Buying a boat - deposit before survey?

[DomX]

As the title suggests, we're on the verge of buying our first boat and are being pushed VERY hard by the broker to pay a 10% deposit and sign a badly written agreement of sale before we can do a survey. Is this the norm? We're very keen to get the survey done asap, suspect it will be fine as the boat's relatively new, and just want to get on with the whole thing.... it just seems very odd to take this approach as we don't do it with houses or cars do we??

 

Any thoughts?

 

Dom.

[GoodGurl]

we had to put a 10% deposit down "subject to survey" when we bought ours, make sure you read any small print if you are suspicious.

Edited August 23, 2012 by GoodGurl

[Stormbringer]

Seems to be the norm...however there should be a clause in the contract which makes the deposit refundable if the cost

of any work required exceeds a certain percentage of the purchase price, or if the boat has been mis-represented in the advertising.

 

I have actually managed to get a refund of a deposit as the boat needed a new bottom and the seller was unwilling to drop the price

enough to cover the work. It did cost me the price of a survey, but saved me the cost and disruption of having to pay for the work myself

had I not had a survey. The broker refunded my deposit in full without any drama.

 

Good luck

Andy

[Richard10002]

As the title suggests, we're on the verge of buying our first boat and are being pushed VERY hard by the broker to pay a 10% deposit and sign a badly written agreement of sale before we can do a survey. Is this the norm? We're very keen to get the survey done asap, suspect it will be fine as the boat's relatively new, and just want to get on with the whole thing.... it just seems very odd to take this approach as we don't do it with houses or cars do we??

 

Any thoughts?

 

Dom.

 

Who is the broker. Whilst it might be the norm, there is no actual reason why you have to pay a deposit and sign a contract before being allowed to have a survey. However, if you pay a deposit and sign the contract, it should mean that the broker/seller cannot consider alternative offers. No deposit and contract, and you might find they sell to someone else, even if you've paid for a lift and a survey.

 

Have they said you cannot have a survey without paying and signing?

[dor]

Part of the reason is to make sure there are funds to pay for the survey if you decide not to go ahead and then disappear. Also, as Richard says above, it protects you as until you have put down a deposit, the boat is still for sale and someone else could come in and buy it leaving you out of pocket. As to the amount, that depends on the price of the boat. Some brokers charge £1000 deposit, which is enough to cover all the costs. And it should be refundable if the survey shows up significant problems.

 

But yes, it is normal to put down a deposit before having a survey.

[cotswoldsman]

All I will say is HARRAL BROKERAGE SERVICES LTD

 

Stephen Harral told Boating Business he was devastated, and particularly sorry for two boat owners whose craft had been sold and the money not paid over to them.

 

Read more: http://www.bluesheets.co.uk/dnn/News/NewsDetails/tabid/347/ArticleID/637/Harral-Brokerage-Services-in-receivership.aspx#ixzz24Rd9Anid

 

 

 

I certainly would pay no money to a broker. As I have said before I do not understand how normal people who would never dream of paying money to an Estate Agent for the purchase of a property seem to be happy to pay money to a brokerage.

[DomX]

Thanks for the quick replies all.

 

I do get the fact that the boat remains 'available' until I put down a deposit so there's the risk that someone else might come and buy it. I'm paying for the lifting and survey, so they can't argue that the deposit is to cover this.

 

They've also been quite difficult about letting me get access to the boat to start the engine, test the heater and test the electrics. I know they're busy, but the excuse given to me was around insurance not covering this. I checked the sellers agreement terms last night and it clearly states, "The Owner confirms that the Vessel is insured against usual marine perils and third party risks and will remain insured until completion of a sale and such insurance shall cover all viewing and sale arrangements, including trials and lifting / slipping / docking for survey. Further, unless otherwise specifically agreed the Owner shall also be responsible for all cleaning, maintenance, berthing, storage and security of the Vessel pending sale."

 

We really like this boat and want to buy it but are being put off by the 'can't do' attitude of the marina. It almost feels like they want to put us off buying the boat which is totally the opposite attitude that we saw at other brokers where they would bend over backwards to help facilitate the sale. There's an argument that we won't have to deal with them again once we've bought the boat as we'll be moving it to a lovely new and friendly marina, but it still leaves a bad taste in the mouth.

