Insolvent broker takes deposit question

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However, he does not have legal or beneficial owenrship of it.

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Scuse the legal pedantry, but there is rarely a separate trustee and so the broker does have legal ownership of (ie title to) the money. He doesn't have beneficial ownership of it, but he does have legal ownership (using that latter term in its normal way, ie posession of title). Hence the problem, and the Peters Opal mess...!
 
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However, he does not have legal or beneficial owenrship of it.

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Scuse the legal pedantry, but there is rarely a separate trustee and so the broker does have legal ownership of (ie title to) the money. He doesn't have beneficial ownership of it, but he does have legal ownership (using that latter term in its normal way, ie posession of title). Hence the problem, and the Peters Opal mess...!

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Happy to be corrected. I should have said there is an implied (if not explicit) trust so the broker has legal title to the funds as trustee whilst the beneficial owner (client) is elsewhere. I should have avoided the trap by just using "belong", as I did on the PBO thread.
 
Yes, but one must start from a "perfect world" knowing that once you put humans in it becomes "imperfect". What matters is the degree of imperfection and how it affects individuals.

I find those whose starting point is "all brokers are crooks" or suggesting that abuse (of whatever) is rife are not reflecting reality - which is that the legal framework works well for the vast majority of relationships between individuals, but is not perfect because the world changes. You might also argue that the law is often slow to change, but one can also argue that many recent changes in particular have been hasty and ill conceived.

Great thing is that in my other life, such issues (not only in law) always gave me good topics for student essays!
 
Of course it's unfair and untrue to state or imply that "all brokers are crooks". But after the events of the last nine months, nothing - absolutely nothing (like major banks going bust, for example) - is unthinkable. As jfm pointed out, there is (quite probably) a lot of 'non-separation' of client fund and own funds that happens not in bad faith but because of ignorance or 'less-than-stringent' operating procedures.

I prefer not be left holding the dirty end of the stick where the security of my money is concerned.
 
I almost agree with that! But boatkids question doesn't just boil down to whether the holders of trust money etc are good guys or bad guys. It's also relevant, as I said at the beginning, to establish the legal/contractual/agency/trustee relationships. I kinda fear you are too quick to assume those arrangements are all in place according to the "perfect world" rules, and hence one only needs to look out for dishonessty. In fact the contractual arrangements might not follow the "prefect world" formula at all.

I agree one shouldn't think brokers= crooks. That's rarely the case. Much more often (read the Law society disciplinary proceedings) misuse of trust money is down to mistake, ignorance, bad controls and procedures and general sloppiness, and not fraud (as Observer re-iterated below). So even in an honest world, trust monies are misused. That may well have been the case with Peters Opal (the court case was an application for direction on how the recievers should distribute the money, not about dishonesty by any Peters people). I'd rarely think a broker might be a crook, but I'd often think him capable of making a mistake over his obligations concerning money held in trust. (When I sold my boat a few months back, at one point the broker was about to refund deposit to buyer. I had to remind him of his duty to me and tell him that if he dares pay deposit back to buyer he'd better be ready for a large claim from me. He wasn't at all dishonest, just a bit wrong. It did the trick!)
 
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I paid an agreed 1% deposit on my last boat, I had shown the seller my bank a/c statements as I viewed the boat in order to demonstrate I was not messing him about.

It was very amicable

here's my funds
I want your boat
I will pay 1% deposit which legally binds me to the sale subject to survey.

Why would anyone wanting to sell their boat refuse a sale unless a greedy broker wants some quick cash !

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I would be quite happy to sell to you on that basis.

I figure if you were willing to sign a contract, pay for a survey and a lift then you have gone passed "tyre kicker" status - quite happy to therefore hold the boat for you (even if still on the market). Me or broker holding 10% adds no value to me - I figure if survey throws something up then you either walk away or we deal on price.
 
I agree very much with that sentiment. Give the current state of the market, any seller who quibbles over the size of the deposit doesn't really want to sell.

