by mitigating the risk for the vendor - such as a £50,000 non-refundable deposit or proof that I've got many millions in liquid assets.

It's more common in this country to make offer subject to survey but that's really to protect the buyer, not the vendor. The buyer wants the offer accepted before he/she goes ahead and parts with money for the survey. The main thing the vendor wants to see (or should want to see though very few ask) is the surveyor's insurance - that's what will protect the vendor.

 

[chinita]

May I just clarify one point.

The Surveyor should complete an objective survey, dealing in 'facts' and not 'opinions' following which the purchaser may decide whether to take the next step.

He is not a 'valuer'. He is not trained as such and has no professional experience of this black art. What boats are 'worth', what they sell for, what the current market is dictating and what the local situation may be.

 

[Robin]

The vendor insist on an offer being he/she allows a survey but that is the vendor's decision. Some people will insist on it and some won't. If I wanted to test drive a Mclaren P1 I would be politely told to go away, especially as they're all sold and it's pretty obvious I couldn't afford to spend best part of £1MM on car. If I wanted to test drive a Hyundai Santa Fe to replace my existing model they'd offer to bring to my workplace or home, never mind allow it. The risk of my wasting their time on a Mclaren is pretty high whereas the risk on my buying a Santa Fe is much lower - well within the risk boundaries of doing business. The only way I could get a test drive on a very expensive and exotic car is by mitigating the risk for the vendor - such as a £50,000 non-refundable deposit or proof that I've got many millions in liquid assets.



It's more common in this country to make offer subject to survey but that's really to protect the buyer, not the vendor. The buyer wants the offer accepted before he/she goes ahead and parts with money for the survey. The main thing the vendor wants to see (or should want to see though very few ask) is the surveyor's insurance - that's what will protect the vendor.

Well put. And if the prospective buyer has paid into the deal with a decent deposit too, albeit subject to survey, then the seller can confidently send away any others making interested in buying noises, especially any that are hoping to find a last minute bargain basement deal.

I refused to sell one boat to a 'buyer who was wanting everything he had identified himself put right at my expense before he even arranged a pre-purchase survey, after which he reserved the right to make an offer which might be entirely different. My boat deserved a better new owner than that so he didn't get it but the one that did got a very good deal and remains a friend years later.

 

[jonic]

I refused to sell one boat to a 'buyer who was wanting everything he had identified himself put right at my expense before he even arranged a pre-purchase survey, after which he reserved the right to make an offer which might be entirely different. My boat deserved a better new owner than that so he didn't get it but the one that did got a very good deal and remains a friend years later.

Indeed.

There has been a bit of a fad recently for wanting a 20 year old boat - that is priced as a 20 year old boat- to be put in as new condition at the sellers expense after having had the survey.

Surveyors have started to list EVERYTHING however minor or normal for age and then "recommend" they are fixed. (Down to tiny split pins and screws in locker hinges.)

Even though the manufacture only warranted the item for one or two years the fact it is 20 years old is ignored and the buyer now wants it as new because the surveyor "recommends" it- but still at 20 year old money.

I have even seen surveyors threatened to be sued months or years later because an item on the 20 year old boat has worn out - and again, even though the manufacturer only warranted it for one or two years, the buyers wants the surveyor to pay for a new one 20 years later!

It's gone a bit daft and the surveys and contracts need to be tightened up and better defined to stop it.

 

[Concerto]

Lets say the asking price for the boat is £20,000. The seller lets you have your survey, which costs you £250 for the lift out and pressure wash off, plus £400 for the survey. After the survey you decide to offer £18,000. Well done you - till the seller accepts an immediate offer of £19,000 from the nice chap he met when he had the boat lifted out, and who had a chance to look at the bottom himself.

The written agreement with a price "subject to survey", then a deposit, then survey, then if survey is bad a renegotiation or pull out with deposit refunded system is there for a reason. It protects both buyer and seller.

+1

This process is designed to protect both the buyer and seller from the other party not being prepared to complete the agreement. The let our clause is Subject to Survey. If it shows the condition of the vessel to be below an acceptable standard, then a renegoitiation of the price is started. If agreement cannot be made then the deposit must be returned and the sale will not be completed. As we all know many horrors are discovered by a surveyor. Some faults can be remedied by a price adjustment, others just cannot, so the buyer can walk away with just the costs associated with the survey.

Any forumite who thinks otherwise is a fool, or never bought or sold a secondhand boat with any protection.

 

[chinita]

Indeed.

There has been a bit of a fad recently for wanting a 20 year old boat - that is priced as a 20 year old boat- to be put in as new condition at the sellers expense after having had the survey.

Surveyors have started to list EVERYTHING however minor or normal for age and then "recommend" they are fixed. (Down to tiny split pins and screws in locker hinges.)

Even though the manufacture only warranted the item for one or two years the fact it is 20 years old is ignored and the buyer now wants it as new because the surveyor "recommends" it- but still at 20 year old money.