[jonathanA]

when we bought our boat (from harral btw), we were happy to pay a £1000 deposit, to secure the boat whilst we had the BSS done (as the current BSS status was uncertain at the time). It was a simple document that gave us a 'get out' if the BSS/survey indicated problems. the brokers agreed to show the boat as sold so no more viewings/offers. Seemed perfectly reasonable to me.

 

The last house I sold I wouldn't take it off the market until the buyers had a survey and I knew that they were serious and also weren't going to come back asking for reductions etc as a result of the survey.

 

There is a slightly different issue that cotswoldman alludes to about whether you want to pay the full purchase price to the broker and what happens if the broker goes bust before paying the seller....

[cotswoldsman]

when we bought our boat (from harral btw), we were happy to pay a £1000 deposit, to secure the boat whilst we had the BSS done (as the current BSS status was uncertain at the time). It was a simple document that gave us a 'get out' if the BSS/survey indicated problems. the brokers agreed to show the boat as sold so no more viewings/offers. Seemed perfectly reasonable to me.

 

The last house I sold I wouldn't take it off the market until the buyers had a survey and I knew that they were serious and also weren't going to come back asking for reductions etc as a result of the survey.

 

There is a slightly different issue that cotswoldman alludes to about whether you want to pay the full purchase price to the broker and what happens if the broker goes bust before paying the seller....

 

Sorry maybe I should have said that a lot of people lost deposits with the demise of Harall

[cotswoldsman]

wrong thread silly me

Edited August 24, 2012 by cotswoldsman

[larkshall]

If memory serves, isn't there a scheme which a number of brokers have signed upto, and covers both marine and freshwater vessels which puts all deposits into an escrow, or client account?.

Also I thought there was an industry standard contract for sale and purchase of boats?. If so I suggest the OP gets a copy of one and compares it with the one this broker is pushing.

 

I'm sure one or more of my learned brethren will be able to quote chapter and verse.

[Zayna]

We paid £1,000 deposit which we were assured would be refunded if the survey turned out to be so bad that we didn't want the boat, but not refundable if we had the survey done and then just changed our minds or got cold feet.

 

TBH, I couldn't part with my grand quick enough. It meant that nobody else could look at the boat in the meantime, and believe me there was a queue for viewings, and I wanted that boat sooooooooo much.

 

Everything turned out fine and we've never been happier. If you want to pm me the details of the broker, it could be the one we used and I can tell you a bit more.

Edited August 24, 2012 by Zayna

[GoodGurl]

Thanks for the quick replies all.

 

I do get the fact that the boat remains 'available' until I put down a deposit so there's the risk that someone else might come and buy it. I'm paying for the lifting and survey, so they can't argue that the deposit is to cover this.

 

They've also been quite difficult about letting me get access to the boat to start the engine, test the heater and test the electrics. I know they're busy, but the excuse given to me was around insurance not covering this. I checked the sellers agreement terms last night and it clearly states, "The Owner confirms that the Vessel is insured against usual marine perils and third party risks and will remain insured until completion of a sale and such insurance shall cover all viewing and sale arrangements, including trials and lifting / slipping / docking for survey. Further, unless otherwise specifically agreed the Owner shall also be responsible for all cleaning, maintenance, berthing, storage and security of the Vessel pending sale."

 

We really like this boat and want to buy it but are being put off by the 'can't do' attitude of the marina. It almost feels like they want to put us off buying the boat which is totally the opposite attitude that we saw at other brokers where they would bend over backwards to help facilitate the sale. There's an argument that we won't have to deal with them again once we've bought the boat as we'll be moving it to a lovely new and friendly marina, but it still leaves a bad taste in the mouth.

this is not normal practise, you should be able to try engine/heating ect under supervision of owner or boat yard, how do you know they work if not? you wouldn't buy a car without being able to start the engine would you?

[Teadaemon]

this is not normal practise, you should be able to try engine/heating ect under supervision of owner or boat yard, how do you know they work if not? you wouldn't buy a car without being able to start the engine would you?

 

In cases where it's not possible to try out equipment like engines (e.g. if the boat's stored on land at the time of sale), then it's not unusual for a portion of the selling price to be witheld or placed in escrow pending an acceptable trial. Normally this would be a large enough amount to pay for a replacement engine or whatever other equipment can't be tested.

[Laurie Booth]

May I ask who the broker is?

[GoodGurl]

Thanks for the quick replies all.

 

I do get the fact that the boat remains 'available' until I put down a deposit so there's the risk that someone else might come and buy it. I'm paying for the lifting and survey, so they can't argue that the deposit is to cover this.

