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Walking away from sales agreement

8K views 31 replies 19 participants last post by  wakked1 
#1 ·
Greetings -

I recently made an offer on a small boat and put down 10% pending survey/sea trial. Two days later, a relative offered to sell me their (much nicer) boat for very little money as they would like to see it remain with the family.

So - I no longer want the boat I made an offer on. The survey is scheduled already. My question is: Do I even need to do the survey?

Can I walk away from a signed purchase and sale for ANY reason? I understand I can nitpick the survey and kill the deal, but I would prefer to just tell them what happened. Can I do that?

The agreement is the standard "Yacht Brokers Association of America" purchase and sale.

Any advice is appreciated. Thank you.
 
#2 ·
Yes, you can walk, but .....

Be ethical about it. If you really don't want the boat, call the surveyor and seller/broker and cancel. Explain why. They shouldn't have a problem with that.

As far as the seller/broker, nothing has been lost to them yet, so they should not have a problem with you backing out. However, if the seller had to make stuff right at your request before you put in an offer, then your financial position is now different. Hypothetically the seller could have you help pay for the "upgrades".

Has your deposit check been cashed yet? If so it makes getting your money back a little tougher if they raise a stink. If they haven't, you could always put a stop order on it to avoid it being cashed if it starts to get ugly

I would get back to the surveyor and seller sooner than later. You don't want to spend money on a survey if you don't want the boat.

DrB
 
#3 ·
You can certainly walk away from the deal at any time. Your only risk is the 10% that you put on the table. Legally, if you do not follow the contract as written, those dollars are the boat owners. But what happens if you do the survey and it is perfect? Then you have added more expense to the equation.

Having said that, it really comes down to the seller. They can see where you are coming from and give you your money back. Or, they can say fine, but i am keeping your money. Nothing wrong with either of those responses, it is just that you prefer one over the other.

The seller may have turned down another offer in the interim. Probably not, but you never know. In that case they would definetely have an issue.

Hope all works out for both of you.
 
#4 ·
I'd go through with the survey and then walk away (you need not say why) for a couple of reasons. One, it's cleaner contractually. Two, you have booked the surveyors time and he may easily loose money if he can't book someone else for that day. Three, never burn a bridge with the surveyor or broker. You may need their services again some day and people have long memories. Good luck.
 
#5 ·
You make the call.....

Well I understand the POV of teshannon, I don't think that you should have a survey. Why spend money on something that is necessary? What happens if the survey comes back 100%? Highly unlikely, but let's say it does. What are you going to tell the seller to get out of the deal then?

The point about the surveyor's time is noted. If they survey was tomorrow, then you're kind of set it would be unfair to back out now. You still could call him and cancel and maybe pay half his time to not do it as it saves him drive time or do it anyway as a learning experience (if you have never gone through one). If the survey was say late next week or later, you should cancel. These guys/gals know stuff comes up all the time, so it shouldn't phase them.

I don't think any of the above is unreasonable or unethical and should keep everything on business friendly terms.

DrB
 
#6 ·
I think you need to go back and read your contract because there isn't standard language on this issue. Iin some contracts there are specific reasons that entitle you to back out of an agreement and get back your deposit back, and other contracts which allow you to back out for any undisclosed reason at all.

You need to be clear on what the contract says before your approach the owner. In many contracts, the owner is permitted to keep your deposit if you back out but don't have a reason related to items disclosed during survey or seatrial. This compensates the owner for the time that the boat was off the market and possible buyers were turned away.

Once you know your contractual obligations, I would quickly get in touch with the broker to see if you can get out of the contract without forfeiting your deposit. If your contract does not allow you to get out without forfeiting your deposit, at this point it is a negotiation. As a Seller, I would rather know as soon as possible that the buyer was going to default rather than go through the sham of a survey on a boat that you have no intention of buying. Most buyers and brokers will let you off the hook if you are upfront and don't drag this out too long.