I have even seen surveyors threatened to be sued months or years later because an item on the 20 year old boat has worn out - and again, even though the manufacturer only warranted it for one or two years, the buyers wants the surveyor to pay for a new one 20 years later!

It's gone a bit daft and the surveys and contracts need to be tightened up and better defined to stop it.

All down to the six year Statute of Limitations I am afraid.

 

[Robin]

Indeed.

There has been a bit of a fad recently for wanting a 20 year old boat - that is priced as a 20 year old boat- to be put in as new condition at the sellers expense after having had the survey.

Surveyors have started to list EVERYTHING however minor or normal for age and then "recommend" they are fixed. (Down to tiny split pins and screws in locker hinges.)

Even though the manufacture only warranted the item for one or two years the fact it is 20 years old is ignored and the buyer now wants it as new because the surveyor "recommends" it- but still at 20 year old money.

I have even seen surveyors threatened to be sued months or years later because an item on the 20 year old boat has worn out - and again, even though the manufacturer only warranted it for one or two years, the buyers wants the surveyor to pay for a new one 20 years later!

It's gone a bit daft and the surveys and contracts need to be tightened up and better defined to stop it.

The wannabee buyer I referred to wanted me to put in all new instruments because the existing ST50 Raytheons were 'old hat and replaced by ST60s' ( they all worked) and this was before he even had a survey where he expected to 'renegotiate to cover any other 'defects' found in a survey. I said he could feel free to replace anything he jolly well liked after purchase, at his expense, if he wished but I was not going to do it for him beforehand. The boat was a 22 year old W33 that had all new fully battened high tech Hydranet sails, a nearly new Volvo Md22L engine, new standing and running rigging on main and mizzen, all new canvas and new upholstery, it looked like a new boat. He is probably still looking for his bargain boat now some 15 years or more later...

 

[JumbleDuck]

Yes they can be much more complex than a house sale.

I am sure that some yacht sales can be more complicated than some house sales, but I find it hard to believe that that's always the same.

I once sat down with a good friend who is a lawyer and showed her one of our yacht conveyancing files. She was horrified at the size of it!

Proving title on a house is relatively easy - check with the land registry.

In Scotland we are in the process, and have been for a hundred years, of moving from verbal descriptions of property boundaries to a map based system. Sorting out precisely where my property ends was a significant task.

It may also have a hidden beneficial owner, be tied up in a company or overseas trust, have missing title documents, incorrectly filled in title documents, a mortgage that has not been discharged, lost it's VAT paid status, have incorrect VAT papers, still be registered on a foreign registry even though it is now flagged in a different state, have been subject to a VAT avoidance leasing scheme, RCD compliance issues, subject to a will, subject to a lien and so it goes on.

And the same, or the equivalent, of almost all of these with houses. Then of course there are all the statutory requirements on the fabric of houses: Part P and Fensa compliance, planning and building warrants, conservation zones and listed status. The first flat I bought was in a listed building in a conservation area with an outstanding statutory repair and an alteration which lacked planning permission, a building warrant or approval of the feudal superior. Slightly more complicated than buying one of Mr Barratt's boxes on a geometrical estate somewhere ... and even those can and do give rise to boundary disputes.

And of course we haven't touched on wayleaves, access rights, party walls and chancel repair liability ...

Don't get me wrong, please, as I am not belittling the complexities of your job or the skill required to put through a sale. I just think that it's a little simplistic to think that buying a house is trivially easy.

 

[JumbleDuck]

With a boat sale the seller would have been contractually obliged to sell to you once you had gone to conditional contract and started your survey.

The vendor insist on an offer being he/she allows a survey but that is the vendor's decision. Some people will insist on it and some won't.

Well put. And if the prospective buyer has paid into the deal with a decent deposit too, albeit subject to survey, then the seller can confidently send away any others making interested in buying noises, especially any that are hoping to find a last minute bargain basement deal.

In Scotland surveys are done on almost all properties before an offer is put in or before a contract is in place and yet, somehow, the sky doesn't seem to fall in. Of course it has its disadvantages: I know someone who paid around a thousand quid a time for eight surveys in Edinburgh before buying a flat, but the basic principal that you are allowed to take professional advice on the state of something before making an offer for it seems to apply to everything except yachts. Do surveyors really do so much damage?

If I wanted to test drive a Mclaren P1 I would be politely told to go away, especially as they're all sold and it's pretty obvious I couldn't afford to spend best part of £1MM on car. If I wanted to test drive a Hyundai Santa Fe to replace my existing model they'd offer to bring to my workplace or home, never mind allow it.ry few ask) is the surveyor's insurance - that's what will protect the vendor.

Of course. But in either case if you asked to have a look under the bonnet, once you had been approved as a prospective buyer, you would be allowed to do so.

This process is designed to protect both the buyer and seller from the other party not being prepared to complete the agreement. The let our clause is Subject to Survey. If it shows the condition of the vessel to be below an acceptable standard, then a renegoitiation of the price is started. If agreement cannot be made then the deposit must be returned and the sale will not be completed.

