Syndicate purchase question

[jfm]

Usually the contract is formed at the sale and purchase contract stage. Each party performs as per that contract with regard to survey, deposit and then the balance payment. The purchaser accepts the yacht as per the contract, and transfers the funds. The Bill of Sale is then an instrument with which to convey title after the contract.

This is why the MCA Bill of Sale is only signed by the seller.

Exactly Jonic. You have it exaclty correct there. A BoS is not a contract. Delivery of it is performance of the sale and purchase contract, but the BoS itself is not the contract. It's amazing how people cannot grasp such simple stuff, including the RYA legal team

The problem with the RYA syndicate BoS is that it is so amateurishly drafted that it sort of unwittingly does include some contractual obligations, so if it is executed as they suggest it does indeed form a contract, in addition to the sale and purchase contract, which is a really dumb thing to do.

 

[jfm]

Thanks, that's helpful, those were pretty much the issues I was concerned about myself. If we have a syndicate agreement (we do or will have by next week) why do we need to have this stuff in the Bill of Sale as well? Absurd, as you say.
Cheers

In that case you're going up the right path Ken. Sorry to be so blunt about the RYA legal team but they really are quite bad and that syndicate BoS is a thoroughly bad thing for them to put on their website and offer to all and sundry. I appreciate they are "the RYA" which is a great brand and so people might think "they ought to know", and I in contrast am just an internet poster, but I'm sure you can figure out what's what here.

As you say, you need

(i) a syndicate agreement, to which the parties are the members. This will cover the usual stuff like who owns the boat, time sharing, rules for a member to exit, and so on
(ii) a yacht purchase contract, to which the parties can be the seller and all the syndicate members, or the seller and one syndicate member acting as agent for the others. Personally I'd do the latter but it doesn't much matter
(iii) a BoS to convey title. Not necessary for a non part 1 vessel, but doesn't do any harm and people are used to BoSs these days so it's easier to go with the flow and do one

Now the functions of these 3 things are clear and quite distinct. Yet the RYA stupidly including elements of (i) and (ii) in (iii), by including the seller of the yacht as a party to a contract in which the syndicate members agree to be in the syndicate, with the result that the seller of the yacht has a legal right of action if one syndicate member say wants to leave the syndicate. How utterly stupid

You can achieve separate (i) (ii) and (iii), which is the best structure, just by deleting basically the bottom half of the RYA's syndicate BoS

To answer the other question above, I dont think much of this discussion differs if we are using Scots law rather than E+W but if in doubt simply include a term in the docs (i) and (ii) that they are governed by E+W law

If you do use the RYA doc remember to have it signed by the seller in as many counterparts as you have syndicate members, otherwise you'll have to face the question of which syndicate member gets to keep the signed original, and all other members will of course then lack perfect documentation to prove their title in the event the syndicate members fall out. The whole point of the sysndicate docs is as a security blanket in case arguments occur so they might as well be right: 99.9% of the time you'll never need them because the syndicate will just run like clockwork. In my two syndicates the boats were owned in thirds and 25-25-50 and so we did everything on that basis and never even read the docs becuase everyone played fair and to those percentages. But it was good to have them there in case things hadn't turned out as nicely as they did, and that being the case they were made legally perfect (I think...!) docs. So aim for perfection, or don't bother

Good luck with the project

 

[jonic]

Exactly Jonic. You have it exaclty correct there. A BoS is not a contract. Delivery of it is performance of the sale and purchase contract, but the BoS itself is not the contract.

Precisely jmf, which is what clause 7 in the S&P contract is all about.

7 COMPLETION
Upon acceptance of the vessel by the Purchaser, the deposit shall be treated as part payment of the purchase price and within 7 days of acceptance:-

(a) The Vendor shall:

(i) in the case of a Registered vessel provide the Brokers with the Certificate of Registry, correct and updated, together with such other documents as are set out in the Schedule to this Agreement, together with any other documents appertaining to the vessel, and shall execute a Bill of Sale in favour of the Purchaser or his nominee, showing the vessel to be free from encumbrances and in such form as to ensure transfer on the Register. Should the Purchaser so require, the Vendor shall provide the Broker with sufficient instructions to cancel the existing registry and enable the vessel to be re-registered by the Purchaser;
OR
in the case of an unregistered vessel or vessel registered on the Small Ships Register, provide the Brokers with an executed Bill of Sale in favour of the Purchaser or his nominee showing the vessel to be free from encumbrances and such other documents as are set out in the Schedule to this Agreement, together with any other documents appertaining to the vessel.



Off topic and not related to the op now, but I get a bit miffed when I hear the usual broker bashing from some types who complain all a broker does is stick in ad in a mag or on the internet and collects a %.

Brokering is not just advertising for sale. It is brokering.

We prep a listing contract, we prep details that SELL the boat not just advertise it or describe it, we deal with all the time wasting enquiries, then we do the viewings and sea trials for the genuine enquiries, and negotiate a price.

But to me this is when the real brokering work starts. The S&P contract has to be drawn up and administered properly, deposit funds have to be held correctly during the contract. Then after survey, and possibly another round of renegotiation, the balance payment must be collected and title correctly and legally conveyed.

Not forgetting prior to that we will have checked the previous title history, VAT paid evidence, RCD compliance and as far as possible for outstanding finance.

It all takes time and a level of knowledge to do correctly.

I see every month incorrectly filled in Bills of Sale, missing VAT papers- or papers that aren't anything like VAT papers being used as VAT papers, title documents that on paper show the boat as being mortgaged, title documents that show the full 64 shares not having been transferred, all because of badly handled DIY sales further back in time down the chain of ownership.

Now that doest mean that a DIY sale shouldn't be done. Of course it should, but like the OP you have to check it is being handled correctly. Especially with high value yachts.

Good luck Ken and I hope it all runs smoothly for you.

 

[jfm]

Well said jonic! That all makes sense to me. Speaking as a punter rather than a broker, one has to find a broker who "gets" all this, as you clearly do, otherwise it gets messy.

I think your clause 7 is a bit 6/10 though. Could be much improved for buyer or alrernatively it cuts much slack to the seller's benefit. Would be going well OT for me to explain why so I won't here