As to the surveyor, you can use him to survey the boat that you are buying from your relative.

Jeff
 
#7 · (Edited)
Don't do the survey.

That agreement if standard and not marked-up, does not require that you actually have the survey done (it says "may" survey) nor to state a reason for which you reject the boat. I would not tell the broker/seller you found something else. Just follow the contract provision for rejection, in the time period permitted, but asap; Send the broker a letter by registered mail stating that you feel the boat is not what you thought and that you reject the yacht under the terms of the agreement.

Case closed. you will get the deposit back, less any costs you have made the seller or broker incur in support of your purchase.

If you ever want to do business with the broker again you should call him/her asap, apologize and tell them there's nothing wrong with the boat, then an understandable excuse, such as your SO doesn't like the color.
 
#9 ·
Thanks All - it's a tough issue. I can clearly go through with the sea trial and reject on nothing more than performance..."it's too slow" is fair game, at least according to the broker.

I guess my real conundrum is that it seems unfair to put the broker and owner through that when I already KNOW what my answer is.

At the same time, if I tell them that now...can they keep my deposit?

The "terms" for acceptance/rejection on the contract are just "survey and sea trial"
 
#11 ·
Thanks All - it's a tough issue. I can clearly go through with the sea trial and reject on nothing more than performance..."it's too slow" is fair game, at least according to the broker.

I guess my real conundrum is that it seems unfair to put the broker and owner through that when I already KNOW what my answer is.

At the same time, if I tell them that now...can they keep my deposit?

The "terms" for acceptance/rejection on the contract are just "survey and sea trial"
Those terms sound like you need to go through with the survey and sea trial before rejecting the boat. How much money is involved in the deposit?
 
#13 ·
In America, anyone can be sued for anything.

Beyond that, whether you can walk away without penalty depends on the terms of the contract you signed. You signed a contract, right? Did you read it?

If you walk away for no real reason, you may owe the broker his 10% commission. You may owe the seller money for various reasons. There may be a "liquidated damages" clause. Or, in most cases, you have made an offer to buy and the seller must make a formal acceptance of your offer. If they haven't made theformal acceptance--you're free to revoke your offer without penalty, in most states.

Better reread your contract, fast, and if it is unclear, see an attorney who knows local contract law. If your contract says something like "pending sea trial" and your sea trial is going to showno substantial defects--you may be responsible to buy the boat, period. And if that's the case--you'd also be liable for court costs if they had to sue you. So, read that contract, and then take action fast. The seller might just be a nice guy who'll let you walk away if they haven't suffered any loss.
 
#14 · (Edited)
Yikes, this is about as trivial a legal situation you are ever likely to face.

Are the the words of your agreement those copied below from the Standard? If yes, as I said in the first post, neither survey nor sea trial is required, send the written rejection letter and you'll get your money back, unless you haven't laid all the facts on the table. Actually the standard form has no provision or reference to sea trial at all, although you may have written one into ADDITIONAL PROVISIONS. As long as you didn't markup the rejection language, that would be irrelevant.

This is just business, not something personal. That's the lovey thing about a contract, there's no need for all the hypothesizing that otherwise gets thown out.

"
STANDARD FORM OF THE YACHT BROKERS ASSOCIATION OF AMERICA
YACHT PURCHASE AND SALE AGREEMENT

DATE: ________________________________
1 of 4

1

This is an Agreement (the "Agreement") made by and between ________________________________________

2

of ____________________________________________________ , a citizen of _________________________

3

(the "BUYER"), and _______________________________________ of ________________________________

4

________________________________ , a citizen of _______________________ (the "SELLER"), owner of the

5

________________________________ described in Attachment(s) _____ to this Agreement, which is made a

6

part hereof, and named "___________________________________________________ ," (the "YACHT").

7

The BUYER and SELLER recognize __________________________________________(the "SELLING BROKER")

8

and __________________________________________ (the "LISTING BROKER") as the brokers handling the sale

9

of the YACHT, and herein referred to collectively as the "BROKERS."

