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Join Date: Aug 2009
Location: Richmond, Virginia
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Re: What Is A Boat Really Worth?
Ideally, the earnest money should be deposited into an escrow account upon full ratification of the contract (fully signed and initialed after all counters accepted). It stands as security for performance of the contract and may be designated as liquidated damages by the seller and buyer in the event of a default.
In the event of a dispute as to a breach of contract, the money should be deposited with the clerk of court in a proceeding known as an interpleader action, where the third party escrow agent tenders payment to the court to release its liability and all parties with a claim to it, seller, buyer and broker, assert their rights to it.
Some brokers may not have the balls or the desire to act as a true escrow agent, which exposes them to liability and becomes messy and expensive if a dispute arises, and therefore never deposit the check, because they do not want to have to file an interpleader action. Instead, they may encourage everyone to sign a release (which, of course, includes a release of all liability of the broker by all!). After all, their interest is in putting the boat back on the market, not being involved in litigation.
If you are the seller and the buyer breaches the contract, you may have a right to the deposit, and you may have a cause of action against your escrow agent for failing to deposit the earnest money. On the other side, a buyer may sue for damages, or, in some instances, specific performance, if the subject matter of the contract is unique, or damages would be inadequate. In some jurisdictions, the remedy of specific performance may be available only with respect to real property.
There is a reason why we have contracts - real written contracts - and deposits; this is where the rubber meets the road and there is money at stake for performance of the agreement according to its terms. Pretending you have deal and holding a check, while the buyer spends umpteen dollars on a haul out or launch, marine survey, rigging survey, engine survey, sea trial, and any other evaluations is a sucker play for buyers who are willing to be led around by the nose by the process.
Last edited by jameswilson29; 07-29-2013 at 08:32 AM.