Yacht brokers and my money

[Chris_Robb]

There is a very well established mechanism called a "Client Account" used by Brokers to hold the money, separate from their own account. If the Broker is a member of an association it is a condition of membership that they maintain such accounts correctly. Although it is possible for the Broker to access the account and take the money, in practice there is little evidnce this actually happens.

As a buyer, your concern would be that you did not get the boat because the seller did not get his money. The advice is to always pay the funds directly into the nominated client account so you have evidence that it went there. This creates the legal "trust" that clearly identifies that the money is yours.

The final part of the transaction is exchanging your final payment for title to the boat and there is no reason why you can't do that direct to the seller - but in reality that is not your concern as if you get the title to the boat if you complete through the broker - and usually more convenient.

All this detail is well covered in the RYA book on buying and selling second hand boats and information on how Brokers work is on the YDSA and BMIF websites.

Good luck with your new boat.

Agreed - but when handing over final tranch of money you should immediately get the bill of sale. You now own the vessel legally, and actually the main danger lies with the seller not being paid by the broker if he is bust or has fiddled the client accounts.

 

[Tranona]

None whatsoever. Client accounts and so-called agent managed escrows are no real protection either - the protection these devices purport is a myth because when the transaction goes bottoms up you cannot enforce them; so they are not worth the paper they are written on! Even monies deposited with solicitors may end up in prolongued and costly dispute.



PWG

I am afraid it is you that is creating (or trying to create) a myth! Properly set up and run client accounts and escrow accounts have legal status.

See my brief explanation of the Opal Peters judgement above, or better still read the judgement and then you will realise that you have stated is simply untrue.

Your last statement is only true if the solicitor acts illegally. If he acts within the law, there is no dispute!

 

[PeterGibbs]

You can ask for the so called clients account details BEFORE you pay into it.

Is it possible to have a written agreement that says once my funds are cleared the title to the boat is transferred into my ownership.
As such the exchange is automated on my cleared funds regardless of what happens to the documents/boat.

In the UK the proof of payment is either through a bankers draft or telegraphic transfer, which if properly set up, cannot be cancelled once committed, and takes place on the day the goods transfer to the purchaser. The arrangment is usually cleared with the agent in advance, the vendor satisfying himself that the transaction is ok with him. If the agent then steals the money that is for the vendor to pursue - you as purchaser can show that you completed your part of the transaction, paid the money and took possession of the boat.

In the case of a cash transaction (more probable abroad) there is a risk of dispute if the agent falls prey to temptation and helps himself to some / all your money. Best deal with an accredited representative of the vendor, or the vendor directly, who can then settle the agent's commission by payment, not by deduction.

Beware of any device purporting to be a trust fund. It's just a piece of paper, and trying to enforce its terms against a "man of straw" is a fools game.

PWG

 

[Tranona]

I am most likely concerned about nothing but it has been mentioned several times on the forum that you should be there for the exchange and take possession of the boat and documents.

Many of us are working and to take a day off work, drive possibly 200 miles just find funds have been delayed or just to hold an envelope of papers dosent seem a sensible way to spend time.

Is it required to turn up just to collect the documents or can completion take place automatically when funds are passed to the Broker's clients account.

Being present is "belt and braces". The contract is a legal document binding on both parties. When you complete your side (handing over the money) the boat is legally yours. If you have checked all the documents beforehand and they are all in order there is no reason to collect them immediately. Did you collect the documents for your house on completion? I expect like everybody else you left all that to your solicitor. Same principle.

In my case with my Bavaria, the transaction was protracted and took place in Greece. I made sure everything was in order before I left Greece knowing that the formal registration of change in ownership takes 2-3 weeks and all the documents came by courier when that process was complete. At some point you have to go with the "system". If it did not work the thousands of transactions that take place each year would not occur!

 

[maxi77]

Every one has a right to be cautious when parting with large lumps of cash, but equally people have every right to be cautious when selling. rom some of the comments here I can see a few 'mexican standoffs' happening where both are ready to complete but neither is prepared to take the first step.

At the end of the day there does have to be a modicum of trust, though that trust will have to be earnt during the negotiations.

 

[grumpy_o_g]

Many boats sell for the same sort of money as some houses or flats. No-one would recommend handing the money over to an estate agent yet it seems it's regarded as absolutely fine to hand over tens or hundreds of thousands to some-one who is effectively an estate agent for boats.

This talk of title transferring when funds clear is mis-leading as the title is held by the current owner (the seller) but the funds will clear to the broker, who does not have the title to transfer. You could try and have a contract with the current owner that says the title will transfer when the funds clear with broker. That seems very reasonable to me as the broker is appointed by the seller and is acting as his agent - don't be surprised if the seller doesn't like it though.