10

1. PRICE AND DEPOSIT: The "SELLING PRICE" shall be

11

________________________________________________________ (______ _____________ ) for which the

12

BUYER agrees to buy and the SELLER agrees to sell the YACHT, subject to the terms and conditions

13

set forth in this Agreement. The sum of __________________________________________________

14

(______ _________________ ) of the SELLING PRICE shall be paid as a deposit (the "deposit") upon

15

execution of this agreement. The deposit shall be paid to and held in escrow by the SELLING BROKER

16

pending resolution of this sale. The balance of the SELLING PRICE shall be paid in collected funds at the

17

closing. Should the SELLER and BUYER agree that payment may be made in any form other than collected

18

funds, they further agree to jointly and severally indemnify and hold harmless the BROKER(S) involved in

19

the transaction from any loss or liability resulting from reliance on use of such other form of payment.

20

2. SURVEY: The BUYER may have the YACHT surveyed at his expense, to verify the condition of the

21

YACHT and the accuracy of the attached inventory.

22

A. The SELLER agrees that the BUYER or his agents may examine the YACHT and inventory in a

23

nondestructive manner. If the YACHT is in the water, the SELLER may stipulate at which boatyard he is

24

willing to have the YACHT hauled for survey and agrees that delivery to and from the boatyard for survey,

25

which he hereby authorizes, is to be at the SELLER's sole risk and expense.

26

B. The BUYER agrees that the surveyor(s) shall be employed by the BUYER. BUYER agrees that any and

27

all claims that may arise regarding the accuracy of the survey in the transaction may not be asserted against

28

the BROKER(S).

29

3. ACCEPTANCE OF THE YACHT: The BUYER shall notify the SELLING BROKER of his acceptance of

30

the YACHT and inventory, or his rejection of same. Such notice which shall be in writing, shall be received

31

no later than five o'clock p.m. local time on ___________________. If said notice has not been timely

32

received, the BUYER shall be deemed to have rejected the YACHT and inventory in its present condition,

33

subject to the terms, if any, of paragraph #7. IT IS THE BUYER'S RESPONSIBILITY TO OBTAIN ANY

34

ASSURANCES HE REQUIRES REGARDING THE AVAILABILITY OF SATISFACTORY FINANCING

35

AND INSURANCE PRIOR TO THE ABOVE MENTIONED DATE.

36

4. TERMINATION OF AGREEMENT: If the BUYER gives notice of his intention to reject the YACHT

37

under the terms of this Agreement, such notice shall constitute termination of the BUYER's obligation to

38

purchase and the SELLER's obligation to sell, and the BUYER and the SELLER both authorize the

39

SELLING BROKER to return the deposit to the BUYER, after deducting any fees and charges incurred
40

against the YACHT by the BUYER, or by the BROKERS on behalf of the BUYER, including the cost of the

41

survey and related expenses.

42

INITIALS: BUYER BUYER SELLER SELLER
43 DATE DATE"
 
#16 · (Edited)
That is the exact contract. Section 7, addition provisions, we added:
Survey and Sea Trial
Then its no longer just the standard form. Did you add only those four words?? Yikes, that isn't even a sentence so it could be taken to mean anything or nothing.

If the deposit amount is not too large, I would think you are still very safe to just send the rejection letter. Everyone else involved will want to move on just like you do. For a big deposit, I'd see a lawyer, or rather have seen one before signing the Agreement.
 
#18 ·
I recently made an offer on a small boat and put down 10% pending survey/sea trial. Two days later, a relative offered to sell me their (much nicer) boat for very little money as they would like to see it remain with the family.

So - I no longer want the boat I made an offer on. The survey is scheduled already. My question is: Do I even need to do the survey?

