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Non refundable deposit


PMcC

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Hi everyone , I've at last found a boat I like :) The only problem is that the broker is asking for a 10% deposit in this case over £5000 non refundable subject to survey. The subject to survey isn't very clear on what that means. Now I would never pay that for a house non refundable, is it normal when buying a boat ? any input would be very appreciated.

Phill

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1 minute ago, PMcC said:

Hi everyone , I've at last found a boat I like :) The only problem is that the broker is asking for a 10% deposit in this case over £5000 non refundable subject to survey. The subject to survey isn't very clear on what that means. Now I would never pay that for a house non refundable, is it normal when buying a boat ? any input would be very appreciated.

Phill

It is quite usual and is refunded if there are faults with the boat that are quite serious causing you to pull out. Personaly I never part with any cash until the sale has been agreed but I never have a survey so it negates all the crap you have to put up with having a survey. Obviously its your money and you may wish to go down the survey route.

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It's a big , can't call it an investment as it will decrease in value with time, so I will have a survey, two other boats I don't like as much but am hesitating about are only asking for 1000 deposit so 10% seems a bit over the top. Anyway thanks for your view :)

 

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Yep, totally normal with a broker. You are basically agreeing to buy the boat now. It's not like a house. Make sure it is clear under what conditions you get your money back....normally it would be maybe if it needs repairs that cost more than 10% of the purchase price. Make sure it is in writing and whos call it is that the repairs are needed.

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Just now, PMcC said:

It's a big , can't call it an investment as it will decrease in value with time, so I will have a survey, two other boats I don't like as much but am hesitating about are only asking for 1000 deposit so 10% seems a bit over the top. Anyway thanks for your view :)

 

Who is the broker? You are King remember you are the purchaser can you not talk to the owner? I akways do before I pay my cash over.

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What's the point of a deposit if it's refundable on a whim?

The whole point of a deposit is to secure the boat and have the seller stop actively marketing it while you get together the rest of the money. The deposit should only be refundable under tightly defined circumstances, e.g. if a substantial undeclared fault is found on survey.

Edited by Mike the Boilerman
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There will be a clause in the sale agreement that will be something like "defects to 5% of the agreed price"

If the survey shows it's a complete wreck you can pull out and get your deposit back.  If there are minor niggles you can't withdraw from the purchase without losing your deposit, but might be able to renegotiate based on the survey.

It is normal, standard wording on the sales contract.

Note that with buying a house (In England & Wales) the 10% deposit on exchange of contracts is non-refundable.

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4 minutes ago, TheBiscuits said:

Note that with buying a house (In England & Wales) the 10% deposit on exchange of contracts is non-refundable.

 

A couple of points there. 

1) The 10% deposit is negotiable. I've often only paid 5%, and occasionally 2.5%.

2) Failure to complete doesn't just lose you your deposit, it gets you sued for the full amount of the house purchase contract price (less whatever deposit you paid) AIUI. But I've never tried it!

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I think that simply put the question to ask is “Do I want to buy this boat?”  If the answer is yes then I don’t see any problem with paying a deposit of any percentage as long as it’s ‘subject to survey’ and the conditions which would alllw you to pull out of the sale are reasonable. Basically, I echo what everyone else has said. 

Except for SeaDog :P

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35 minutes ago, Mike the Boilerman said:

A couple of points there. 

1) The 10% deposit is negotiable. I've often only paid 5%, and occasionally 2.5%.

2) Failure to complete doesn't just lose you your deposit, it gets you sued for the full amount of the house purchase contract price (less whatever deposit you paid) AIUI. But I've never tried it!

Yeah, but you buy 'em Darn Sarf where the hoi polloi can't usually raise 10% deposits :P

Oop Norf we can usually find a 10% deposit for a house down the back of the sofa cushions.  

You might be right about liability to complete after exchange, but in practice if it happened to me I'd keep the deposit and flog the house to someone else :D

 

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11 minutes ago, WotEver said:

I think that simply put the question to ask is “Do I want to buy this boat?”  If the answer is yes then I don’t see any problem with paying a deposit of any percentage as long as it’s ‘subject to survey’ and the conditions which would alllw you to pull out of the sale are reasonable. Basically, I echo what everyone else has said. 

Except for SeaDog :P

Oh damn it, now I'm gonna have to make a serious point!  :D

In the last 5 or 6 years, we've bought 2 motorcycles, half a dozen cars and a Narrowboat all well into five figures.  For each and every one of them, I've paid a deposit over the phone which I insisted would be refundable in full if, for any reason, I was not entirely satisfied. I wouldn't have bought without that proviso, yet I've never been turned down.  I have had an issue which caused me to pull out (with a motorcycle as it happens, because the dealer wasn't sorting some quite reasonable requests in a timely fashion so I did a deal elsewhere) and my deposit was returned without issue. 

