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Boat transfer payment logistics - how to not get scammed?


jetzi

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As promised, I haven't posted any more about our boat buying mission until we followed the advice of the forum and had a look at boats up country.

 

We took a weekend trip north to Whilton and ABNB marinas, and looked at around thirty boats. We also looked at a few more private seller boats. We've chatted to a number of experienced boaters on the cut. We've physically been aboard around about fifty boats for sale now, at various price ranges, lengths and layouts. The advice to look outside London, outside our specifications and more than and less than our budget was solid - we came away knowing exactly what we want.

 

Only problem was that we had narrowed our criteria down so much that I was concerned what we want would be impossible to find!

 

Miraculously though, we found the boat that ticked all of our boxes, within our budget, and for a reasonable price, that we absolutely love. I feel that I have a pretty good handle on the narrowboat market now and although it's hard to say, I think we have offered the right price for the boat. There are other people interested in her and so our offer might get beaten. If that happens we're prepared to walk away, even if we are a little heartbroken.

 

The catch is, the owners of this boat want to sell immediately so that they can pay for their next boat, which also might get sold if they don't move fast.

 

As such we have NOT made the offer on condition of a survey. It could take us a month to get her surveyed. Her last survey and blacking was three years ago. I know that the sage wisdom is to insist on a pre-purchase survey, but in this case I think it's a choice between taking the risk or losing the boat.

 

My question is, how would the logistics of the transfer work in such a sale...? What guarantee have we got that the boat is ours if we transfer the money before the owners have moved off her - since the need the money for their own purchase, they will clearly only move once that sale has gone through. They'll need to park their new boat next to her and physically move their stuff. If these were houses, the lawyers would all hold the money in escrow and only release the funds once the paperwork was done and had occupancy taken. With boats, there is no paperwork, no escrow and no lawyers. So I'm unwilling to hand over five figures before I can physically get on board and sail away, or at least change the locks!

 

Our offer hasn't been accepted yet, and we have yet to hear how the seller will propose to do the deal. I get a good vibe from the sellers by the way, I've seen some paperwork and confirmed the survey is legit by phoning the surveyor - I have no reason to believe the boat is stolen or with serious defects.

What normally happens in this case? I'll hear what the seller has in mind, but I was wondering what I should counter with if the terms are unacceptable?

So far - I'm thinking that I'll need a simple contract that we can sign, along with proof of identity (and address?) of the seller and buyer. What other precautions can be taken to ensure the whole deal is legitimate? Any other risks or things we haven't thought of here?

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5 minutes ago, ivan&alice said:

My question is, how would the logistics of the transfer work in such a sale...? What guarantee have we got that the boat is ours if we transfer the money before the owners have moved off her - since the need the money for their own purchase, they will clearly only move once that sale has gone through. They'll need to park their new boat next to her and physically move their stuff. If these were houses, the lawyers would all hold the money in escrow and only release the funds once the paperwork was done and had occupancy taken. With boats, there is no paperwork, no escrow and no lawyers. So I'm unwilling to hand over five figures before I can physically get on board and sail away, or at least change the locks!

It sounds all very high risk (sure, its all going to be OK, but who is out of pocket if it goes pear-shaped ?)

 

My suggestion would be to do one of the following :

 

1) Suggest to the seller that if he wants to sell under those conditions no one will be happy paying him the money and waiting for an unknown length of time until his new boat becomes available. he should empty the boat and take a B&B / Hotel / etc until his new boat is available.

 

2) Tell him that he will have to do similar to his seller but in reverse (take on the boat and then pay for it later)

 

3) Tell him that you will do exactly the same as a 'house sale chain' does, everyone pays at (say) 11:00 am and ownership is established. You can turn up with a carrier bag of cash, his seller can bring the boat alongside his, you give him the cash, he gives his 'seller' the cash, transfers goods from A to B,  other 'seller' takes a taxi back home.

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Welcome back @ivan&alice

 

We are not that daft after all, are we :D

 

First question, how many of the magic spreadsheet points does your new boat fail on?

Second question, did the boat choose you?

 

More helpfully, both Alan and Matty are both speaking sense. 

