If a Broker goes bust and takes the Client account monies with them - who loses out

[gjgm]

No - it's no good, buyers need better security - not just for their money, but for knowing what they are buying!! I wouldn't buy a £2000 car without knowing it's HPI clear, yet I am expected to buy a £8000 -£10000 boat without knowing if it's been stolen, subject to being security for a loan or anything else.

How does this sound. Some insurance company sets up some sort of policy to address these concerns. They price it by perceived risks and a bit of p/l and admin costs etc. but the risk perhaps being the main part of the premium.
So, either that premium is low because events are so rare there is nothing to insurance against, or cases are rampant and so high premiums.
I am not sure why the market should bear the costs of an individual wanting protection. Let those concerned pay for it.
At what point wouldnt you be prepared to pay for it.. 1pct of the value of the boat.. 10pct?
I am not proposing this, just highlighting the point.
Under your idea,just remember someone has to pay.

 

[ontheplane]

How does this sound. Some insurance company sets up some sort of policy to address these concerns. They price it by perceived risks and a bit of p/l and admin costs etc. but the risk perhaps being the main part of the premium.
So, either that premium is low because events are so rare there is nothing to insurance against, or cases are rampant and so high premiums.
I am not sure why the market should bear the costs of an individual wanting protection. Let those concerned pay for it.
At what point wouldnt you be prepared to pay for it.. 1pct of the value of the boat.. 10pct?
I am not proposing this, just highlighting the point.
Under your idea,just remember someone has to pay.

But I do pay - to HPi I pay every time I check.

I agree, an insurance may be the way forwards. I would certainly pay 1pct no question - in reality I might pay 2,3 or even 4, not sure I'd pay much more than that given the cost of insuring what should be a very small risk indeed.

But such a policy will never exist - because for insurance to work, large numbers need to pay a small amount to cover the one or two who claim. And no broker is going to have a leaflet on their counter saying "Insure yourself against buying a duff boat" as that might just alert potential clients that buying a boat is riskier than buying a car.

 

[jonic]

How does this sound. Some insurance company sets up some sort of policy to address these concerns. They price it by perceived risks and a bit of p/l and admin costs etc. but the risk perhaps being the main part of the premium.
So, either that premium is low because events are so rare there is nothing to insurance against, or cases are rampant and so high premiums.
I am not sure why the market should bear the costs of an individual wanting protection. Let those concerned pay for it.
At what point wouldnt you be prepared to pay for it.. 1pct of the value of the boat.. 10pct?
I am not proposing this, just highlighting the point.
Under your idea,just remember someone has to pay.

+1

It may be of interest to know that I already pay £700 a year for professional indemnity insurance. Which does cover fraud by my employees. As I understand it you cant insure yourself against yourself committing fraud. (For obvious reasons)

 

[ontheplane]

Would they insure you against selling a boat to a client that turned out to not have it's VAT paid, not be the sellers property and so on?

IF they would offer that, you'd at least be able to reassure your clients their purchase was protected to some extent.

 

[jonic]

Would they insure you against selling a boat to a client that turned out to not have it's VAT paid, not be the sellers property and so on?

IF they would offer that, you'd at least be able to reassure your clients their purchase was protected to some extent.

The insurance covers me being negligent. So I must perform a due diligence check.

Ultimately if the seller is a crook and sets out to deceive, it is buyer beware. (Because it is the sale of goods between two private individuals.)

A good broker will know what to look for so the crook is actually less likely to use a broker to sell the boat and more likely to sell privately. They certainly won't give me their passport! Unless that's a fake too.

Another thing to watch for is payment by bankers draft. Especially if the buyer wants to buy sight unseen.The draft can clear and you then release the boat. Then several weeks later the funds can be recalled if the draft turns out to be a fraud or stolen. ONLY accept CHAPS payments to be safe.

But to be honest this thread, as ever, is painting a distorted picture in relation to the size of any problem.

Billions of pounds a year are transacted without incident.

Brokers do not oppose any additional legislation. The Government has not proposed any.

The risk of fraud is no greater or no less than any other industry. It is not specific to Yacht Brokers.

I would love to see it become mandatory for a yacht broker to be a member of an association and for there to be a central database to record ownership, mortgages etc. and for a compensation scheme to be set up. But I doubt there is any appetite at Westminister.

Until the government decide to do so, boat buyers should choose brokers who are voluntarily governed by an association and its rules, and like any other business on reputation.

 

[Flying Penguin]

It's so simple, the mechanism is already there for cars - a slight database tweek and it's done - has anyone actually ever asked HPi whether they could do the same for boats?

Careful what you wish for, if you can track it you can tax it

 

[gjgm]

But I do pay - to HPi I pay every time I check.

I agree, an insurance may be the way forwards. I would certainly pay 1pct no question - in reality I might pay 2,3 or even 4, not sure I'd pay much more than that given the cost of insuring what should be a very small risk indeed.