 

 

they are paying for the lifting which implies that the boat is indeed in the water.

 

In cases where it's not possible to try out equipment like engines (e.g. if the boat's stored on land at the time of sale), then it's not unusual for a portion of the selling price to be witheld or placed in escrow pending an acceptable trial. Normally this would be a large enough amount to pay for a replacement engine or whatever other equipment can't be tested.

[BEngo]

Part of the reason is to make sure there are funds to pay for the survey if you decide not to go ahead and then disappear.

 

<SNIP>

 

 

But yes, it is normal to put down a deposit before having a survey.

 

 

Why would the broker get involved if a prospective buyer were to disappear before the survey, or after it was done but before payment for the survey?

Apart from the high probability that any surveyor will retain the results of a survey until he has the fee for doing it, the Contract for the survey and the professional liability associated is between the surveyor and the party that pays for it. If the broker pays then the purchaser finds the survey is inadequate then there is no recourse to the surveyor. Just as if you rely on survey procured by the seller- if its wrong you have no comeback against the surveyor.

 

If the prospective purchaser 'does a runner' then the surveyor must pursue him directly.

 

It's still normal to pay a refundable (depending on survey results) deposit before survey.

 

N

[dor]

Why would the broker get involved if a prospective buyer were to disappear before the survey, or after it was done but before payment for the survey?

The broker will want to maintain his reputation with the surveyor. Also, as the broker is often involved with the marina, they are likely to arrange the slipping/dry docking on behalf of the buyer, so would want to ensure they can cover the costs. Doesn't happen in every case I agree, but it is the situation in many places. It is part of the service some brokers offer - arranging all the bits and pieces involved in getting a boat out of the water.

[Dominic M]

Yes, it is normal to pay a deposit and enter into a Sale and Purchase Agreement. Some pointers however:

 

1. Is the contract the British Marine Federation (BMF) agreement?

2. Is the broker a BMF or ABYA member? Both use the same agreement. if the broker is not a member then it cannot be the BMF agreement, as this warrants that the broker is a member.

3. A member of the BMF or ABYA MUST operate a genuine client account. I don't know what the ABYA requirement is, but a BMF member has to supply a letter from their bank declaring that the Client Account cannot be used to offset any debts that the broker may incur, and that includes insolvency.

4. There is a good measure of protection for both the buyer and the seller provided by that sale agreement. The vendor is locked into selling it to you at the agreed price, with a provision for adjusting the price to cover material defects, or having the seller make them good. If the material defects exceed a percentage of the purchase price, the agreement should provide the buyer with right to walk away with a full refund of the deposit. What is a fair deposit? I believe it should be roughly equivalent to the broker's eventual commission, including the VAT element. The buyer cannot be gazumped. The comparison with buying a property is worth looking at. You can shell out at least £1500 and often a lot more for a property survey, yet at the last minute be gazumped, or the seller can decide to take the property off the market. You have no enforceable contract and lose the money you've already paid out, and that will be solicitor's fees as well.

5. Both the BMF and ABYA insist on their broker members having Professional Indemnity insurance.

6. If your offer has been accepted, it is perfectly reasonable to ask for the engine to be run and other systems (central heating, electrical equipment) to be shown in working order, unless you have been advised already if any of them are faulty. You should be allowed this before entering into the agreement and putting down a deposit.

 

I hope this helps you.

 

Another Dom

Edited August 24, 2012 by Dominic M

[Richard10002]

Dominic (M),

 

If someone asked if they could survey a boat before signing the contract and paying a deposit, would you refuse point blank, or allow them to do it, having made them aware that the owner may subsequently choose not to sell to them.... Or would you refuse them the opportunity, albeit in the politest of terms?

[Dominic M]

Dominic (M),

 

If someone asked if they could survey a boat before signing the contract and paying a deposit, would you refuse point blank, or allow them to do it, having made them aware that the owner may subsequently choose not to sell to them.... Or would you refuse them the opportunity, albeit in the politest of terms?

Interesting point. My starting position is that I am not the owner of the boat, and if a prospective buyer suggested that I would be bound to put it to the owner. I would ask why the buyer was not prepared to protect their interest against gazumping, and also ask what they would do to restore the boat to good order. You cannot have a proper hull survey without removing the protective coating of the hull, be it 2 pack epoxy or bitumen, in a good number of places. My advice to the ower would be to insist that the buyer enters into the approved BMF contract. The owner does not have to take that advice, of course.