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  #171  
Old 07-30-2013
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Re: What Is A Boat Really Worth?

No point going to a local bank to open an escrow account. Use an escrow agent that already has one.

There is really no practical point to cashing the good faith check prior to survey. In the standard contract, the buyer can bail for absolutely any reason whatsoever and get it all back, up to that point. Why would anyone in their right mind (attorney, broker, etc) bother with the liability for accepting the cash, when they have zero right to it yet.

The process is mostly good faith, until she is accepted post-survey, and that's all.
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  #172  
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Re: What Is A Boat Really Worth?

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Originally Posted by Minnewaska View Post
No point going to a local bank to open an escrow account. Use an escrow agent that already has one.

There is really no practical point to cashing the good faith check prior to survey. In the standard contract, the buyer can bail for absolutely any reason whatsoever and get it all back, up to that point. Why would anyone in their right mind (attorney, broker, etc) bother with the liability for accepting the cash, when they have zero right to it yet.

The process is mostly good faith, until she is accepted post-survey, and that's all.
Because it's the law. Maybe it shouldn't be law but until it isn't it is.

Attorneys', brokers, etc don't get to decide that.

Last edited by sailpower; 07-30-2013 at 01:55 PM.
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  #173  
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Re: What Is A Boat Really Worth?

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Because it's the law. Maybe it shouldn't be law but until it isn't it is.

Attorneys', brokers, etc don't get to decide that.
Are we splitting hairs here? I understand they are required to comply with escrow laws. However, what law requires them to cash the check into an escrow that no one has any actual right to prior to survey? My check has never been cashed until survey when, thereafter, default provisions are enforceable.
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  #174  
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Re: What Is A Boat Really Worth?

Well, here is one practical reason for depositing the earnest money check - you will have clear funds when necessary, especially with funds drawn from a different federal reserve district.

I closed real estate and business transactions at one time, and I can tell you about all the different types of "Official Check"s, "Treasurer's Checks", "Cashier's Checks", etc. people and financial institutions will submit, even when they are told to obtain certified funds or send a wire transfer. Some checks are marked in such a way to appear to be cash equivalent, but are in fact drawn on a bank in a different federal reserve district so the maker can earn the interest until it is honored. [Virginia has had a Wet Settlement Act to force parties to advance actual cash equivalent funds or pay interest/damages to others.] You can call the bank to ask if a stop payment can be put on a particular type of check or how long before funds clear and you will receive some interesting answers.

Also, what if the contract survey contingency and all other contingencies are satisfied, the escrow agent, who didn't timely deposit the check upon ratification, now goes to deposit the check at the bank, and that same day, the buyer backs out and changes his mind. The seller now has no liquidated damages waiting for him. Oops! Who is at fault, the escrow agent for not depositing the check?

And why not deposit it, the inconvenience of having to write a check and obtain a release? The escrow agent earns a fee for a reason, and has liability in the process.

Last edited by jameswilson29; 07-30-2013 at 02:28 PM.
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Re: What Is A Boat Really Worth?

The contract usually gives a period of time post-survey or a date specific for the buyer to accept (read as back out). In my experience, the check is usually deposited between the survey and that date, when it becomes clear there will actually be a deal. Contingent repairs, etc, have not necessarily been completed. I've not seen an escrow agent even engaged until that point, therefore, the expense of one. No point, if the boat is going to be rejected.

On the one hand, it is as simple as writing a check to refund. But, for the broker, who would probably hold it in their own account before engaging an escrow agent, they have to have bookeeping and internal controls to watch over significant funds they are responsible for, if anything screws up. Easier and arguably safer to just sit on the check that the seller has no rights to yet anyway. Buyers are happier too. Makes for a less threatening experience, until it becomes necessary.