I would also wish the very best of luck to anyone who thinks that their knowledge of contract law is going to be of much use when it comes to getting their deposit back from the receivers. Far better and cheaper is to rely on them not having had your money in the first place /forums/images/graemlins/grin.gif

Incidentally to answer the OPs original question, if the "insolvent broker" concerned was clearly insolvent when they took the deposit, they would open themselves up to a claim against them personally. Again in reality this is very difficult to achieve and I for one wouldn't give them the chance to make off with my money in the first place.
 
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I paid an agreed 1% deposit on my last boat, I had shown the seller my bank a/c statements as I viewed the boat in order to demonstrate I was not messing him about.

It was very amicable

here's my funds
I want your boat
I will pay 1% deposit which legally binds me to the sale subject to survey.

Why would anyone wanting to sell their boat refuse a sale unless a greedy broker wants some quick cash !

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I would be quite happy to sell to you on that basis.

I figure if you were willing to sign a contract, pay for a survey and a lift then you have gone passed "tyre kicker" status - quite happy to therefore hold the boat for you (even if still on the market). Me or broker holding 10% adds no value to me - I figure if survey throws something up then you either walk away or we deal on price.

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So why bother with a deposit at all then?

The whole point of the deposit is, if you're selling your boat on that basis then the buyer has a very real need to "see the deal through" or he potentially loses his 10% (lot of money).

If you're just going to fiddle about with £50 or nothing (which £50 is really isn't it?) then you go to all the trouble of organising your boat to be available for survey, maybe taking it round yourself, telling other buyers it's sold, clearing all your junk off it, then Mr. Buyer spots another boat he likes the look of and wanders off and buys that instead, leaving you hanging.

Now of course you can wave the contract in the air and shout "but but but, you signed", and good luck with that. You could get all legal on his ass, if you really want the hassle.

But bestest of all would be the power to say "well if you do that, I'm keeping your 10% mate".

And that's what the 10% deposit is all about. A genuine and meaningful stake and statement of account whilst the sale is carried out.

A £50 deposit or no deposit (same thing) gives you nothing.
 
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A £50 deposit or no deposit (same thing) gives you nothing.

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It proves the intention to commit to contract and the buyer would be wasting his time suggesting the signature on the contract is a fake.


What I think you and others are suggesting is that you could keep 10% deposit and let the buyer go ?

what happens if you get lucky and sell to buyer 2 and then buyer 1 turns up with the rest of his cash and demands his boat.........
 
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It proves the intention to commit to contract and the buyer would be wasting his time suggesting the signature on the contract is a fake.


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Unlikely possession of five crisp tenners will prove anything, and you've already got a signed contract so you have your proof. But even if so, so what? You've still got to get legal. Much less likely to happen if you're holding £10K against his purchase of your £100K boat isn't it?


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What I think you and others are suggesting is that you could keep 10% deposit and let the buyer go ?

what happens if you get lucky and sell to buyer 2 and then buyer 1 turns up with the rest of his cash and demands his boat.........

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And what if you take your £50 off your buyer and he disappears. You going to keep your boat forever on the off-chance he rocks up with the rest of the money? how does your £50 make that any less likely.

If you've got £10K (or whatever) of someones money you've got serious intent and you know the guy is not going to risk losing it.

£50 and you've got nothing, but you're still open to the very thing you mention there, the risk of the chap turning up and demanding his boat that he gave you a deposit for.

A £50 deposit is the worst of all worlds, I certainly wouldn't do it if I were selling.
 
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A £50 deposit is the worst of all worlds

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Yup agreed. You've given the buyer a cheap option to piss you around. If he doesn't want your boat he can walk away and kiss goodbye to £50. If you want any more from him you have to litigate and who has the time for that. If he dithers and you sell it to someone else, he can come after you for breach of contract. Worst of all worlds, as you say (assuming you're the seller!)
 
£50 deposit balance within 7 days - non payment breach of contract by buyer - surely

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Yeah, so he's in breach. Then what? Does seller (who's a busy guy, which is why he can own a furk off powerboat to begin with) really have time to sue the toerag? Course not.

