Yacht Brokers

[Sea Devil]

Of course there are many very honourable and trustworthy yacht brokers but that is because they choose to be, not because the law requires them to be.

There is a difference between the image 'British Yacht Brokers' want to portray and the legal reality.

Yacht Brokers under current legislation have no 'duty of protection' whatsoever to the purchaser. Under the law they do not have to be honest, truthful or reliable in any way whatsoever towards the purchaser. In fact a 2nd hand car salesman has more legal requirements constraining him to the truth than a yacht broker.


I suspect the deposit you pay is not protected, nor is the full and final payment you make for your boat, if the broker goes 'broke' before the money reaches the vendor.

Yacht Brokers defend this 'non protection of the purchaser' by saying:
'It is the vendor who pays us. therefore we only owe a duty of trust and loyalty to the vendor'.

This is somewhat disingenuous. A commission of around 8% + - is normally charged for a successful sale. Clearly the vendor/seller 'enhances' the price he will settle for, in order to accommodate that amount of money he will 'loose/pay' in commission to the broker. In my own experience, I have always sold all my boats (8 or 9) privately, with an asking price of at least 5% lower than the prices asked by brokerage companies. I have then negotiated an acceptable price, knowing I am still ahead of the game and the purchaser is too.

The reality of the 'commission' is that actually it is born partly between the buyer and the seller.

On the other hand I have purchased several boats via brokers. I always felt that there was an element of personal protection. That the brokers would act as 'honest brokers' and be a fair and just 'intermediary' between me and the seller/vendor. This is was purely illusionary.

The broker has no legal requirement to be honest or protective towards me, the purchaser, under the present legislation.

The broker can make any statement true or false, change any document, knowingly present a boat or it's equipment, condition whatever and not be in any way responsible. He can legally claim to have no duty of protection towards the purchaser/buyer. It is totally up to the buyer to 'discover' if any of the statements made about the boat by the broker are true or false. For the 8% +- commission, the broker will in no way be responsible for any statement or claim made by the vendor/seller, rather may present every statement made by the vendor as the 'truth', even if they know it is not. If the purchaser/buyer later discovers the broker has lied in his teeth, then he has no claim whatsoever against the broker, only against the vendor/seller who, by then has paid the 8% and vanished. The broker washes their hands of the affaire.

This simply cannot be right.

In this day and age, the broker should have a responsibility both to the vendor/seller and to purchaser/buyer. The broker should be required to ascertain if the claims of the vendor are reasonable and fair. If he is to hold the deposit of the purchaser/buyer then he should certainly be acting like a responsible 'stakeholder' and equally protect both parties.

Brokers take substantial commissions for the sale of expensive items like boats and their equipment and yet take no responsibility for the 'good conduct' of the sale.

This is an unacceptable state of affairs. Nearly all of us have purchased 2nd hand boats, at some time in our sailing careers, frequently via brokers. Brokers offer a useful facility, contact between buyer and seller but should be required legally, to behave in an honest and fair manner. At the moment it is much 'safer' to buy privately from an individual than it is via a yacht broker, who has a law on his side which allows him to make any statement, do anything in order to make the sale 'happen'.

If you would like to see the legislation changed then one route is via your Member of Parliament - do please cut and paste the above if you wish.
If you are a member of the RYA that might well be a way to lobby for some protection and again do use this article.
If you have connections with the Yachting press, then perhaps try to inform them or simply put a copy of the above article on your sailing or yacht club notice board...

It must be possible to change the law - I think?

Michael

 

[Moonshiners]

[ QUOTE ]
Of course there are many very honourable and trustworthy yacht brokers

[/ QUOTE ] /forums/images/graemlins/laugh.gif


Bring on an updated law!

 

[DanielJaffe]

Wasn't there something about this in a recent MBY? Aren't you covered under the Sales of Goods Act when you buy from a broker/dealer? Or is it only when the dealer owns the boat?

 

[jfm]

Michael, I think the description you give of the current state of affairs is wrong in some important parts. I don't think there's any need for a wholesale law change.

When broker accepts deposit, he is stakeholder (assuming the contract says he is stakeholder, as buyer should insist it does, and as is generally the case) and therefore has clear legal obligations to buyer regarding what happens to that money

You say "broker can make any statement true or false, change any document,...and not be in any way responsible.... the broker will in no way be responsible for any statement or claim made by the vendor/seller, rather may present every statement made by the vendor as the 'truth', even if they know it is not. If the purchaser/buyer later discovers the broker has lied in his teeth, then he has no claim whatsoever against the broker, only against the vendor/seller

That isn't correct. A broker will have some degree of liability (in tort rather than in contract) to a seller if he behaves as badly as you describe. But more important he is also agent of the seller, so the seller is liable (in contract as well as in tort) for broker's misrepresentations.

I dont see what needs mending in the law.

 

[gjgm]

It must be possible to change the law - I think?
**
and the brokerage will jump to 15pct to pay for it /forums/images/graemlins/grin.gif
I dont think you need to change the law;you just need to understand it.
If you accept the broad concept that nothing the broker does or says is enforceable in law (and I dont know how true that is) then behave accordingly.

 

[Tranona]

You are rolling up too many issues here. Agency is clear in Common Law and the broker is acting for the seller. The issue of money is well covered, but can be complicated as the ongoing Opal saga illustrates.