 

Can you afford to risk a 10% deposit with people you trust?  Give the vendor a deposit, and insist upon a BMF or RYA bill of sale/standard contract.   Both can be downloaded and printed out.  If you are wary, use either a bank transfer or a (certified) cheque, not cash in a carrier bag.

 

Matty's suggestion that you do the deal via a broker for cash exchange is an expensive but safer solution, but if you were prepared to go without a survey for the boat you want that might not matter to you.

 

Oh, and congratulations by the way.  Welcome to the club of people who used to have cash and now have boats! 

 

Come back when you have the bill of sale and the keys in your hand and let us know what you bought.

 

 

 

 

 

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It is good news that you have found ""the boat" and fingers crossed that all goes smoothly. I would only caution against not having a survey. Time and again we read of people who have done that and lived to regret it. It is also worth saying that a three year old survey is meaningless so be wary of relying on it. 

 

Good luck with your purchase.

 

Howard

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My friend and I have just bought a boat between us. We looked at two prior to this purchase that looked fantastic above the water but when we had them pulled out various major problems with the hulls showed up. On one of the boats the propshaft was waggling about like a flag. Needless to say we rejected both of those at a large expense to us for the haul out and surveyors fees. The third and last boat we looked at, again, was fantastic above the water but we wanted a hull survey. the owner was reluctant to allow us to have that as he wanted a quick sale. I asked him when he had last had the boat surveyed and he said he had never had it surveyed. I was on the point of walking away but then the owner said that we could have it surveyed at our cost obviously. As it turned out the hull was, almost, unworn and the wear edge didn't appear to be diminished at all. The prop sahft was solid in it's bearing as was the tiller post So we have bought that boat.

 

If the owner had refused to allow us to get that boat surveyed we would have walked away. If that survey had shown up anything bad we would have walked away. Three surveys, allbeit that two were only hull surveys, have cost us a lot of money. If we had rejected the third boat then that amount of money would have been, to all intents and purposes, lost. Having said that I would never advise anyone to buy a boat without, at least, a hull survey and if the sellers are reluctant to allow that then treat that with a major amount of suspicion and walk away. Boats and the consequences of buying a bad one are just too expensive, on both counts, to do otherwise.

 

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9 hours ago, Alan de Enfield said:

It sounds all very high risk (sure, its all going to be OK, but who is out of pocket if it goes pear-shaped ?) 

 

My suggestion would be to do one of the following :

 

1) Suggest to the seller that if he wants to sell under those conditions no one will be happy paying him the money and waiting for an unknown length of time until his new boat becomes available. he should empty the boat and take a B&B / Hotel / etc until his new boat is available.

 

2) Tell him that he will have to do similar to his seller but in reverse (take on the boat and then pay for it later)

 

3) Tell him that you will do exactly the same as a 'house sale chain' does, everyone pays at (say) 11:00 am and ownership is established. You can turn up with a carrier bag of cash, his seller can bring the boat alongside his, you give him the cash, he gives his 'seller' the cash, transfers goods from A to B,  other 'seller' takes a taxi back home.

It does sound high risk, so I'm looking for ways to minimise this risk. This situation can't be that uncommon, so there must be a common way to mitigate the risk when buying and selling boats privately.

 

Agreed - paying cash and waiting can't be the way it is done! I'm just assuming here anyway (getting ahead of myself). After the offer is accepted I should perhaps simply insist that I can't pay until I physically get the keys and step aboard - I can transfer the money from my banking app, no need for a carrier bag of cash! I can make the transfer in front of the seller and the boat, and step aboard simultaneously.


I think the problem in this case is that everyone wants to see the money so that they are assured that the deal is going through. It might be worthwhile to get some kind of third party involved as an escrow agent so that everyone can see that we're all committed.

 

12 hours ago, matty40s said:

I know some private sellers/buyers have used proper established brokerages as a middle escrow account for a fee. less than their commission but at least you know the moneys safe until its all gone through.

 

So you would approach say, Whilton Marina and ask them to escrow for you for some percentage of the sale? Any idea what it would cost or can recommend a brokerage we should call to ask?

