Jcorstorphine
Well-Known Member
Has anyone set up an Escrow account to buy a second hand yacht privately in the UK and if so, what are the charges etc.
Using Escrow accout to buy yacht.
- Thread starter Jcorstorphine
- Start date
Tranona
Well-Known Member
You would do better using a broker to handle it for you as he will do all the checks and paperwork as well as handling the funds through his client account. Charges will be modest.
Bobc
Well-Known Member
If it's that enough money to think about that, then get your solicitor to sort it out.
dunedin
Well-Known Member
Exactly what risk do you think the Escrow account will mitigate in a private sale?
When buying a new or second hand boat through a third party (new boat dealer or used boat broker) there is a risk that monies paid to the dealer/broker do not get passed on to the boat builder/owner, and therefore you lose the money but don't obtain title of the yacht (though this is normally a client account used for this, and the risk mitigation is very limited as a good/solvent broker will use the client account, but a bad/insolvent one may say so but not actually do so)
So again need to be clear on risk you are worried about
When buying a new or second hand boat through a third party (new boat dealer or used boat broker) there is a risk that monies paid to the dealer/broker do not get passed on to the boat builder/owner, and therefore you lose the money but don't obtain title of the yacht (though this is normally a client account used for this, and the risk mitigation is very limited as a good/solvent broker will use the client account, but a bad/insolvent one may say so but not actually do so)
So again need to be clear on risk you are worried about
pvb
Well-Known Member
But client accounts aren't guaranteed against unscrupulous brokers (remember Peters Opal?). If the OP is worried, a solicitor's client account would be safer, although using a broker simply to check the boat's paperwork might be worthwhile.
Tranona
Well-Known Member
Really? Have you ever seen the number of solicitors who abuse client accounts?
If you are going to quote Peters Opal in this context then you need to know the details, which was nothing to do with being unscrupulous in the sort of transaction we are talking about here. The case revolved around a principle of the management of trust accounts which only came to light in this very specific (and unusual) situation - so unusual that it had to go to the high court to clarify the principle.
All recognised brokers use a very secure form of client account and there are no recorded cases of one stealing clients money from such an account.
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Bates Wharf will handle a transaction through their client account for a small fee.
pvb
Well-Known Member
There's some comeback against solicitors, but not against brokers.
Blue Sunray
Well-Known Member
True but at least they have this, and it does work (at least in my experience) http://www.sra.org.uk/consumers/problems/solicitor-owes-money.page
Tranona
Well-Known Member
Of course there needs to be given the number who steal from clients. If you have ever tried to get money out of the Law Society schemes you will know how reluctant they are to deal with claims. They will only pay out after you have pursued the errant person (and possibly his partners) and that can take years.
I repeat there are no known cases of brokers running off with client's money using the ABYA recommended trust account structure, which arose out of the Peters case - although most brokers already used the structure. The Peters case just reinforced the need for specific wording and defined process for accounting for clients money.
Taking money out of a client account is theft and we have laws against that and seem enough to deter anybody from stealing the relatively small amounts in a typical used boat transaction, plus the short time the money is in the account before demands are placed on it - typically only a day or 2 for the major payment, although in many cases with electronic transfers only minutes!
I worry more for the people who place deposits or pay in advance for other consumer products such as cars, furniture etc with absolutely no security.
Tranona
Well-Known Member
Sounds good on paper. However, solicitors frauds are often very complicated and occur over a long period of time, particularly with sole practitioners and those dealing with clients money for example as executors or trust managers. Often accountability is poor and irregular, which is what makes fraud "attractive" for some. By their nature when they are discovered they can take years to unravel, particularly if they go to court.
On the other hand brokers (as I explained above partly) are accountable in very short time scales, so do not normally hold large sums for individual clients for long periods. Deposits are small, but may be held for a few weeks at most. Final payments are only held for short periods before the broker has to account to his client.
grumpy_o_g
Well-Known Member
I wouldn't worry about the charges, my concern would be trying to agree conditions for release of funds. In a private sale I would have thought the biggest concern would discovering some kind of lien on or liability against the boat after you've taken ownership - but the funds would most likely have been released by then anyway so you'd no better off.
