Shared ownership - " Get-Out " Clause?

[concentrik]

I'm considering a shared ownership . My boat is seriously under used at the moment. It's in a great spot in Spain and although the berth fees are reasonable it is a drain on resources. I want to find a boat-sharer who would help to defray costs and make use of the boat, but I am aware of the possible personality clash problems and would like to be able to end the arrangement at will, or after maybe a year.

It has to be a true 'ownership' arrangement not a rental. In Spain, even if the boat never leaves the berth it's a charter as soon as money changes hands, so holiday lets are out.

What about offering a 1/64 share for a nominal sum with the proviso that I can buy the share back at any time - like if I decide to sell? Is this too unfair to the sharer?

 

[Tranona]

Yes. If you want to share ownership then you have accept that you are giving up exclusive control. Otherwise who would want to pay for a share and contribute to costs if you can decide unilaterally to withdraw. The share you offer has with it rights equal to the share, so the share you propose only gets 1/64 of costs and usage. Nobody in their right mind would be interested.

Suggest you read theRYA information on shared ownership before looking for partners.

 

[JumbleDuck]

Is it possible to do things on a cost sharing basis (in the gliding world this is called an "insurance share", since insurance is by far the biggest cost) or does that worry the Spanish authorities too?

 

[jbweston]

Some years ago I was in a happy and succesful partnership owning and running a light aircraft - sometimes called a syndicate. There were three of us. One of my partners had been in previous partnerships and had some good advice which we found worked for us. He said the secret of a good aircraft partnership was for it to be small enough that everyone thought of the aircraft as their own, even if they had only a quarter or third share. Once the partnership got too big, each member began to think the aircraft belonged to someone else, so took less care of it and left problems for someone else to sort out.

I think the same problem arises if there are only two partners but one has a large 'majority share' and the other a small 'minority share'. Yes the majority shareholder has control. And from the point of view of the owner of the small share, 'if there's a problem I can walk away from it as it was never my boat'.

The same applies in business. People love to 'keep control' but the downside is that other people have a dislike of being controlled. Either they'll act awkward when it suits them or go along with it while things are going well but abandon ship when they aren't or will just behave like employees not business owners. Better to have real partners or else to own 100% of the business and not pretend to be sharing it.

I think you're right to identify that the main problem is the prospective partner's personal compatibilty with you. If you're compatible then you'll work the other things out together. if you're not, it doesn't matter how good a sailor he is, or how good at maintenance, you'll just grow to hate each other.

Could you try treating it a bit like marriage? Date each other for a while then perhaps try getting engaged before committing yourselves? In boat terms that means meeting up first for a chat, then sailing together, then doing a longer time togther on the boat - to see if you're going to get on OK or whether the other guy/girl is an incompetent, inconsiderate lunatic.

And of course the other person doesn't have to be bad to be incompatible. Like having different expectations about whether the boat will be based in one place, or cruise through the season. Or filling the tank with diesel or hoovering at the end of the visit being normal for some of us and not others. Like my wife's irritatingly different approach to filing papers at home . . .

 

[Tranona]

Is it possible to do things on a cost sharing basis (in the gliding world this is called an "insurance share", since insurance is by far the biggest cost) or does that worry the Spanish authorities too?

There is no reason why the other party cannot be put on the SSR document as an "owner" without actually having any share of the title. Same with the insurance. This would satisfy the Spanish authorities.

Equally there is no reason why that could not have behind it an informal arrangement for sharing costs and usage - such arrangements are common. The difficulty arises if the second party gets a share of title by buying a share of the boat, where it is difficult to accept a clause that allows one of the owners to unilaterally cancel the sale and deprive the other of his rights just because they don't get on.

If the OP can find somebody interested in a more loose, non ownership arrangement there is no reason why this could not be on a year by year basis with an option for both parties to renew.

 

[GrahamM376]

Is it possible to do things on a cost sharing basis (in the gliding world this is called an "insurance share", since insurance is by far the biggest cost) or does that worry the Spanish authorities too?

I was lucky with the glider syndicates I was in but have seen several fall out badly and I'm sure the same applies to boats. Disputes can be various but - not doing a share of work, would rather pay someone to do it or, one wants to spend lots of money on new instruments and the other partner is broke or, "it's my week", when you've booked time off. All these potential problems need sorting before any agreement is signed.

 

[Spirit of Glenans]

You only want to find a way of reducing what it costs you to keep the boat at its location and what it costs you to keep it maintained, without actually relinquishing any title or control. I suggest you add up all the costs; berthing/winter storage, insurance, maintenance, fuel etc., plus a % for depreciation. Now you need to find someone who would like to use the boat for a few weeks every year and who is willing to share the costs proportionately with the amount of use, i.e. if you use it for two weeks and he uses it for six, he pays three-quarters of the annual costs. Naturally you would have to allow a certain measure of discount to allow for the lack of equity, and set up agreements regarding responsibilities.