 

12 hours ago, TheBiscuits said:

We are not that daft after all, are we :D


Well, you are all boat owners and some of you did say you have to be mad to own a boat!!

 

 

12 hours ago, TheBiscuits said:

First question, how many of the magic spreadsheet points does your new boat fail on?

Second question, did the boat choose you?

That's the crazy thing, this boat ticks all of our spreadsheet boxes. It's under the line on all the critical points, from manufacturer to age to length to location, to layout to features to condition. I really am hoping the boat chooses us - our offer hasn't been accepted so it's not a done deal yet! We do love her though, we're trying to not get our hopes up but it is very, very difficult. I barely slept last night!

 

12 hours ago, TheBiscuits said:

Give the vendor a deposit, and insist upon a BMF or RYA bill of sale/standard contract. 

OOH this sounds like the good stuff. Would you mind explaining what a BMF or RYA is...? Not familiar with those terms.

 

 

12 hours ago, TheBiscuits said:

Come back when you have the bill of sale and the keys in your hand and let us know what you bought.

I will of course post a big introduction to our new boat as soon as she's definitely in the bag!

 

 

12 hours ago, howardang said:

I would only caution against not having a survey. Time and again we read of people who have done that and lived to regret it. It is also worth saying that a three year old survey is meaningless so be wary of relying on it. 

 

2 hours ago, pete.i said:

If the owner had refused to allow us to get that boat surveyed we would have walked away. If that survey had shown up anything bad we would have walked away. Three surveys, allbeit that two were only hull surveys, have cost us a lot of money.

I've heard differing opinions on the forum about surveys. I think we can all agree that if you have the time and the money, a survey is a wise choice. However if it is the difference between a risky bargain and nothing, then if there are no obvious red flags some folks think it might be worth taking the leap. If you have negotiated a good price without a survey, then when you do get the survey done, unless the work is REALLY major it's possible to still come out on top.

We'll certainly try to get a pre-purchase survey but due to the nature of the seller needing to buy the next boat, it seems unlikely he'd agree to those terms and rather sell her to somone who doesn't insist on a survey. We do of course intend having a full survey and blacking at the earliest possible occasion, should we get the boat. And as it's within our budget we'll hopefully be able to afford some repair work should it be necessary.

Please wish us luck guys!

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14 minutes ago, ivan&alice said:

OOH this sounds like the good stuff. Would you mind explaining what a BMF or RYA is...? Not familiar with those terms.

BMF = British Marine Federation

RYA = Royal Yachting association.

 

Copies attached of their 'contract' and the MCA (legal) Bill of sale.

 

 

 

 

 

 

BMF STOCK BOAT AGREEMENT.pdf

Bill Of Sale MCA.pdf

Bill Of Sale Template BMF.doc

Edited by Alan de Enfield
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"I've heard differing opinions on the forum about surveys. I think we can all agree that if you have the time and the money, a survey is a wise choice. However if it is the difference between a risky bargain and nothing, then if there are no obvious red flags some folks think it might be worth taking the leap. If you have negotiated a good price without a survey, then when you do get the survey done, unless the work is REALLY major it's possible to still come out on top.

We'll certainly try to get a pre-purchase survey but due to the nature of the seller needing to buy the next boat, it seems unlikely he'd agree to those terms and rather sell her to somone who doesn't insist on a survey. We do of course intend having a full survey and blacking at the earliest possible occasion, should we get the boat. And as it's within our budget we'll hopefully be able to afford some repair work should it be necessary.

Please wish us luck guys!"

 

 

I agree but then it is pure luck. Not even the "clever people" on this forum are able to say what the state of a hull is or any of the other stuff under the water unless they pull a boat out of the water to look.

 

But I wish you luck all the same. Enjoy your boat.

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I personally prefer the simple RYA ones for a boat that does not need to be on the Shipping Register:

 

https://www.rya.org.uk/SiteCollectionDocuments/legal/Web Documents/Legal Leaflets/Members Advice/Sale and Purchase Pack/AGREEMENT FOR THE SALE AND PURCHASE OF A SECOND HAND BOAT.pdf

 

https://www.rya.org.uk/sitecollectiondocuments/legal/Web Documents/Legal Leaflets/Members Advice/Bill of Sale/BILL OF SALE.pdf

 

These when filled in, signed and witnessed are your official proof of ownership - don't lose them!  They are also legally binding contracts, so I would quite happily give a deposit (usually 10%) for a boat with these papers.

