How Do I Check Who Owns It/Is There Any Other Finance Interests

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mikesyam

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With a bit of luck should be looking for a bargain 50' ish flybridge in the next couple of months, if I buy through a broker or private how do I ensure nobody can knock on my door a week later and seize it under a finance issue, talking 300-400k boat.
Thanks Mike
 
If the boat is Part 1 registered, it should be straighforward to check if here is a mortgage on it. If it isnt, you can try phoning around the boat mortgages brokers and see if they are willing to offer any info. A bank loan probably wont be secured on the boat itself, so the debt isnt tied to it; it would probably either be an unsecured loan, or secured on the sellers house etc.
If you use a registered broker he should be doing these checks for you;if private, its up to you of course, but a standard bill of sale normally stipulates that there are no outstandings or lien on the vessel. RYA and the brokers/surveyors association have some pages on buying boats, so you might want to check them out.
If there is a mortgage on it, then of course you need that cleared.
While there are some great brokers, there isnt any requirement to be qualified.So, just take the responsibility on yourself. Unfortunately there are too mnay stories where things are promised/documents are in the post etc. Its all a bit late once you have paid, so make sure you have personally seen ALL the paper work yourself, unless you have alot of trust in the broker.
 
You can't.

If someone wants to defraud you they can do so very easily. It is possible to have a loan on an unregistered boat that "follows" the boat.

It is also childs play for the owner of a fully registered boat to remove the registration number and change the name. Full Part One holds no engine numbers or other ways of cross referencing so there is no way you can guard yourself against this.

A broker only has to be seen to be taking "reasonable steps". So if he's looked for a registration number and not found one, and been told by the owner it's not registered then his obligation to you is discharged.

Of course in both circumstances you'd have comeback against the owner so you can sue him. If you can find him. And if he's got any money...

Insane situation but there it is.
 
If your spending that kind of money from a cash account and not borrowing then its buyer beware.

If I was doing the same there would even be certain brokers i would avoid as well, do your homework and dont trust anyone, you dont know how liquid any one is these days even the big companies can hide behind doors that you could never open, take BA Peters for instance, they were selling sealines, you would have thought they would have been ok, how wrong were people who had lost there boats and deposits, sealine as far as im aware were untouchable, they didnt have to honour anything be peters did.

If you find a boat but have the full amount in cash, finance a percentage of it then when its all bought and paid for and clear of any nasties pay the balance off, by part 1 registering it, and you will have to if there is a large mortgage on it, that will sort it out as the finance house will do the paperwork for you, they will insist on it.
 
mikesyam said:
With a bit of luck should be looking for a bargain 50' ish flybridge in the next couple of months, if I buy through a broker or private how do I ensure nobody can knock on my door a week later and seize it under a finance issue, talking 300-400k boat.
Thanks Mike
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Basically you can never be sure. Even a conscientious broker can only check if a mortgage is registered on a Part 1 registered boat or have a phone around a few mortgage companies. There is no way of telling if the boat has been used as collateral for other loans. I once bought a boat which had been repossesed by a finance co and, as part of the deal, I insisted that the finance co provide me with a letter confirming that the boat was being sold free of all liens. Later it transpired that the boat had also been used by the previous owner as security for a bank loan made to his company (despite the fact that it had been mortgaged to the finance co). When the bank contacted me I referred them to the finance co and that was the end of it.
I think it is even more important in these recessionary times to try to protect yourself from this kind of situation, especially with boats that are being sold cheap. If you are concerned about the status of a particular boat, IMHO the best you can do is go to marina lawyor eg http://www.ward-mckenzie.co.uk/ and ask them to draft an agreement between you and the owner confirming that the boat is sold free of all debt. Even so, there are people on this forum who would say that even an agreement like this would not protect you but it's got to be worth consulting a marina lawyor for an opinion at least.
I'm afraid this is one of those dark little secrets that the industry doesn't like to talk about. You can't even be 100% sure when you are buying a new boat or a used stock boat from a dealer that it hasn't been mortgaged and if it has that the mortgage is discharged when you buy the boat. Caveat emptor
 
volvopaul said:
If you find a boat but have the full amount in cash, finance a percentage of it then when its all bought and paid for and clear of any nasties pay the balance off, by part 1 registering it, and you will have to if there is a large mortgage on it, that will sort it out as the finance house will do the paperwork for you, they will insist on it.
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If a finance company lends you money for a boat that subsequently turns out to already have a loan on it I very much doubt your lender will relieve you of the financial responsibility!

For sure they'll want to approve the paperwork (if it's a mortgage, not necessarily if it's a smaller loan), but if it all goes wrong it'll still be the owner that shoulders the burden, you can be sure of that...

Can't see how financing it protects you in any way I'm afraid.
 
ari said:
Can't see how financing it protects you in any way I'm afraid.
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I think the idea is that the finance company perform their own checks - to prevent themselves being the 3rd people to have lent against the boat.