Somewhat simplistic but any money held in anything other than a solicitors account then you are relying on the good faith, competence and solvency of the broker. Even if your money is held by the broker in a clearly identifiable client account and there's a clear trail to sure that your money was handed over against the purchase of boat on the broker's books, if the broker goes into administration or worse, then you'll face a delay in getting either your money or the boat.

Having said that the number of problem transactions that would seem to be quite small compared to the total number of transactions though I have nothing more than a finger in the air estimate based on the number of bad transactions we hear about versus the likely total number of transactions to back that statement up.

 

[Ubergeekian]

Many boats sell for the same sort of money as some houses or flats. No-one would recommend handing the money over to an estate agent yet it seems it's regarded as absolutely fine to hand over tens or hundreds of thousands to some-one who is effectively an estate agent for boats.

In Scotland, generally, solicitors sell houses and not estate agents. The buyer gives the money to his solicitor, then at the agreed time the buyer's solicitor transfers the money to the seller's solicitor, waits for confirmation that it has arrived and hands over the keys. The seller gets his money from his solicitor later. So yes, up here we do hand over tens of thousands of pounds to estate agents!

 

[DAKA]

Being present is "belt and braces". The contract is a legal document binding on both parties. When you complete your side (handing over the money) the boat is legally yours. If you have checked all the documents beforehand and they are all in order there is no reason to collect them immediately. Did you collect the documents for your house on completion? I expect like everybody else you left all that to your solicitor. Same principle.

In my case with my Bavaria, the transaction was protracted and took place in Greece. I made sure everything was in order before I left Greece knowing that the formal registration of change in ownership takes 2-3 weeks and all the documents came by courier when that process was complete. At some point you have to go with the "system". If it did not work the thousands of transactions that take place each year would not occur!

Thanks for the extra reassurance.

You really dont want to know about the last time I bought a house/freehold

Sentley , Wilson and Bowen (theoretically acting for me) wanted to retain my documents, eventually I demanded them from their foyer by phoning the law society on my mobile with their clients watching .
Another Solicitor tried to invoice me for ground rent.
Shortly after I produced documents to the land registry an 'intervention' was introduced to Sentley, Wilson and Bowen.
I have no idea what happened to Sentley Wilson and Bowen and I havent got a clue what an 'intervention' is , I just know things werent straight forward .
this is all I could find
http://www.lawgazette.co.uk/gazette-in-practice/law-reports/interventions


.

 

[davidej]

For God's sake - not this old chestnut YET again!

Last time the thread ran to about 27 pages and degenerated into personal abuse

Let it rest!

 

[Tranona]

Many boats sell for the same sort of money as some houses or flats. No-one would recommend handing the money over to an estate agent yet it seems it's regarded as absolutely fine to hand over tens or hundreds of thousands to some-one who is effectively an estate agent for boats.

This talk of title transferring when funds clear is mis-leading as the title is held by the current owner (the seller) but the funds will clear to the broker, who does not have the title to transfer. You could try and have a contract with the current owner that says the title will transfer when the funds clear with broker. That seems very reasonable to me as the broker is appointed by the seller and is acting as his agent - don't be surprised if the seller doesn't like it though.

Somewhat simplistic but any money held in anything other than a solicitors account then you are relying on the good faith, competence and solvency of the broker. Even if your money is held by the broker in a clearly identifiable client account and there's a clear trail to sure that your money was handed over against the purchase of boat on the broker's books, if the broker goes into administration or worse, then you'll face a delay in getting either your money or the boat.

Having said that the number of problem transactions that would seem to be quite small compared to the total number of transactions though I have nothing more than a finger in the air estimate based on the number of bad transactions we hear about versus the likely total number of transactions to back that statement up.

Not sure this is an accurate representation of the process.

The broker is authorised by his client (the vendor) to release title against receipt of the funds, which he then holds in trust for the client untill it is transferred to him.

It is not a question of "trust" in the everyday sense of the word but in a legal sense under the law of trusts. The broker is a trustee and has legal obligations towards the beneficial owner of the property (money or boat). That is what makes the process work.

In many ways a solicitor is not the place to go. There are many more examples of solicitors breaking trust and stealing their clients' money. A solicitor would charge fees for doing the same job that a broker does for free.

You are right - in all the threads on this subject (usually every 6 months or so), nobody has found a single case of a broker stealing from a client account. This does not mean there are not opportunities for wrongdoing, just that the rewards probably are not worth it and the probability of being found out quickly are very high!