 

You then agree a date and time when you pay the rest of the money and take possession of the boat.

 

If something seems "off" with either the boat or the seller, you walk away before you get to this stage!

 

 

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You're still looking for the satisfactory answer to the impossible question.

Of course the situation is not uncommon, that's why so many insist on a survey.

For somebody who wants to cross every "t" and dot every "i" you also display an uncharacteristic urge to throw good sense out of the window.

Other uncommon yet not advisable situations exist like: -

Smoking

Binge drinking

Teenagers and young Mums wondering into traffic while staring at phones

What will your advice to your children be on the above?

 

The vendor of this boat, is he surveying his next boat?  What's your opinion of him in that light?

The bottom line is if you're happy to hand over 5 figures without seeing it out of the water (as, I'm sure many would do) then do it, if you're not then don't.

 

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Draw up terms and conditions, values, their proof of ownership, proof of your available funds, dates you both agree with - and in writing - a copy each - and signed.

Pay a deposit (usually 10% to create a binding contract on day one). With full payment of the balance on the day of vacant possession when you collect the boat.

Is it any different to buying a car.

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1 hour ago, pete.i said:

I agree but then it is pure luck. Not even the "clever people" on this forum are able to say what the state of a hull is or any of the other stuff under the water unless they pull a boat out of the water to look. 

Yes, we understand the risk here. Thanks for the advice.

 

1 hour ago, TheBiscuits said:

I personally prefer the simple RYA ones for a boat that does not need to be on the Shipping Register:

 

https://www.rya.org.uk/SiteCollectionDocuments/legal/Web Documents/Legal Leaflets/Members Advice/Sale and Purchase Pack/AGREEMENT FOR THE SALE AND PURCHASE OF A SECOND HAND BOAT.pdf

 

https://www.rya.org.uk/sitecollectiondocuments/legal/Web Documents/Legal Leaflets/Members Advice/Bill of Sale/BILL OF SALE.pdf

 

These when filled in, signed and witnessed are your official proof of ownership - don't lose them!  They are also legally binding contracts, so I would quite happily give a deposit (usually 10%) for a boat with these papers.

 

You then agree a date and time when you pay the rest of the money and take possession of the boat.

 

If something seems "off" with either the boat or the seller, you walk away before you get to this stage!

 

 

These look like the papers we need! I notice that both documents say they are copyright and for use by RYA members. I take this to mean that we wouldn't have the right to use these documents, and should draft a similar contract with similar considerations, rather than simply print and fill out this one?

 

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2 minutes ago, ivan&alice said:

These look like the papers we need! I notice that both documents say they are copyright and for use by RYA members. I take this to mean that we wouldn't have the right to use these documents, and should draft a similar contract with similar considerations, rather than simply print and fill out this one?
 

You could always join the RYA for £45 ... or £25 if one of you is under 25.

 

But yes, they are for member's use as is.

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Others have come up with similar answers and have posted them whilst I have been writing mine.

As an afterthought, an independent survey is not necessary when buying the boat but will be if you intend to take out fully comprehensive insurance.

 

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22 minutes ago, zenataomm said:

For somebody who wants to cross every "t" and dot every "i" you also display an uncharacteristic urge to throw good sense out of the window.

In case you missed it, I agree that it is good sense to get a survey, and if the sale was not urgent I'd absolutely insist on it. It's not about saving the money in this case, which may be the case for many others who decide against a survey.

 

We have two choices: this boat sans survey, or no boat.

Don't get me wrong, I am anxious about the risk. We'll make that final call once our offer is accepted and we negotiate the terms.
 

11 minutes ago, TheBiscuits said:

You could always join the RYA for £45 ... or £25 if one of you is under 25.

 

But yes, they are for member's use as is.