So seller says ho hum, and sells it to another buyer, say a month later. Then Mr £50 comes to him and says "Here's the other £499,950, i want the boat". Now seller is in breach. The fact that the buyer was, earlier, in breach, doesn't per se give a right to Seller also to commit a breach*. Buyer finds that the cheapest same-spec boat on the market is £525k, so he sues for £25k losses.

Do you really want to be exposed to all that hassle, for a mere £50? Better not to have had any contract with a £50 tyrekicker. As said above, the buyer has bought for a mere £50 the right to piss you around.

No, if someone wants to buy my boat for a tiny deposit, I'd say stuff your poxy £50 mate. You go ahead, but we have no contract. Give me the crane fee and I'll crane her out while your surveyor does his surveying. He may not damage the boat or undo things - I'll be standing over him. When you've finishing doing your stuff, make me an offer if you wish, and we might then enter into a contract, if i like your offer. Meantime, no contract pal. Point is, I wont give anyone contractual rights against me over an issue like say a £500k boat sale, for a mere £50. Stuff the fact i might have contractual rights against them, I'll do without thanks.

*I know you can argue constructive recission/frustration etc, but point is that's still much hassle for a poxy £50
 
You can keep the deposit if he is in breach of the contract. So it makes sense to place some time limits on having the survey and completing the sale. If he agrees to that by signing the contract and fails to perform he loses his deposit - or pays another specific penalty if you have agreed to that in advance.

Just the same as the normal penalties in a house contract for failing to complete - but it has to be clear in the contract.
 
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You can keep the deposit if he is in breach of the contract. So it makes sense to place some time limits on having the survey and completing the sale. If he agrees to that by signing the contract and fails to perform he loses his deposit - or pays another specific penalty if you have agreed to that in advance.

Just the same as the normal penalties in a house contract for failing to complete - but it has to be clear in the contract.

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As a general statement, that is quite, quite wrong. And these references to "penalties". You are really showing that you actually know very little about contract law.
 
I agree with you. If all deposit and purchase monies go through a client account to which the broker has no access , how does the broker take his commission from a sale? The broker must have the ability to access the client account in order to transfer his commission to his own account and remit the balance to the seller. That's why I have no faith whatsoever in the client a/c procedure. Yes, the vast majority of brokers are surely honest but the client account system does not protect buyers or sellers from the dishonest ones. If I was selling a boat today, particularly in the current market conditions, I would insist that the buyer paid the broker's commission direct to the broker and the balance direct to me. If a deposit is involved and the buyer insists on paying the deposit to the broker, probably the wisest thing to do is to agree a deposit sum that does not exceed the brokers commission with the balance paid directly to the seller on completion
 
So, if as once happened to me I failed to complete a house purchase on time I was required to pay the vendor interest on the outstanding monies at the rate in the contract. Long time since I bought a house, but I recall this being a standard part of the contract that I signed.

The general point I am making is that the seller cannot arbitrarily retain the deposit.
 
I am sure most Brokers are upright and honest people however I was caught by one 10 years ago which has soured my opinion of them, I had to get a Barrister involved and won but even the honest ones are going through hard times and the temptation is even greater for them to dip into their clients accounts.

Clients accounts are not at all safe.

Both the Insurance industry and the Law society have very stringent regulations and individuals must prove suitability, BUT money still gets misused The Financial Service Authority regulate Insurance client funds and here are just a few of the clowns that have been caught out over a two year period
http://www.fsa.gov.uk/pages/search/index...mit=Search#1146
These are professional people who have had to demonstrate suitability and been checked for criminal records which includes spent convictions without limitation, Yacht brokers do not have to prove suitability and could have recent fraud/theft convictions.





ps
Anyone know what happened to Dave Deritt and Bob Hardman t/a Severn Yacht Brokers t/a DH marine, Kempsey ?
 
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The general point I am making is that the seller cannot arbitrarily retain the deposit.

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That's the opposite of what you said in your last post -

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You can keep the deposit if he is in breach of the contract.

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Do you actually know what you mean?

BTW, the interest you had to pay because of late completion of house purchase was not a penalty - it was damages. There's a critically important distinction; you can't properly analyse the issue of "deposits" and what happens to them if a sale falls through without understanding it.
 
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