But such a policy will never exist - because for insurance to work, large numbers need to pay a small amount to cover the one or two who claim. And no broker is going to have a leaflet on their counter saying "Insure yourself against buying a duff boat" as that might just alert potential clients that buying a boat is riskier than buying a car.

As I said, it wasnt a proposal, the point being that you feel you want protection and that has a cost. Others will argue that since there simply isnt a history of problems here, why put in place safe guards that arent backed up by neccesity?
I am sort of guessing that solicitors dont have their safeguards in place to improve public confidence, but bcz too many solicitors were running off with peoples money.
FSA puts safeguards in place bcz financial firms keep ripping off clients.
TBH , you not feeling 100pct safe about buying a boat isnt adequate reason for boat buying to be more expensive for all of us.Almost all risks can be reduced to acceptable levels for almost everyone, otherwise no one would buy or sell a boat.
So (joking here) man-up
Or, get real about the risk. You do plenty of things every day of your life that have risk, and many of them could be alot more fatal than boat transactions.

 

[jonic]

No worries jonic! Problem with lawyers, ahem, is that while some of them are really very excellent a certain percentage are mediocre. We had for example a solicitor on the VAT thread who arranged a VAT payment in the UK without realising it didn't extinguish a VAT liability in Spain. Jeeze. Let's not get into a debate as to the aforementioned percentage but it begins with an 8 or a 9, very much imho!

Part 1 reg proves title, not ownership. It's very hard to explain differnce in a thread on here; better done over a beer. The tricky part is English law (and anglo saxon law generally) recognises the trust concept, so we have beneficial ownership on the one hand and legal ownership aka title on the other

Most chattels are owned benefically and legally by their owners, and there is no need to distingusih between legal and beneficial ownership, and generally there is no point. With registered or similar assets however (land, boats, company shares, bank accounts, etc) you can distinguish and peoplle often do. Now people, often unwittingly, mean beneficial ownership when they say they own something but it is important to undersntad the distinction esp when dealing with registered property like boats. In anglo saxon legal jurisdictions it is perfectly possible to own something beneficially without being the registered owner. It is very common for example for company shares to be registered in the name of an owner who is in fact a trustee or nominee for someone else. The registered owner would appear in the records of the company, receive the dividend cheque, have the rigth to vote, and if the shares were sold would be the person who signs the bill of sale (which is called a "stock transfer form" in the case of a company but its exactly same as a BoS). But he wouldn't really own the shares and would be fully answerable in law to the person who does. If the shares are sold the beneficial owner would put them on his CGT tax retrun and the nominee wouldn't

So getting back to boats, the registered title is a record of the legal title holder aka legal owner and has no means of or intention to record any underlying beneficial owners. My boats are for example recorded on part 1 registry under the name of a company but it is a mere nominee for me and i have a separate trust deed (invisible to outsiders) that says I am the beneficial owner. The ship's registry cannot know about beneficial owners and that is why there is the disclaimer on the certificate. What they are really saying is that "this certificate proves legal title but we don't know if that title is held in trust and if there is an underlying beneficial owner"

None of this is really a problem but I really dont have time to write loads more. Perhaps worth adding that when a boat is sold the contract operates to transfer beneficial ownership and the delivery of the BoS (if the boat is registered) serves to transfer legal title. Hence both must be got right

Now you might ask how a buyer can ever know if he is getting beneficial ownership, becuase there might be a hidden beenficial owner. That's true but it's not as risky as it sounds. Buyer will get legal title, via BoS, and if an underlying beneficial owner then appears and claims beneficial ownership under a new constructuve trust he will making an equitable claim and you can only come to equity if you have clean hands. If he is genuinely innocent he might have a claim, but it is virtually impossible that would ever happen in the world of boats. no-one gives legal title to their boat to a trustee who would then fruadulently sell it without even telling the beneficial owner. Lots of people give title to a trustee/nominee controlled by them. So dont worry about this one

I have to go, gotta leave for plane to France at 4pm. you could write pages and pages on this but it isn't a big bone of contention and I do not want to create urban myths. The above is typed quickly and isn't perfect - it's a complex topic

Thank you for this. I have now read through it a couple of times. In essence are we advised not to say part 1 proves ownership because there may be an invisible, unsearchable beneficial owner?

 

[jfm]

True to both of you...
And if all new boats were registered with HPi then changing the hull number would flag up a boat NOT registered as existing with HPi which in itself would flag up issues - you'd then phone the boat builder with the hull number, they'd say they didn't build that boat and so on and a trail of concern would be raised.

No. If you were a crook and you had borrowed money on a boat, you would change the HIN number on your boat to the HIN number of a similar boat that didn't have a loan on it. QED. Now, you might say that the name would then be wrong on your HPI database. Well if you are contemplating a full DVLA/HPI style database recording the keeper of each boat then you're nuts. That will cost millions in database build and management costs. And boaters would have to pay. It's crazy to spend milliosn to fix a tiny problem. And there would then, as someone said, be a database to collect tax.