Thanks for confirming. I'll consider it for the official documentation. They have some very random benefits for your 45 quid ?
 

3 minutes ago, Horace42 said:

Others have come up with similar answers and have posted them whilst I have been writing mine.

As an afterthought, an independent survey is not necessary when buying the boat but will be if you intend to take out fully comprehensive insurance. 

 

Yes, and we would get her surveyed, of course, as soon as possible after purchase along with fresh blacking. Just not a pre-purchase survey where the sale is contingent upon it. Otherwise we lose the boat to someone with a bigger appetite for risk.

It's tricky, I admit.
 

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6 minutes ago, ivan&alice said:

Do you guys have any suggestions for minimising this risk further? 

Not what you want to hear - but an extreme option to reduce the risk to zero, is ………………………………………………………………………….. Don't buy it.

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6 minutes ago, Alan de Enfield said:

Not what you want to hear - but an extreme option to reduce the risk to zero, is ………………………………………………………………………….. Don't buy it.

An obviously unhelpful suggestion :(

 

That said, it's useful to hear if other people are smelling a rat on this.

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What about CRT licenses - are these issued to a boat, to an owner, or to both? Is there any way I can check the records to confirm that he owns the boat and it has been licensed?

Another possibility - what if the boat has a loan secured on it? I should imagine that a boat is a rather insecure thing to use as security, is it possible?

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Waiting to be told I am wrong but I don't think a loan would be secured against a boat. The boat licence is issued  to whoever pays for it, you don't have to prove ownership, but it will be in his name. When you buy the boat his licence will be revoked and you will have to licence it.

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Have both of you discussed the transfer of money with your bank? This is another potential stumbling block on either side, due to money laundering issues.

Personally, I would not allow the transfer of more than  a small % of the total payment in advance of the date of purchase. And the % would be refundable plus any legal expenses incurred. I would want to use the small claims. A legal agreement is pretty much essential imho.

Edited by LadyG
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You will have to bear in mind the possibility that your seller won't quit his boat when he says he will and you may have no way to make him.  This happened to me over a house purchase made rather like your boat one - in my case it cost me a few grand more than expected to get him out, followed by the threat of physical violence. The seller had taken my fifty grand deposit and lost it at the bookies instead of using it to settle his mortgage. Not a deliberate scam, nice bloke, just a gambler.

In my case, it all worked out well in the end, and it usually does with boats - I bought mine cash on a handshake, no survey, no papers, no proof of anyone's identity, and I've still got the undated receipt I got for my money.  It's been pure joy ever since...

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8 minutes ago, LadyG said:

Have you discussed the transfer of money with your bank, this is another potential stumbling block on either side, due to money laundering issues.

GREAT POINT! No, we did not think of this. I'll chat to the bank on Monday and do what we can to remove this stumbling block, and we'll recommend the seller do the same. Thanks @LadyG!!!
 

7 minutes ago, Arthur Marshall said:

You will have to bear in mind the possibility that your seller won't quit his boat when he says he will and you may have no way to make him. 

I'm really glad your story had a happy ending, @Arthur Marshall. This is another risk, yes. I'll have an occupation date clause in the contract, so if the seller does for whatever reason not quit his boat, hopefully we'll be able to take it to a lawyer for some legal recourse.

 

For the record, I have no doubt in the seller. He seems like a good, trustworthy bloke. I'm erring on the side of paranoid though, because all the best con artists are ?. We stalked him on the internet and Facebook and his story all checks out, as well.

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On 20/09/2018 at 23:12, ivan&alice said:

What guarantee have we got that the boat is ours if we transfer the money before the owners have moved off her -

 

None, in my personal opinion.  This is why your offer has been accepted not someone else's. You are the only person daft enough to take the (massive) risk. 

 

All your precautions listed will be jolly handy for tracking the seller down and suing him should he renege on the deal having used your loan to help him get the boat he wants, then fail to hand over your boat to you or at best, give you your money back having sold it at a higher price to someone else in the meantime. The police won't be bothered, they will tell you it is a civil dispute and to employ a solicitor.  

 

I'm pretty gung-ho when it comes to buying boats on a handshake but here, I'd run a mile. 

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