I'm just going to speculate that checks are cashed earlier than this, simply to test whether the buyer has the money. I am not saying I know this to be the case. On the other hand, once a buyer has agreed to contract a surveyor, they're committed. The one argument for cashing the check would be survey costs that may attach to the boat, if not paid. However, I've always known the buyer to contract the surveyor, not the seller, so I'm not sure they could attach.
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Last edited by Minnewaska; 07-30-2013 at 02:31 PM.
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  #176  
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Re: What Is A Boat Really Worth?

If you handle enough of a certain type of transaction, you will eventually have that 1 in a 1,000 case that reminds you why you should employ standard, routine, defensive practices as an escrow agent...

As you probably know, I am not a big fan of the brokers' association contract, so you can't generalize about escrows for all boat sales transactions. Some buyers may be sophisticated enough to insist on the use of their own contract.

Julie seems prone to allowing the broker to control the sale.

The broker's advice to ask the broker about the meaning of the contract is quite comical.

Last edited by jameswilson29; 07-30-2013 at 02:36 PM.
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Re: What Is A Boat Really Worth?

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Originally Posted by Minnewaska View Post
Are we splitting hairs here? I understand they are required to comply with escrow laws. However, what law requires them to cash the check into an escrow that no one has any actual right to prior to survey? My check has never been cashed until survey when, thereafter, default provisions are enforceable.
Maybe we are splitting hairs. I am not trying to be argumentative. Brokerage contracts specify cleared funds. An un-cashed check is not cleared funds.

There have been many lawsuits over the years. Here is but one scenario:

Buyer surveys boat which he rejects because it has one bottom paint blister. Boat is still hanging in the slings and buyer says forget it and leaves without paying the yard or the surveyor.

Seller is forced to pay the yard in order to get his boat back.

Surveyor files a maritime lien against the boat which must be satisfied prior to any future ownership transfer .

Broker deposits buyer’s check which he has been holding and discovers that the check is no good.

Seller is now out 1k-2k and wants to know why the check wasn’t cleared prior to survey?

Broker says because he heard on the internet that it wasn’t necessary.

There are many permutations of the above. Sadly, not everyone is nice or honest. People who themselves are nice and honest don't always realize that.

In FL checks are now discouraged and most everything today is done by wire transfer including deposits.
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  #178  
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Re: What Is A Boat Really Worth?

Quote:
Originally Posted by jameswilson29 View Post

Julie seems prone to allowing the broker to control the sale.

The broker's advice to ask the broker about the meaning of the contract is quite comical.
How so? Shouldn't she understand what she is signing before she signs it?
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Re: What Is A Boat Really Worth?

I am not licensed in Florida so I cannot speak to its laws, but most states have exceptions to the crime of unauthorized practice of law that allow agents to fill in the blanks on a form contract, and in some cases draft an addendum to that contract. Going beyond those exceptions is engaging in the unauthorized practice of law.

A broker who represents the seller and who starts giving legal advice to the buyer about the implications of certain provisions and the law of that state has likely crossed the line into the unauthorized practice of law.

A buyer who relies on the legal advice of the seller's agent is a fool.

Last edited by jameswilson29; 07-30-2013 at 02:47 PM.
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  #180  
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Re: What Is A Boat Really Worth?

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Originally Posted by jameswilson29 View Post
I am not licensed in Florida so I cannot speak to its laws, but most states have exceptions to the crime of unauthorized practice of law that allow agents to fill in the blanks on a form contract, and in some cases draft an addendum to that contract. Going beyond those exceptions is engaging in the unauthorized practice of law.

A broker who represents the seller and who starts giving legal advice to the buyer about the implications of certain provisions and the law of that state has likely crossed the line into the unauthorized practice of law.

A buyer who relies on the legal advice of the seller's agent is a fool.
I am not an attorney so I can't comment on your first part except to say that I haven't believed that pointing out the parts of the agreement labeled as pertaining to the seller and/or the buyer is "practicing law". It is a good point and I am going to research it further.

For the record, I suggested that Julie ask her broker any contract questions that she is signing with him about what is in his contract. To my knowledge, she is not dealing directly with the seller or the seller's agent.
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