 

[DAKA]

You are right - in all the threads on this subject (usually every 6 months or so), nobody has found a single case of a broker stealing from a client account. This does not mean there are not opportunities

It doesnt mean that it is not happening either.
It cant be reported without the serious risk to the poster of slander prosecution, at its not illegal for a Yacht Broker to 'Borrow' the funds as long as he intends to pay it back at the time of 'borrowing' it.


Example any Marine brokers are a bit short of funds so they use £50 000 out of the any marine brokers clients account intending to pay it back after Christmas.

Of course they have a great christmas and spend up.

The any Marine brokers clients account isnt correctly formatted and legally isnt a clients account at all.

The police question the directors who say at the time they took it out they intended to pay it back but they had a good christmas and there wasnt anything left.

No crime has been committed, but they still owe the money legally and a few thousand spent with a solicitor will confirm this, a few more grand and you can be the proud owner of a court order theoretically worth £50 000.
A few more grand and you can have his bank account garnished but you will now be £85 000 out of pocket with nothing more than an IOU to show for it.

The forum should note I am not an expert on this subject, my only qualifications to stick my nose into this thread is that I was shafted by a Broker several years ago and needed to employ a Barrister .
I have personal experience in understanding the very real difficulties of attempting to create a client account with National Westminster , HSBC banks and Nationwide Bank, all were clueless and some banks openly offered to 'loan' me money on the strength of the clients account...............
They offered this facility, I didnt ask for it or want it but had I taken the offer I believe the clients account would have been useless !

I deduce this has actually happened recently twice as far as I am aware with two large south coast brokers.

It is the fact that it is so hard to prove dishonesty in that all the Broker has to say is that he only meant to borrow it that this 'Crime' is going unreported.

? HOW OR WHY DID OPAL PETERS CHAPEL CUSTOMERS LOOSE OUT ?

 

[grumpy_o_g]

In Scotland, generally, solicitors sell houses and not estate agents. The buyer gives the money to his solicitor, then at the agreed time the buyer's solicitor transfers the money to the seller's solicitor, waits for confirmation that it has arrived and hands over the keys. The seller gets his money from his solicitor later. So yes, up here we do hand over tens of thousands of pounds to estate agents!

I think we're agreeing right up till the last line because, as in England, the funds are transferred to the solicitor's client account, not the estate agent's.

 

[Tranona]

? HOW OR WHY DID OPAL PETERS CHAPEL CUSTOMERS LOOSE OUT ?

Read the judgement of the court case. That explains it all. Nothing secret.

Think most of the rest of what you say is your vivid imagination rather than based on any facts. As usual you are confusing brokers with traders - if my memory serves me your dispute was with a trader, not a broker.

You need to think through the process for brokerage of second hand boats to see that money only stays in client accounts for very short periods of time which limits the scope for wrongdoing. Where people have lost it has usually (as in the case of Opal) in relation to deposits and stage payments on new boats where the money has NOT gone into a client account. Again reading the court judgement and a basic understanding of trust law will help understand why this distinction is so important.

Can't understand your statement about banks - operating client accounts is a significant activity for them and they do know how to do it properly.

 

[Heckler]

Read the judgement of the court case. That explains it all. Nothing secret.

Think most of the rest of what you say is your vivid imagination rather than based on any facts. As usual you are confusing brokers with traders - if my memory serves me your dispute was with a trader, not a broker.

You need to think through the process for brokerage of second hand boats to see that money only stays in client accounts for very short periods of time which limits the scope for wrongdoing. Where people have lost it has usually (as in the case of Opal) in relation to deposits and stage payments on new boats where the money has NOT gone into a client account. Again reading the court judgement and a basic understanding of trust law will help understand why this distinction is so important.

Can't understand your statement about banks - operating client accounts is a significant activity for them and they do know how to do it properly.

Stew
as the OP said earlier, another one of those threads!
Bottom line, what you are saying but not getting across, everything is fine if the dosh goes in to the "clients account". The Peters malarky, the judge said because it had gone in the "general" account it had "disappeared. Thats it, thats all we have to concentrate on!!!!
So in answer to the OP, MAKE SURE IT GOES IN TO A CLIENT ACCOUNT!!!!!
Make the cheque out to the broker with CLIENT ACCOUNT written all over it.
Better still, do as I did, make enquiries of the bank as to what is the name of the account, in my case it was named S*******d client account, I then did an electronic transfer to the client account. I was then sure that it had gone in the proper account. If things had gone tits up I would have then been protected better than if I had just handed over a cheque and not known where it had gone.
OK its still not fool proof, brokers can dip in to the client account BUT the judge would, as in the Peters judgement, have been able to identify where the money had gone and perhaps be in a position to allocate it back. As it was in the Peters trial he couldnt.
So to the OP question. Make sure it goes in to a client account, either by making enquiries of the receiving bank OR writing client account all over the cheque.
Stu

 

[DAKA]

writing client account all over the cheque.
Stu

The point I am attempting to get across is that just because a bank account is called 'clients account' doesnt actually mean it has any protection.

