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Go Back   SailNet Community > General Interest Forums > Boat Review and Purchase Forum > Boat Buyers & Sellers Forum
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Old 05-31-2013
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Honest disclosure

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?

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Old 05-31-2013
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Re: Honest disclosure

I think that is why is it whise to hire a good surveyor. Unfortunately these days most surveys are just inventories followed by many pages of boiler plate caveats. My list of good surveyors is very short.

I have never heard of any laws or stipulations requiring the seller to disclose damage. But I have been involved in several cases where the seller did volunteer the information and I was brought in to look over the repair work.
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Re: Honest disclosure

I guess life has just made me a little too cynical - somehow I'm not suprised that no 'full disclosure' rule/law applies. Would be nice, though.
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Re: Honest disclosure

Dave:
I'm no attorney but I would think that a simple written statement to the fat that "I, the seller, have disclosed any and all information regarding damage and repairs made to the boat during my ownership" would suffice as a legal document. That sounds a bit too general. You can't expect a guy to tell you he cracked a hatch glass and had it replaced. Maybe you would need to be specific, i'e. damage to hull, deck, rig, rudder, keel etc.

If you used the words "major damage" I suppose the seller could pull an Eric Holder and parse the meaning of "major".
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Old 05-31-2013
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Re: Honest disclosure

Disclosure laws are unenforceable anyway. I bought two houses that had major issues not disclosed prior to closing and missed by the inspector. On the first one the seller marked that there was no basement leaks and he had owned the home for 25 years. The first big rain the basement had several inches of water in it. The attorney said it wasn't worth perusing in court because the disclosure documents state "to the best of sellers knowledge" and there is no way to prove that the seller knew and didn't know.

Second house had code violations and modifications without permits. Again no recourse.
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The 'House Inspector' market is loaded with unqualified people, just as the Surveyors market is. Even worse. Best bet is to educate yourself as to what you need to look for when buying a boat, house, car etc.. Hard to trust anybody these days when ANYONE can claim to be a surveyor/inspector/mechanic. Honest people selling anything will be forthcoming with potential drawbacks/ deficiencies about what they are selling. The rest are just trying to unload a bad purchase or their dream purchase that they could not afford, or keep up. Beware. Hardest thing is to sort out the honest people from the skeevy ones. May be wiser to spend money on a lie detector test than a survey or a home inspector. Just my opinion.
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Re: Honest disclosure

I wouldn't go to sea in either of those houses.
I hate water in the basement of my boat.
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Old 06-01-2013
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Re: Honest disclosure

Quote:
Originally Posted by dave6330 View Post
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?

V/R

Dave
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.
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Last edited by jameswilson29; 06-01-2013 at 08:37 AM.
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Re: Honest disclosure

There's not really a lot of point in hiding that sort of thing.. the survey is likely to catch it (one would hope - for the buyer's sake) and then you're caught redhanded apparently hiding something or misrepresenting what's there. I actually struggled with this last year when we tried to sell.. I didn't hide the fact that there was an issue but I probably understated it. I knew it would come up at survey. In the end we didn't sell and did a proper repair for our own peace of mind.

In the end you either lose the sale altogether, or take a harder hit, perhaps, than the cost of fixing it first...
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Re: Honest disclosure

Quote:
Originally Posted by Faster View Post
There's not really a lot of point in hiding that sort of thing.. the survey is likely to catch it (one would hope - for the buyer's sake) and then you're caught redhanded apparently hiding something or misrepresenting what's there. I actually struggled with this last year when we tried to sell.. I didn't hide the fact that there was an issue but I probably understated it. I knew it would come up at survey. In the end we didn't sell and did a proper repair for our own peace of mind.

In the end you either lose the sale altogether, or take a harder hit, perhaps, than the cost of fixing it first...
What was the issue you had to fix?
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