Not a great deal of protection, then. I wonder how many buyers each year are forced to complete the purchase of boats they don't want to buy?

Simple question: Given that a yacht is out of the water and easily accessible, what, precisely, is the objection to allowing a survey, at a potential purchaser's expense, if s/he chooses to take the risk of paying for one without a purchase contract in place?

 

[jonic]

Don't worry I am not getting you wrong

I have bought and sold houses in conservation areas, owned listed buildings, bought a house with subsidence, owned property in UK overseas territories, bought thatched properties and properties off plan with a myriad of legal disputes over boundaries.

Both my Mother and sister worked in law firms on the conveyancing side.

I have also practised as a yacht broker for over 10 years.

But believe me the yachts can give us more headaches!

Primarily because unlike houses and depending on the problem there can be no central databases or online agencies to refer to, so it comes down to chasing missing papers or people - often internationally.

I didn't even get round to Sovereign and non Sovereign VAT schemes, coded vessels, post construction RCD certificates, sonic boom engine testing, the customs warehousing scheme...

For example I have had to turn down one listing this week as the VAT papers are incorrect and we have one query on another vessel that has a hole in the title trail - there is evidence of a mortgage with no record of discharge and the title documents are copies.

 

[JumbleDuck]

But believe me the yachts can give us more headaches!

I'm sure you earn your money!

 

[jonic]

I'm sure you earn your money!

That's the problem - we sometimes don't!

All that work gets done upfront and unseen, then it all falls apart on survey.

The surveyor gets paid, the boatyard gets paid, the lift operator gets paid and we just have our costs to pay out!

So in many ways I would like to see surveys pre offering for sale but it is fraught with difficulty if the owner wants to keep his boat in commission and surveyors are reluctant to sign the rights over to a new party.

I have on occasion piloted schemes where we as brokers have paid for a survey prior to marketing, but to be impartial we have to then recommend a fresh survey on purchase and then we have had two separate surveyors in dispute over whether something was a "defect" or not!

The current system is not perfect but covers most variables.

If a purchaser wanted to survey with no deposit or contract and was prepared to take the risk he would lose his money and the boat if it was sold elsewhere in the interim, and the seller was prepared to take the risk of damage to his boat either through the survey or through a lift or seatrial with no contractual protection I would not stop them, but would not advise them to do it.

If I said I was coming to survey your house but I was going to come round with a crane, pick it up and hoist it 20 feet in the air, then drop it in the sea and take it away out of sight for a while, and bring it back with 30 patches of it's sandtex weather shield paint scrapped off, all without an agreement regarding what the seller and buyer would accept as a sale price you might want some contractual or financial protection after all.

 

[JumbleDuck]

So in many ways I would like to see surveys pre offering for sale but it is fraught with difficulty if the owner wants to keep his boat in commission and surveyors are reluctant to sign the rights over to a new party.

I have on occasion piloted schemes where we as brokers have paid for a survey prior to marketing, but to be impartial we have to then recommend a fresh survey on purchase and then we have had two separate surveyors in dispute over whether something was a "defect" or not!

All (I think) properties in Scotland now have to be marketed with a basic survey, but many buyers (and lenders) still want their own for just the reasons you state.

If I said I was coming to survey your house but I was going to come round with a crane, pick it up and hoist it 20 feet in the air, then drop it in the sea and take it away out of sight for a while, and bring it back with 30 patches of it's sandtex weather shield paint scrapped off, all without an agreement regarding what the seller and buyer would accept as a sale price you might want some contractual or financial protection after all.

I see what you mean ... but I did specify a boat which was already out of the water! The surveyor who did my house (before I made an offer) didn't lift it with a crane, as far as I know, but he did make a few holes in the wallpaper to check for damp ...

 

[JumbleDuck]

So in many ways I would like to see surveys pre offering for sale but it is fraught with difficulty if the owner wants to keep his boat in commission and surveyors are reluctant to sign the rights over to a new party.

I have on occasion piloted schemes where we as brokers have paid for a survey prior to marketing, but to be impartial we have to then recommend a fresh survey on purchase and then we have had two separate surveyors in dispute over whether something was a "defect" or not!

All (I think) properties in Scotland now have to be marketed with a basic survey, but many buyers (and lenders) still want their own for just the reasons you state.

If I said I was coming to survey your house but I was going to come round with a crane, pick it up and hoist it 20 feet in the air, then drop it in the sea and take it away out of sight for a while, and bring it back with 30 patches of it's sandtex weather shield paint scrapped off, all without an agreement regarding what the seller and buyer would accept as a sale price you might want some contractual or financial protection after all.

I see what you mean ... but I did specify a boat which was already out of the water! The surveyor who did my house (before I made an offer) didn't lift it with a crane, as far as I know, but he did make a few holes in the wallpaper to check for damp ...