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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 08-26-2013
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Why give the payoff amount?

I'm in the process of selling my beloved Beneteau and the buyer needs some details for closing the deal and settling the financing. One of the items she asked for was the payoff amount for the loan. My bank indicated to me that a check or electronic funds transfer to the loan account would clear the loan and any money in excess the loan amount they would put in my checking account for example.
Since I put a large amount of money down on the boat years ago the loan is less than I am currently asking for the boat. Is there any reason I should or would need to tell the buyer what I owe on the vessel?
Would you pass this information? Does this seem like a standard banking request?
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Old 08-26-2013
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Re: Why give the payoff amount?

The bank wants to get an idea of the equity that is in the deal for the under-writers. Banks do ask this. I was in Venture Capital for 10 years. Now is it really their business NO. If you can I would only show what your Beneteau is worth, so they see the equity. Other than that I would not think the payoff would even matter that's your business.

Hope this helps some, Blessings.
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Old 08-26-2013
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Re: Why give the payoff amount?

I don't know if it is normal or not. I can say I did not ask for or receive this information when I bought my boat. Just gave them the check for the amout sold.
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Old 08-26-2013
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Re: Why give the payoff amount?

If you owe money on the boat, then you "technically" don't own it. A marine title company wiil issue a satisfaction of mortgage document to you when the bank note is paid off. Sometime the bank is listed as the first lien holder in the ownership chain. While you may have more equity in the vessel, the bank still has a fidicuary interest and will need to be paid off, usually first. Remember, he who gas the gold makes the rules.
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Old 08-26-2013
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Re: Why give the payoff amount?

Only reason I can think of would be to ensure that selling price is greater than loan. That way the buyer can be certain the boat will be free and clear post sale.
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Old 08-27-2013
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Re: Why give the payoff amount?

If the buyer is smart, they are using an escrow company that has researched the liens on the title and identified the loan. They will pay the loan off directly to ensure title is transferred clean. No buyer should ever write a check and leave it to the seller to pay off the loan afterward.

The only alternative is for the seller to repay the loan themselves, prior to closing, and providing a release of lien from their bank.
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Old 08-27-2013
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Re: Why give the payoff amount?

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Originally Posted by Minnewaska View Post
They will pay the loan off directly to ensure title is transferred clean.
Exactly. They are not going to just trust that you really, really do intend to pay off the loan with all the money they are going to hand you. They will pay it off themselves, and give you the difference. This is the same way that it works when you sell a house that has a mortgage outstanding on it.
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Old 08-27-2013
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Re: Why give the payoff amount?

Having to disclose the payoff amount makes very little sense to me. It seems like you are obligated to disclose all liens and the name of the bank who holds the loan so the buyer's lender can verify the payoff. If you have made arrangements that the entire check goes to your loan department at your bank and that the loan department would then release the balance back to you, there would be zero reason to release the payoff amount other than to ascertain that you don't owe more than the sale price of the boat.

But even if you wanted to release the payoff amount to the buyer, the appropriate process is to allow your bank to communicate with the buyer's bank and disclose the payoff amount, because the final payoff amount will not be known until your bank has a precise day and time at which they will receive the final payment.

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Re: Why give the payoff amount?

Thanks to all for the insight and viewpoints. I spoke with my bank today and they said it is NOT unusual for the loaning bank to want the payoff amount to ensure that after they transfer the loan amount that the loan will in fact be free and clear.

I suspect there are any number of scenarios that could be different than this but that could lead to many rabbit holes to drill down into.

In my case as I put money down on the boat, the loan payoff and value of the vessel are not related. I was concerned that the buyer would try and drive me to a "payoff" number for final negotiation. She was maybe trying to see what I "owe" and thinks me just getting out of the loan would satisfy me. Again thanks for the inputs.
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Old 08-27-2013
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Re: Why give the payoff amount?

Quote:
Originally Posted by BigBene View Post
... I was concerned that the buyer would try and drive me to a "payoff" number for final negotiation. She was maybe trying to see what I "owe" and thinks me just getting out of the loan would satisfy me. ...
A possible solution for this concern would be to give the buyer the loan details only AFTER a price was agreed on and a contract in place. Then, the exact value of the loan payoff would be available from the bank as part of the closing process.
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