I vaguely recall reading somewhere that if a boat is part 1 reg and a lender with a lien against a vessel doesn't record this fact on the registry that his position is weakened in a subsequent dispute with anyone who buys without knowing of the secured debt - but that could simply be nonsense I read here :D In any event not something I would want to rely on for those sums :rolleyes:
 
David_Jersey said:
I think the idea is that the finance company perform their own checks - to prevent themselves being the 3rd people to have lent against the boat.
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But the point is, there are no cast iron checks.

I vaguely recall reading somewhere that if a boat is part 1 reg and a lender with a lien against a vessel doesn't record this fact on the registry that his position is weakened in a subsequent dispute with anyone who buys without knowing of the secured debt - but that could simply be nonsense I read here :D In any event not something I would want to rely on for those sums :rolleyes:
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I'm not sure that legally a boat must be Full Part One for a lien to be effective.

But in any case, what if the lender did record the fact but the seller removed all evidence of Part One registration? Dead easy to do, remove the official number (often a bit of wood glued to a bulkhead) and change the name (stuck on the back in vinyl letters, 10 min job).

You can be damn sure the original lender will be first in the queue and your lender will still want their money back.

Worst case scenario you could have a £100,000 boat which you owe £80K on, and another lender is owed £80K by it.

What now skip?

I remember an article by a broker in MBM (Secret Salesman I think) who suggested there should be a central finance register that records not just the (easily changed) name but hull number, engine serial numbers, gearbox serial numbers etc. He reckoned it should be a fully cross reference-able list that finance companies have to register their interest against in order to have a lien, with all the serial numbers. That way any buyer would be able to perform the equivalent of an HPI check.

But as it stands at the moment, there's nothing but Full Part One.

In other words, nothing...
 
mikesyam said:
With a bit of luck should be looking for a bargain 50' ish flybridge in the next couple of months, if I buy through a broker or private how do I ensure nobody can knock on my door a week later and seize it under a finance issue, talking 300-400k boat.
Thanks Mike
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As GIGM has said with a Part 1 registered boat it should be straightforward to check (though, of course, not fraudproof).
If such an expensive boat is claimed not to be Part 1 registered I would be asking myself why, to save a few quid? Unlikely.
With a bargain in our sights it is easy to convince ourselves that all is well, but I would want to see a Part 1 document in my hand and take investigations from there.
 
Why would you P1 register a boat? (Remember, it's not like SSR, it costs hundreds of pounds, you have to have a surveyor visit and measure it, paperwork, etc etc).

Because you're financing it and the finance company insists on it (the only other reason for needing registration is going abroad, and SSR for £15 or whatever it costs now covers that with none of the cost/hassle).

No other reason.

So perhaps 50%+ of "expensive" (define expensive? Lets say £50K+ boats) are Part One registered at the very most. Or perhaps only 20% are, who knows?

Are you suggesting that we therefore view maybe 80% of all expensive boats as potentially dodgy and give them a swerve on the off-chance that there's hidden outstanding finance?
 
ari said:
So perhaps 50%+ of "expensive" (define expensive? Lets say £50K+ boats) are Part One registered at the very most. Or perhaps only 20% are, who knows?
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An interesting question, who knows indeed?
Perhaps we will have a broker along in a minute to give an informed opinion.
Expensive I would say starts at £200,000. The original poster is shopping at the 3 - 400k mark which I would call bloody expensive.
 
See above. No risk, no (effective) checks.

You don't really think a finance company is going to smile and generously take on £100K of debt on your behalf if the boat you've bought with their assistance turns out to have a previous lien on it do you..?
 
Ari, the idea of financing the boat and part registry is to 100% secure its title wether it be to the owner or the finance house, if money is being lent against the boat the finance house will do all the checks to satisfy themselves its a legitimate deal, if it comes tumbling down after its down to the house.

I have been down this road before, in the end it was the best way to get clear title.

All the main hoses talk to each other all the time, as long as the dealer is reputable there should be no problem, mess with a finance house once and your company wont get finance again. I got all my info from a dealer I do work for.
 
If a company already has a charge on the boat then a second finance company cannot wave a magic wand and make it go away, nor will they reimburse you/the first company out of pure goodwill.

And as discussed, there are no checks that can be made, other than a transcript of registry which you cannot search if you don't know the boat is registered, and will only show up if a mortgage has been lodged against it anyway.

Let me put it this way, I'm selling you my boat with £100K loan to some non marine lender who's registered the boat and the loan but I've told you the boat isn't registered and changed the boat name.

Or the loan for £20K and the boat was not registered against Part One. When I do a bunk and the finance company nail a writ to the proverbial mast (or more likely the saloon doors) and padlock it, what are your finance company going to do to help you?

They're going to say "sorry chum, we did due diligence, but you've been stiffed". They will still want their money back, and the first company will want you to pay them off as you are now responsible.