 

[jfm]

In essence are we advised not to say part 1 proves ownership because there may be an invisible, unsearchable beneficial owner?

Yes exactly. Though not just an invisible, unsearchable beneficial owner. It could be some other person with an equitable claim (beneficiary under a will, lender with unregistered mortgage, or a statutory claim (HMRC for import duty) - in each case being a claim that has an element of "ownership" quality to it, but not legal title. Hence MCA's disclaimer

This is unlikely stuff though - I intended to correct the legal comments in this thread but I'm happy to admit I'm unintentionally bordering on scaremongering; that's how unlikely this stuff is

 

[jonic]

Jonic you are really beginning to worry me now.

You have been very vocal in recent months on this forum frequently shouting me and other forum members down, and usually shouting longest and loudest .
You managed to gain both my respect and my trust to the extent that I announced my endorsement of the trust I would place in you to act as my Broker.

Now I fear that not only do you not really know what you are doing but you also have more faith in asking an internet forum for advice than your own yacht broking association

Yeah thats right DAKA. I'm totally clueless.

I bow to your superiority

But I think you have misunderstood the question.


Please someone, anyone, don't let me come back to the MOB forum. If you see I have been dragged back in, PM me and tell me to go back to work or to scuttlebutt or something.

Adiós amigos

 

[jonic]

Yes exactly. Though not just an invisible, unsearchable beneficial owner. It could be some other person with an equitable claim (beneficiary under a will, lender with unregistered mortgage, or a statutory claim (HMRC for import duty) - in each case being a claim that has an element of "ownership" quality to it, but not legal title. Hence MCA's disclaimer

This is unlikely stuff though - I intended to correct the legal comments in this thread but I'm happy to admit I'm unintentionally bordering on scaremongering; that's how unlikely this stuff is

Thank you JFM

However in view of DAKAS comments I shall have to discount your advice and knowledge

Have a good flight.

 

[jfm]

you also have more faith in asking an internet forum for advice than your own yacht broking association

Wise up Daka. If you ask the yacht broker association you are damned sure you are getting middle of road material. Ask on an internet forum and the legally guy with the fat powerboat could be either (a) a drug dealer, and just making all the legal stuff up, or (b) at the er top end of legally stuff so much so that his clients are happy to buy him the big fat powerboat,

Jonic is perfectly free to run with (b) if he wants and shouldn't be criticised for that eh?

 

[DAKA]

Hi Jonic,

I tried to delete it but got called away, it was OTT.

Hope you managed to see the funny side

I've deleted it now but you have copy pasted it so you will need to delete your quote in order to wipe it out completely.

cheers

Pete

 

[DAKA]

Jonic is perfectly free to run with (b) if he wants and shouldn't be criticised for that eh?

No, of course you are right.

I couldnt resist it but I have now deleted it, I went too far sorry Jonic.

 

[jonic]

Hi Jonic,

I tried to delete it but got called away, it was OTT.

Hope you managed to see the funny side

I've deleted it now but you have copy pasted it so you will need to delete your quote in order to wipe it out completely.

cheers

Pete

Nahh lets keep it up for posterity.

I think JFM could invite us all for a drink on his aft deck to discuss.

 

[ontheplane]

I am not as twitchy as I appear actually - I think 99.99% of the time everything is fine.

I do think however that the biggest risk is that it's hard to find out if a boat is security for a loan - I think that's probably the biggest risk to the buyer of any of it - the rest is very unlikely to happen, that one, well just maybe....

 

[gjgm]

I am not as twitchy as I appear actually - I think 99.99% of the time everything is fine.

I do think however that the biggest risk is that it's hard to find out if a boat is security for a loan - I think that's probably the biggest risk to the buyer of any of it - the rest is very unlikely to happen, that one, well just maybe....

On the whole, financial institutions are not interested in loans on boats; there are of course companies that specialised in offering mortgages on boats. Not surprisingly, these institutions are quite keen to keep records of those transactions, and some documents. Someone may correct me, but are all (uk) mortgages not noted via Part 1 registration?
If not all, certianly most.
That all being so, you can trace (UK) mortgages on boast reasonably easily, and it is then straight forward on buying to ensure the boat is sold without mortgage.

 

[jonic]

I am not as twitchy as I appear actually - I think 99.99% of the time everything is fine.

I do think however that the biggest risk is that it's hard to find out if a boat is security for a loan - I think that's probably the biggest risk to the buyer of any of it - the rest is very unlikely to happen, that one, well just maybe....

This is true. It is the bit I dislike the most, because no matter how diligent I am, no-one can tell me for sure.

However as JFM said earlier we must be careful of scaremongering, in relative terms these things are very rare.

 

[jonic]

Someone may correct me, but are all (uk) mortgages not noted via Part 1 registration?
If not all, certainly most.

Not all of them, because you are relying on the institution to bother to record it.

If it is under £50k some won't.

The thing to be wary of is if original title documents are missing and the owner just has copies. Because the originals may be being held as security. Then again they may have just been lost!