Originally Posted by dave6330
Question for the community at large:
When you sell a house or a car you are requrired disclose any significant damage/repair done while you owned the house or car. Does the same thing apply to boats or is it simply a case of "let the buyer beware"? Is there any boat equivalent to a CARFAX?
Some states, like Virginia, have detailed statutes regarding a real estate seller's obligation to make a disclosure or disclaimer of certain physical aspects of the property being sold. Federal law requires certain disclosures about certain matters, such as the presence of lead paint, radon gas, or environmental hazards. Generally, there are fewer statutory requirements on the sale of personal property. The Uniform Commercial Code, which has been adopted in various forms by every state, imposes some minimum requirements on a seller of new goods (movable personal property). To a certain extent, all these state and federal statutes are attempts to prevent fraud and ensure some standard of good faith and fair dealing in these transactions. Law suits do not necessarily promote economic efficiency.
Common law fraud (created over time by case law) differs from state to state. Each state may also have codified fraud, civil and criminal, in its statutes. Fraud is the intentional or negligent misrepresentation of a past or present material fact on which the purchaser reasonably relies and which causes damages to the purchaser. In contract law, fraud in the inducement is the misrepresentation of a material fact which induces the purchaser to enter into the contract. Fraud in the inducement may allow the purchaser to rescind the contract and recover damages. Some states, like Virginia, have a broader definition of the fraudulent intent required for civil fraud, and recognize what is called "negligent fraud" - the seller may be liable for what he or she should have known about the physical condition, beyond what he or she actually knew and without the intent to deceive.
If there is no statutory requirement to disclose, a sale may be "as is" (no disclosure - a disclaimer). In a normal market, goods sold on an "as is" basis will not command as high a fair market value as a sale with disclosures and warranties. Look at eBay to see what goods sell for on an "as is" auction basis.
The real problem is some sellers will not accept the tradeoff in this dilemma. They want the full market value for their item while claiming it is sold on an "as is" basis. At the same time, the seller wants to engage in puffery, exaggeration and misrepresentation to promote the sale of his or her item: "solid", "like new", "best available", "excellent condition", "creampuff", "well-maintained", etc.
What is somewhat unusual about boat sales is both the tremendous expense to the buyer to discover defects, and the ease with which they can be hidden by the seller and broker (because parts of the boat are hidden in the water, or, on the hard, you cannot discover how it functions in its natural element, the water, and many conditions are beyond visual inspection). According to some sellers and brokers, the buyer is expected to pay for a haul out and complete marine survey, engine survey, rigging survey, with no consequences to the seller or his or her broker, who should have no liability for any misrepresentations to the buyer. While this might be somewhat understandable, absent intentional fraud, in a new boat sale, it is not reasonable for a used boat sale, unless the boat is being sold at an "as is"/fire sale/rock bottom price.
The boat sales field is ripe for fraud. The sellers and brokers appear to have the upper hand, usually having greater boating experience and knowledge of the boat. Purchasers are making a highly emotional and expensive purchase, many with little or no practical or mechanical experience. The broker wants a quick and sure sale to earn a commission, with no liability. If a sale is going to fall apart, the broker wants clarity and a quick resolution, so the item can be put back on the market. There is no shortage of "experienced" buyers who think everyone should accept the way they have been treated: "Oh, this is the way we always do it (don't you know any better?)"
The short answer to your question is you should address your expectations in the contract. Negotiate the representations of the seller and the consequences in the transaction. Do your research and don't let the seller or broker lead you around by the nose. Disregard the advice of "experienced" buyers who don't recognize that every aspect of a boat sales contract can be negotiated, or who tell you "this is the way it is always done", or who recommend a contract that was prepared with the broker's or seller's interests in mind. Start small and gain experience before entering into a major transaction. Ask written questions of the seller and expect written answers in return. Negotiate a contract that protects your interests in the transaction. Finally, have the appropriate marine survey(s) done for every purchase.