time between survey and seatrial

[Bermudahigh]

we've agreed to most everything on a purchase and sale agreement except the sea trial date. seems the marina is all but closed, but can still do a launch and rehaul, for just a few days. buyer doesnt want to "rush" and wants to wait til the normal relaunch period to get her seatrialed. i'm not sure what standards there are, if any, for a sale this time of year. thoughts please...thanks. joe

[k1vsk]

Some people believe the sea trail to be useless but, if done right, can show problems not readily apparent without one so it is an integral part of most purchases. The issue of how much to wait depends on how you construct the deal - a hold-back pending sea trail at some later date is the usual option. Baring that, you could tell the prospective buyer that you will reserve the right to sell to someone else and include that stipulation in your contract with this buyer. There is no standard interval.

[camaraderie]

Delaying works in the buyers favor since he won't have to pay to re-winterize and you get to foot the bill for winter storage...and keep his money while tying your ability to sell the boat up.
Since it is a buyers market, he has the power unless you have a highly desireable boat that is in short supply. Nevertheless...the fact that an offer has been made means the buyer does not want to lose the deal and is beginning to fall in love! Since you both have something to lose I suggest you structure the deal as:
1. Survey the boat immediately.
2. Upon satisfactory completion of survey, buyer pays 100% of purchase price with 10% held back in escrow by broker pending sea trial.
3. Buyer agrees to hold sea trial by xx date and pays for winter storage until then.
4. Broker releases final 10% upon completion of seatrial LESS amount of any repairs needed that are found on seatrial.

[Bermudahigh]

thanks for your suggestions. we agreed to close on the boat after the surveyor tells the buyer that its a "right" boat. we'll leave 20% in escrow for whatever issues may arise during the sea trial. thanks again. BH

[sailingdog]

Cam's suggestion is excellent and basically fair to both the seller and buyer. The seller gives up the right to show the boat and has a firm offer and doesn't have to carry the winter storage fees... and the buyer has the escrowed money as protection of anything nasty showing up at the seatrial.

[Northeaster]

With this type of arrangement, who decides what is a valid "issue", discovered during the sea trial, versus something normal and expected.

I am new to this, but 20% may be a substantial amount of money. Of course, if something serious breaks during the seatrial, I would expect the buyer and seller to agree on the holdback money being used to fix it.
However, what if the buyer complains of squeaky bulkheads, small portlight / cabin leaks, shitty sound system quality, baggy sails, crazing that is more visible when the decks are wet, etc. Who decides if they are vaild issues, and how is a price dteremined on these things??\

Not trying to be pessimistic, but I would think there is a possiblity for disagreement, here and to replace a shitty sound system, or have someone else repair leaky portlights, etc, could eat up the whole 20%, if they are found to be valid.

[camaraderie]

You can simply write in that if unresolvable issues are found during sea trial than all parties can walk away with refund of all monies except those paid to survey/haul.

[sailingdog]

Don't forget that the buyer will still be responsible for the winterization and winter storage costs.

[max-on]

From the seller's perspective you do not want broad, open-end, language in the sea trail provision of the agreement, such as "satisfactory sea trail" with no explaining definitions or qualifiers. You want narrow, specific language pertaining, for example, to a 'substantial or material repair / structural defect', which can be defined in the agreement, such as, in brief, as a repair in excess of a certain dollar amount as determined by the surveyor or third party. These terms are usually defined more fully in a quality agreement. Discuss this with your broker, I assume he represents you solely. I could talk about P&S Agreements for an hour, but you get the point. I would make sure the buyer understands that the sea trial is not to see if he 'really likes' the boat, unless that is what the parties are agreeing to, which you are not from your post.

Another thing to consider is whether the sale / transfer of title is pre or post sea trail. One way to structure the transaction is to have the sale now with the 20% of the price held is escrow for matters covered under the escrow agreement. However, if the buyer is paying with loan monies, the bank usually will not fund until closing, so you will not have the purchase price in escrow if you do not close now. The situation would be a deposit held in escrow and then sea trial and close in the spring; if the buyer wants you to close in the spring, it may be beneficial to you to have a larger deposit, to make sure the buyer is real. Buyinng a boat is partly an emotional decision, a lot can happen in 5 months. As also suggensted, you could keep your right to sell the boat if you receive another offer prior to the closing with this buyer.