I fully understand marine brokers' policies as I've had a little involvement with yacht surveys. They all had similar clauses to those mentioned in earlier posts and I distinctly remember one purchaser who was really struggling to pull out of a "subject to survey" deal, even when a survey I was part of discovered some quite bad issues with hull delamination.  That was the time I changed my policy, and it was after that I began to insist that MY deposit was refundable if I wasn't satisfied in all respects. There's no way on God's green earth I'd enter into a contract where issues with the boat (or whatever) can be found and I can't guarantee I get my deposit back.  I know these clauses are standard practices for brokers and dealers, but they're no longer my standard practices and brokers and dealers have  always accommodated me.  

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you may not want to say but who is the broker ........................ read the document very carefully you may find there is a get out against an unsatisfactory survey and or sea trial at the buyers discretion without any value set - I have and have successfully retrieved deposits in the past but this is getting to be less likely - as others have suggested 10% non refundable with a value set against it is too high and needs negotiating downwards brokers aren't gods they are acting on their clients behalf and their clients are often more reasonable.

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18 minutes ago, Sea Dog said:

Oh damn it, now I'm gonna have to make a serious point!  :D

In the last 5 or 6 years, we've bought 2 motorcycles, half a dozen cars and a Narrowboat all well into five figures.  For each and every one of them, I've paid a deposit over the phone which I insisted would be refundable in full if, for any reason, I was not entirely satisfied. I wouldn't have bought without that proviso, yet I've never been turned down.  I have had an issue which caused me to pull out (with a motorcycle as it happens, because the dealer wasn't sorting some quite reasonable requests in a timely fashion so I did a deal elsewhere) and my deposit was returned without issue. 

I fully understand marine brokers' policies as I've had a little involvement with yacht surveys. They all had similar clauses to those mentioned in earlier posts and I distinctly remember one purchaser who was really struggling to pull out of a "subject to survey" deal, even when a survey I was part of discovered some quite bad issues with hull delamination.  That was the time I changed my policy, and it was after that I began to insist that MY deposit was refundable if I wasn't satisfied in all respects. There's no way on God's green earth I'd enter into a contract where issues with the boat (or whatever) can be found and I can't guarantee I get my deposit back.  I know these clauses are standard practices for brokers and dealers, but they're no longer my standard practices and brokers and dealers have  always accommodated me.  

 

I'm curious about this now. Why not establish you ARE fully satisfied before placing a deposit?

What is the point for either you or the seller if you make it a condition that you can get your deposit back for 'not being satisfied'? 

If you gave me a deposit on that basis I wouldn't even bank your cheque, and I'd carry on looking for quick sale and if I found one, give you back your cheque. 'Returnable' cuts both ways!

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19 minutes ago, Mike the Boilerman said:

 

I'm curious about this now. Why not establish you ARE fully satisfied before placing a deposit?

What is the point for either you or the seller if you make it a condition that you can get your deposit back for 'not being satisfied'? 

If you gave me a deposit on that basis I wouldn't even bank your cheque, and I'd carry on looking for quick sale and if I found one, give you back your cheque. 'Returnable' cuts both ways!

Fair points Mike.  Where one can be satisfied that one will get what one expects before placing the deposit I have no issue with it being non-refundable, but that's not always possible. Of course, if you, as a business of the very highest repute, were supplying and fitting a Vaillant boiler for me and required a deposit, I'd be perfectly content to agree your terms. Not so where the item is not so straightforward - used vehicles and used boats fall into that category for me.

With cars and bikes, it's been because I've placed a deposit at distance after a discussion about condition, etc, with the intention of collecting the vehicle or having it delivered to my door (I've done both). The deposit, paid by bank transfer, has remained refundable pending my satisfaction after an on receipt inspection.  With the boat, at a well known and respected broker, I'd seen it but asked for my deposit to remain fully refundable (i.e. without clauses and caveats) until I'd had the boat properly inspected and had a satisfactory test drive (which I did myself but could equally have been a surveyor).  As I explained earlier, I'd witnessed at a yacht brokers a difficult case involving a superficially very nice yacht. Incidentally,  all of the businesses involved have expressed no misgivings and have happily agreed in writing.

You could take the view that this puts the balance too far in my favour and affords me the chance to mess the vendor about.  I guess its all down to how the customer comes across.  It's clear that I fully intend to complete the purchase if the item is as reasonably expected and have the funds to do so. 