Appreciate you have been stitched up - but from what you say it is the seller who stitched you up, although the broker did not help by trying to cover up. They deserve all the publicity you can give about their actions. However your contract is with the seller and you can sue him for breach of contract because he did not delivery the goods agreed in the contract. Appreciate that may not be easy given his location but a claim would almost certainly succeed in the small claims court and at least you would have a judgement against him.

Do not see how a law that made the broker an agent of both buyer and seller would ever work - the whole purpose of an agent is to act on behalf of the principal. What you are proposing is a neutral mediator - not workable in practice.

 

[Scaramoosh]

I also read your earlier thread before it was pulled for what to me seemed a good reason. It appears that the Brokerage firm offered you a financial settlement which I have to assume would have come from their revenue on the sale given that the vendor is un reachable.

On the basis that they don't in law owe you anything this seems to be at least a attempt by them to make you a happy customer. The fact that you value a second hand watermaker (if I remember rightly) more than their offer doesn't mean that their offer wasn't a fair one - your value for secondhand equipment could be significantly higher than the true value.

Did you accept their offer to mitigate your loss?

 

[jfm]

I don't know the facts here but I'm surmising (and feel free to correct me!) that Michael bought a boat that was described by broker as having a WM and it turned out it didn't. That's not a reason to change the law. The law, sensibly, says caveat emptor, modified by a (limited) right on buyer's part to pursue seller for damages arising from seller's misrepresentation. If the seller misrtepresented and now has absconded, that's just a caveat emptor matter. Michael was always on risk for an absconding seller, and that's how it should be. It's not something a nanny state should fix

Sorry, no rational basis for changing the law has been set out here, that I can see. People need to be grown up and realise that sellers can abscond, and act accordingly. Not plea for a change in law to remove that risk (or rather pass it on to someone else, like the broker)

 

[grumpy_o_g]

I think the majority of the problem is that people don't understand what a broker is or, if they do, they forget. I frequently hear people talking about buying a boat FROM a broker.

The brokers are very good at presenting themselves as a security blanket to the seller as well as the buyer though, albeit without making false claims. I cannot understand why anyone who is buying a boat would actually pay the broker any money. They have no title to the thing you want to buy and they are not only not acting on your behalf, they are paid by and acting for the other party in the contract, giving about as clear a conflict of interest with the potential buyer as you could get.

People have proposed paying the seller the purchase price less the brokerage fees which would then be paid by the buyer direct to the broker. The brokers don't like it because they don't get the cash flow and interest and because it makes their fees available to both parties. What's never mentioned is that, if the buyer were to pay the broker's fees, their would be an implicit contract between the broker and the buyer and the broker would become liable for some things.

As far as I am concerned the broker provides a useful service to both buyer and seller but the broker's contract is between the seller and the broker. If I buy a boat the contract is between me and the holder of the title of the boat. If I want a contract between the broker and myself as the buyer I'll set one up which will define both my and the broker's responsibilities and liabilities.

Sorry jfm, picked on your port to reply to because I agreed with it.

 

[AndieMac]

Some very good points made here, eyes wide open and all that.

Just like the previous times of financial difficulties, as the "astute" buyer is poised to take advantage of a failing market place, be aware things are not always as they seem.

During desperate times people will stoop to lower levels than ever for financial gain.

No doubt over the next year or two this forum will have its share of deals gone bad. The most common will be vendors selling encumbered vessels (money owed), it will make inventory items missing, pale to insignificance.

As in the past, they will be sold privately!!!!!!!!!!!!!

By the way I am not a broker.

 

[Renegade_Master]

spot on Grumpy

 

[henryf]

Brokers will normally guide the buyer through the correct contract paperwork, as per RYA ? Recommendations.

Someone buying privately won't get this support. The vendor will scribble something on a bit of paper and leave it at that.

An experienced buyer can, in reality, buy from either source with pretty much the same degree of protection. Ultimately I don't think a "named" broker would knowingly enter into a sale knowing the vendor is a dodgy old scrote trying to rip someone off. They just don't want the agrovation.

As has been mentioned already you are buying through a broker, not from a broker. The reason the motor trade is different is because it is assumed (often incorrectly) that they own the cars they are selling. The direct comparison would be a car auction.

What is actually required is a central record of finance interests onto which the lender is required to register their interest. Possibly not foolproof for international purchases (although it could be Europe wide), but for the more modest UK purchases as undertaken by the vast majority on here you'd be sorted.

As to whether a watermaker is working or indeed actually fitted well that's down to the buyer and or their surveyor to check. The whole reason surely for a sea trial. If you want to be too cool for school and use it solely as a test of the flat out speed of the boat then prepare to suffer the consequences. Otherwise take you time, go through the boat and if something can't be shown to work insist on a retainer until such time as you are satisfied all is well.

Once the deal is done it's too late. You can have all the contracts you like but if the bloke hasn't got any money or has taken his winnings and buggered off to Cape Verde you are knackered I'm afraid.

I think you have to buy a second hand boat assuming there is a bit of spend to get it just where you want it. If it's a few years old then things like air conditioning, watermakers or under water illuminated self cleaning robots may well need a tap with the carburator adjustment hammer to bring them back to the prime of health. Similarly the fully integrated navigation system may not be of use if it looks like it belongs in a 1970's Amstrad promotional film.

Henry /forums/images/graemlins/smile.gif