 

[concentrik]

There is no reason why the other party cannot be put on the SSR document as an "owner" without actually having any share of the title. Same with the insurance. This would satisfy the Spanish authorities.
.

OK that's the crucial point in my case, thanks Tranona. The Spanish authorities accept the SSR registration as gospel, without regard to the fact a UK citizen can register whatever he wants, with whatever details he wants. This being the case there is no need for any sixty-fourth-ing and the arrangement is simple: In exchange for contributing one half of the monthly berthing fees (I'm not interested in maintenance or insurance) Joe B can use the boat for an agreed period of time. Either of us can end the arrangement with notice as agreed. I did read the RYA stuff and it didn't seem relevant to my circumstances. The problem is it might all crash down if there's an accident, Joe B sues and the arrangement is viewed in law as a de facto charter....

 

[JumbleDuck]

I was lucky with the glider syndicates I was in but have seen several fall out badly and I'm sure the same applies to boats.

Indeed. That's why I think the insurance share model has a lot to recommend it - it's much easier to end the arrangement if things go wrong.

 

[Tranona]

The problem is it might all crash down if there's an accident, Joe B sues and the arrangement is viewed in law as a de facto charter....

Can't see how Joe B could have any grounds for suing you if he has an accident. He is responsible for his own actions and will be insured.

Think your problem will be actually finding somebody who is prepared to share costs on a boat they do not own. Such arrangements often arise out of existing friendships rather than a relationship started just to share costs and usage.

 

[prv]

Can't see how Joe B could have any grounds for suing you if he has an accident. He is responsible for his own actions and will be insured.

If some perceived or actual defect in the boat causes him harm?

Or even if something happens which is his own silly fault, but he can't accept that and insists on blaming the OP? He doesn't need to win his case to cause a lot of hassle by bringing it.

Think your problem will be actually finding somebody who is prepared to share costs on a boat they do not own.

If the costs make sense, presumably someone with the time to use it might view it as a cheaper alternative to chartering?

Of course, if it's not substantially cheaper than commercial chartering (to reflect the lack of flexibility and organised backup) then it's not going to be an attractive proposition.

Pete

 

[Colvic Watson]

Two or three years down the line it would make an interesting legal case if he claimed half ownership after being an equal owner on the SSR certificate...

 

[Tranona]

Two or three years down the line it would make an interesting legal case if he claimed half ownership after being an equal owner on the SSR certificate...

No basis for being able to do that. The two parties would have a contract that would clearly show that he does not have any claim to title on the boat. The SSR is nothing to do with title.

 

[TangaraToo]

Think your problem will be actually finding somebody who is prepared to share costs on a boat they do not own. Such arrangements often arise out of existing friendships rather than a relationship started just to share costs and usage.

This is what I currently do but with boat in UK. I didn't know the owner before starting the share and we have become friends, sail together when we can but more often on our own/with friends.

 

[JumbleDuck]

No basis for being able to do that. The two parties would have a contract that would clearly show that he does not have any claim to title on the boat. The SSR is nothing to do with title.

Ah, but if he tried to use that perfectly good defence the Spanish authorities will be all over him like a rash.

 

[Tranona]

Ah, but if he tried to use that perfectly good defence the Spanish authorities will be all over him like a rash.

How do you know that? Cannot imagine any situation where he could claim ownership of half the boat, and involve the Spanish authorities. Any contract between the two would be presumably under UK law.

 

[tudorsailor]

I needed a share to help defray the costs of ownership of the yacht. I also was not using more than 7 weeks a year.
With the help of yachtfractions I found a partner. He bought 1/3 share. We calculated that there are 24 weeks sailing in the Med so he sails up to 8 weeks a year and I sail as much as I can. This year it will be 12 weeks. We have a tight contract that is adapted from what sailfractions offered. All costs are divided proportionally 1/3 and 2/3.

The share arrangement has worked brilliantly for us both. One particular benefit is being able to dovetail holidays so that we now avoid out and then back to the same marina in two weeks. I sail out for two weeks. Partner sails further for 2 weeks. I sail back for two weeks and partner returns to marina for two weeks. This works well in Adriatic and in Greece.
I do think that I have been lucky in finding a good partner!

Tudorsailor

 

[JumbleDuck]

How do you know that? Cannot imagine any situation where he could claim ownership of half the boat, and involve the Spanish authorities. Any contract between the two would be presumably under UK law.

The whole point of this is to avoid the Spanish regulatory regime for chartering. A pseudo-owner, thwarted in the UK courts, might get his revenge by grassing up the real owner to the authorities.