I'd offer that if a boat turns out to be not what could reasonably be expected or as advertised, a reduction in price isn't necessarily the acceptable answer.  I don't  want to buy something not as good as I'd wanted at a cheaper price than I agreed. In those circumstances I'd want to find the right boat elsewhere.  

 

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Hi, I too am in the process of buying a narrowboat via a brokerage. Whilst looking I visited a number of brokers and a 10% deposit with the balance payable subject to a satisfactory survey seemed to be pretty standard. Most quote they are members of The British Marine Federation and comply with their policies. I have just paid a 10% deposit and the boat is being surveyed next week. The contract states the purchaser may reject the boat and have the deposit fully refunded if their are material defects to the vessel or its machinery that would exceed 5% of the agreed purchase price to rectify. So basically a deposit is a commitment to complete the purchase unless something pretty significant is found wrong with the boat. Then its up to you if you reject it, get your deposit back and walk away or negotiate the price down to take account of the faults or have the vendor repair the faults prior to completing the purchase. Personally I think its reasonable enough as once you've put your deposit down the boat is under offer and the broker should be turning other potential buyers away.

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3 minutes ago, MichaelG said:

Personally I think its reasonable enough as once you've put your deposit down the boat is under offer and the broker should be turning other potential buyers away.

 

Should be, but I bet they are not. 

If someone offers to buy without a survey prior to you getting yours done, I bet the first you know about it is after the boat has gone and they refund your deposit. 

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1 minute ago, Mike the Boilerman said:

 

Should be, but I bet they are not. 

If someone offers to buy without a survey prior to you getting yours done, I bet the first you know about it is after the boat has gone and they refund your deposit. 

I think that is where the professionalism of the broker kicks in.  If I got the feeling a broker would do that, I would be watching them like a hawk.

I do agree that you go to the broker that is selling the boat you want to buy, but it doesn't mean you need to trust them.  Always check for a Rolex wider than their hand - that's never a good sign.  

I have been fortunate that my two broker purchases were through ABC Leisure and Aqueduct Marina both of whom were excellent, although I ended up dealing directly with company directors due to staff absences on both occasions!

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Hi, yes thats why I used "should" and not "will". There's always the risk of gazumping but ever the optimist I am hopefull that the brokers are professional and honest enough to keep to their word that the boat is off the market once the deposit is down.  

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3 minutes ago, TheBiscuits said:

I have been fortunate that my two broker purchases were through ABC Leisure and Aqueduct Marina both of whom were excellent, although I ended up dealing directly with company directors due to staff absences on both occasions!

That's encouraging as I'm buying through ABC.

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3 minutes ago, MichaelG said:

Hi, yes thats why I used "should" and not "will". There's always the risk of gazumping but ever the optimist I am hopefull that the brokers are professional and honest enough to keep to their word that the boat is off the market once the deposit is down.  

 

I am still waiting for anyone to explain why any broker should want to do this with a refundable deposit. What is in it for the broker?

(Answer: Nothing, other than a reduced chance of getting a quick sale.)

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Not quite the same but when selling houses I only agree to stop marketing it after the buyer has had the survey done. I know they are serious if they have forked out for a survey and im in a better position to negotiate should the survey throw something up

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There has to be some firm commitment from both sides, IE the buyer has to make a commitment to buy and the seller a commitment to sell otherwise the whole process is unworkable. The deposit is the buyer demonstrating his commitment to buy and taking the boat off the market is the seller demonstrating his commitment to sell to that buyer. Plus ofcourse when a deposit is given a conditional agreement is made by both sides. If ether side pulls out I guess we could call that a breach of contract.

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9 minutes ago, jonathanA said:

Not quite the same but when selling houses I only agree to stop marketing it after the buyer has had the survey done. I know they are serious if they have forked out for a survey and im in a better position to negotiate should the survey throw something up

With houses (in England & Wales) though that would nearly always be *before* exchange of contract. 

With boats, it's nearly always *after* taking a deposit subject to survey, so the two cases are not comparable.

Edit to add:

It is also why buying a house in England or Wales is a pain in the neck.  I quite like the Scottish system, but that causes it's own issues for buyers.

Edited by TheBiscuits
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Sorry your argument doesn’t make any sense to me. 

Agree about exchange of contracts but I was referring to the broker still marketing the boat  ( comparable to still taking viewings for house) after taking deposit. It’s usual to put down a deposit before exchange of contracts on house purchases too. 

The issue here is around the non refundable deposit being asked by a broker and if I was selling I would not want the broker to stop marketing my boat until after the buyer had done their survey. 

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