Mad, I agree, but there it is.
 
Ari I quite agree about the magic wand, the point I was trying to make is that finance houses go that little bit further in investigating deals before they lend money on a vessel, that why the house does the hard work.
 
I think it would be in all our interests if some kind of registration process was introduced. Not sure how that would be done right now, but when I handed over more than £100k to a broker a couple of years ago, I did not feel very comfortable about it. All my instincts after 20 years running a company was "what the hell am I doing handing over that kind of money based on little or no due legal process". That was a while ago and everything was fine, but nevertheless it is an incredibly fuzzy/dodgy way of doing what to me is a massive financial transaction with nothing to go on except face value.
 
Whilst it may seem "fuzzy/dodgy" when you are the one involved in the transaction it is actually a very robust system. Although there is a lot of hot air talked about transactions going wrong (and dodgy brokers) the reality is that thousands of transactions take place every year without any problems.

Compare with the number of problem transactions in secondhand cars with all the checks available in that market!

There are much easier ways for crooks to make money than buying and selling dodgy boats!
 
Tranona said:
Whilst it may seem "fuzzy/dodgy" when you are the one involved in the transaction it is actually a very robust system. Although there is a lot of hot air talked about transactions going wrong (and dodgy brokers) the reality is that thousands of transactions take place every year without any problems.

Compare with the number of problem transactions in secondhand cars with all the checks available in that market!

There are much easier ways for crooks to make money than buying and selling dodgy boats!
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Robust! Far from it. Anything but. Firstly when you are buying/selling a boat, the amount of money involved is usually far higher than with a car so the loss, if anything goes wrong, is potentially catastrophic for many people. Unlike the car industry, the boat selling industry is an unregulated cottage industry in which buyers and sellers are often trusting one man bands with hundreds of thousands of pounds. In a brokerage situation, the seller is trusting the broker to pass across money that he receives from the buyer. Since title passes when the buyer pays the broker, the seller is at risk until such time as the broker passes that money over, which may take days or even weeks. If the broker goes bust between the time that the buyer pays the broker and the broker pays the seller, the seller loses everything. The buyer is also at risk in this process when he pays a deposit as he is trusting the broker to safely hold that deposit until the sale is concluded. Again if the broker goes bust before this happens, the buyer loses. Client accounts are worthless since by definition, the broker has free access to that account. There may be thousands of transactions which proceed properly every year but brokers go bust on a regular basis and usually every time they do, unlucky buyers have lost deposits or unlucky sellers have lost all their sale proceeds and as I've said, it often involves large amounts of money. And it's not even as if size is any protection as customers of B A Peters and Tarquin will attest. The industry has to put it's house in order on this either with an insurance scheme or simply making it mandatory that buyers pay the seller direct net of commission and separately pay the commission to the broker. Yes I know brokers won't like this. I haven't yet touched on the issue of outstanding finance on any used brokerage boat purchase. In reality a buyer can never be 100% sure that any boat he buys is not mortgaged or used as collateral and, if so, if the loans are discharged by the seller when the boat is sold.
The situation with buying new build boats through dealers is even more risky as the buyer is paying the dealer stage payments throughout the build which he is trusting that the dealer hands over to the builder. If at any stage during this process, which can take many months, the dealer goes bust, then the buyer loses everything as the buyer has no contract with the builder. Even if the buyer purchases a stock boat, new or used, from a dealer and even if he takes possession the moment he pays for the boat, he is still at potential risk as the buyer does not know whether the boat has been mortgaged by the dealer and, if it has, whether the mortgage is discharged when the boat is sold.
IMHO, the boat buying/selling business is a potential minefield and it is as well that anybody new to boating is aware of the risks, however small they may be, before handing over large sums like £300-400k
 
Deleted User said:
IMHO, the boat buying/selling business is a potential minefield and it is as well that anybody new to boating is aware of the risks, however small they may be, before handing over large sums like £300-400k
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As ever, Mike, mostly in your mind. Of course all of these things can happen - just quote some documented cases of them actually happening! As has been established many times here the laws of contract and agency are robust in both theory and practice - although like all laws there are always people who will try and break them. Brokers do not go bust anywhere as often as you imply nor do they take clients money with them as easily as you suggest. The two examples you quoted are much more complex than the simplistic view you present.

And, be realistic, anybody who has £300k to spare on a toy like a boat must be somebody who is reasonably with it - or how would they have got the £300k in the first place! Nor is it likely to be a newcomer, but if they don't know what it is about, spend less than £10 with the RYA on their publication on buying and selling a boat and they will know about all the "risks" involved.

All your suggestions for "improvements" have come up over and over again but never get anywhere because they are likely to create more problems than they solve.

So, keep a sense of proportion. As we both know, even if it appears a minefield the reality is that it is IN PRACTICE robust.
 
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