Any Nigerian can open an account and add 'client account' to the title.

I was encouraged by the manager of a high street bank to open an account to run parallel with the client account so he could lend me the money back secured against the so called clients account. ( I didnt open an account with that bank !)

Can anyone confirm that the Opal account wasnt regarded as a clients account by Opals staff.

They may well have deposited money into an account they used as a clients account but was in fact not formulated correctly so the administrators got their mits on it.
All they needed to do was to inadvertently leave some commission from a previous sale in the 'clients account' and the trust status is undermined.

If a respected company the size of Opals can cock it up during buoyant times then just who can we trust safe during these testing times?

 

[BurnitBlue]

Does anyone have recent experience of the actual mechanics of making an electronic transfer to a Client Account?

I have only done it once a few years ago. If I remember correctly each of the input boxes on the web page were restricted to 30 characters. I didn't have room to put the words "Client Account" (15 characters incl spaces) plus the name of the account in the same box. The whole lot was truncated after 30 characters. I made enquiry on line to the bank customer service and they told me that it is the ACCOUNT NUMBER plus Bank Sort Code not the NAME of the account that is used as a destination. From the reply, I got the impression that the name and description of the account is not important. Just the account number.

So never mind the words "Client Account" just check that the "Account Number" is correct. This was a few years ago so maybe it has all changed.

 

[ColdFusion]

Does anyone have recent experience of the actual mechanics of making an electronic transfer to a Client Account?

Yes, I did it recently via telegraphic transfer (by far the best way). Phone call to bank. Go through security checks. Give them the account details inc account name (client account) and amount. They call me back on number they have for me. Go through security checks again. They confirm details given to them previously and advise that transfer will go through same day. Said I need it to go through before lunchtime so they moved it to the top of the list (apparently) and payment was received in third party client account two hours later. £25 charge but a fast, same-day transfer.

 

[Heckler]

Yes, I did it recently via telegraphic transfer (by far the best way). Phone call to bank. Go through security checks. Give them the account details inc account name (client account) and amount. They call me back on number they have for me. Go through security checks again. They confirm details given to them previously and advise that transfer will go through same day. Said I need it to go through before lunchtime so they moved it to the top of the list (apparently) and payment was received in third party client account two hours later. £25 charge but a fast, same-day transfer.

Thats what I did eventually, I tried to do it from my online account but was limited by the £10k a day limit, so did it from the branch, similar scenario, checked the account for it to go to and away it went, cost me £25
DAKA
point I am making if those peeps who got stiffed by Peters had had proof that their money had gone in to the client account, then they would have got it back!

Stu

 

[DAKA]

DAKA
point I am making if those peeps who got stiffed by Peters had had proof that their money had gone in to the client account, then they would have got it back!

Stu

I agree that if they had proof that their money had gone into a Clients account that was written under trust correctly , then their cash should have been safe from the administrators.
However it is the administrators duty to take the cash if they can and they will be looking for any discrepancy that will diminish the trust status .

The Opal cash could well have been in an account called a client account but if it wasnt possible to account for all the money in it then who is to say just whos £1000 belongs to who.

If all forum members chuck a £1 into a bucket with client account written on it and someone ' borrows ' £100 from it, just how would you determine whos £1 is left in the bucket.

I supplied the bucket and started the collect off with a few £1 in it and my mum wants her bucket back along with the £100 I owe her so she takes it along with the cash, now its upto each forum member to try to argue just whos £1 is left in the bucket, the trust status no longer exists as you cant tell whos £1 is left in it.

Hence the administrators take the lot unless you can prove which is your £1.

 

[ColdFusion]

Thats what I did eventually, I tried to do it from my online account but was limited by the £10k a day limit, so did it from the branch, similar scenario, checked the account for it to go to and away it went, cost me £25
DAKA
point I am making if those peeps who got stiffed by Peters had had proof that their money had gone in to the client account, then they would have got it back!

Stu

Yes, £10K limit to prevent money laundering so called them (Internet bank) and it was all done over the phone.

...You can still transfer more than £10K between accounts but it triggers more checks unless they know what you're doing. At least, that's what my bank tells me.