I am most definitely not an expert on boat purchase but I'd probably keep the sale private but pay for the services of someone such as Jonic to perform due diligence on the boat before you purchase.
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I opened a joint account with the purchaser when conveyancing a house sale. Not perfect but neither of us could get the £ without the others agreement or a court order.
Jcorstorphine
Well-Known Member
Thanks for all the advice. My problem is I am about 450 miles from where the yacht is at present. When I sold a previous yacht to a chap from South of England, I arranged for our local lawyers to use their client accout into which the purchaser deposited the agreed sum with written instructions from both of us that the funds (25k) could only be released after the purchasers transport company phoned the lawyer to confirm that the yacht was loaded and ready for delivery to the South of England. My cost through our lawyer was only £50. Now my situation is that I thought I could trust my Lawyer and it worked out ok as it was handled by one of the junior partners BUT!!! a few years later we found that the junior partner had left the firm as the senior partner in the law firm was fiddling client accounts so who do you trust. Nobody!! hence the Escrow question.
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Nobody, exactly.! But at least if the bank fails to honour the terms of withdrawal on your joint account they are unlikely to do a runner and you have a multinational business to recover your losses from. Plus it costs nothing and requires no more time to set up than faffing with a solicitor.
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grumpy_o_g
Well-Known Member
I'm still not clear what you gain by using an escrow account? Title transfers only after certain conditions are met anyway, such as receipt of outstanding monies. The only thing an escrow account would really solve was if you thought he would do a runner with the boat and the money...
Tranona
Well-Known Member
That is an important point. Buying a boat 450 miles away and not taking physical possession personally is fraught with danger. The whole purpose of an escrow account is that the money is only released in return for title and possession. You need to either be there with the boat and exchange the money for the title documents and the keys, or have somebody representing you to do this.
Essentially no different from doing a bank transfer or even paying by card. with my last purchase I sat in the office while the documents were faxed over from the factory to underpin the Bill of Sale to me. When it was all complete I paid by debit card. could not take possession as boat was still in the factory, but was insured in my name.
grumpy_o_g
Well-Known Member
"The whole purpose of an escrow account is that the money is only released in return for title and possession." - not sure I'd 100% agree with that? You can put pretty much whatever conditions you want into an escrow arrangement but title can normally be covered the purchase agreement (at least it can in commercial law) - hence the receipt which is the confirmation that the vendor has received the money and therefore can legitimately claim you have title.
Tranona
Well-Known Member
In relation to a boat purchase the normal condition would be transfer of title, which would normally (but does not have to be) the Bill of Sale, but as i suggested might also be physical possession of the boat. The contract would normally say that title is passed with a Bill of Sale on completion.
PaulRainbow
Well-Known Member
The OP has not really explained what he wants from an escrow account.
If it's because he's buying a boat and cannot be there to do the hand over in person, how does an escrow account (or anything else) help with that ?
If the seller has agreed to hold the boat until a particular date, when the buyer can be there, but wants payment or part payment to hold the boat, then perhaps place 10% of the sale price in an escrow account, unless the OP is happy to put it all in. From the sellers perspective, such an arrangement is rather meaningless though. The buyer could just change his mind and refuse to authorise the escrow company to release the money.
It would seem that paying a deposit to a reputable broker would be an easier solution. But, without knowing what the OP wants from the arrangement and what agreements have been made with the seller, it's impossible to give good advise.
If it's because he's buying a boat and cannot be there to do the hand over in person, how does an escrow account (or anything else) help with that ?
If the seller has agreed to hold the boat until a particular date, when the buyer can be there, but wants payment or part payment to hold the boat, then perhaps place 10% of the sale price in an escrow account, unless the OP is happy to put it all in. From the sellers perspective, such an arrangement is rather meaningless though. The buyer could just change his mind and refuse to authorise the escrow company to release the money.
It would seem that paying a deposit to a reputable broker would be an easier solution. But, without knowing what the OP wants from the arrangement and what agreements have been made with the seller, it's impossible to give good advise.
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