Can I walk away from a signed purchase and sale for ANY reason? I understand I can nitpick the survey and kill the deal, but I would prefer to just tell them what happened. Can I do that?
Whoah - You can, and ethicaly SHOULD tell them that you have a better deal on another boat. You should also be prepared to part with your 10%.

In essence, by putting a deposit on the boat you are saying:
  • I have agreed to BUY THIS SPECIFIC BOAT AT THE PRICE WE AGREED UPON.
  • I will have the boat inspected, by a professional inspector, for undisclosed major issues, If any major issues are detected I will negotiate with the seller to have allowances made for them. (Boat is the wrong color does not qualify).
  • In the event that we are unable to agree upon the allowances, then we can agree to terminate the agreement.
  • If I back out of the deal for any other reason,you are entitled to keep my deposit.

How would you feel if your relative's boat were not available, and this boat passes the survey with flying colors. Yet, at some point before the transaction is complete, the seller says; "Forget about it, I've recieved a better offer. Here's your deposit back." I'm willing to bet that you'd be upset. That's effectively what you're doing to the seller.

Now, I'm not saying that he will keep your deposit, or if he does, that he'll keep the whole thing. Many people are understanding if you frame the discussion right. Going through the survey and telling him that it failed would be fraud.

Good luck with your decision.
 
#19 ·
Now, having read the contract (which is written in favor of the broker) you are in better shape than I thought.
TERMINATION OF AGREEMENT: If the BUYER gives notice of his intention to reject the YACHT under the terms of this Agreement, such notice shall constitute termination of the BUYER's obligation to purchase and the SELLER's obligation to sell, and the BUYER and the SELLER both authorize the SELLING BROKER to return the deposit to the BUYER, after deducting any fees and charges incurred
Tell him in writing ASAP that you are no longer interested in the purchase, and you are out of the contract, and you only owe the broker and seller actual "fees and charges incurred." - Realize that these fees may include the Broker's fee....:eek:

Ed
 
#21 · (Edited)
..., and you only owe the broker and seller actual "fees and charges incurred." - Realize that these fees may include the Broker's fee....:eek:

Ed
No way on the broker fee, that is incurred under the listing agreement only by a completed sale, and paid by the seller. The words reference fees such as hauling or launching related specifically to the sale, typically for survey or sea trial.

I actually feel the Yacht Brokers Association of America standard agreement is favorable to the buyer in the sense that it gives the buyer a period to evaluate the boat and the buying decision, during which he/she can simply walk away...as TrueWest will...no explanation required, as long as it's done in writing before of 5PM on the acceptance date. Petty fair for the buyer, too bad for the seller, and for the broker who has a sales agreement evaporate along with the broker fee.
 
#20 ·
One more thing...

Tell the surveyor ASAP that he's not needed for this boat. However, you still may want him to survey the boat your relative is giving you.;)
 
#23 ·
Hello, can someone help me by telling me how a form looks like by buying a 35' sailing boat from a private person, NO via broker. Are there standard forms?
Thanks in advance.
Mbu745
Short answer, no.

You can to take the broker's form http://www.oceanmarinellc.com/brokerage/PurchaseandSaleAgreement.pdf and strike out the references to broker and replace them with an escrow arrangement of your choice, or none, and make other suitable adjustments.

If the boat is expensive (say over $40K or the seller has been anything other than a pefect gentleman), you would be wise to find a lawyer with relevant experience to do the work.
 
#24 ·
Buck up be a man and do the right thing in telling them your situation...

You will get all or most of your money back ( Less yard expenses if any) They cant ding you for anything more. As said before your contract gives you the right and most likely so does your state...Washington law lets you out of any contract within 3 days as mentioned so does Maryland..

Do whats right by all partys and be honest and humble...
 
#26 · (Edited)
Try being honest.

Read your contract and see if the vendor has any claim to your deposit. If he does, then realise that you have reneged on your side of the agreement and that when you signed the contract you agreed to forfeit your deposit if you didn't proceed.

If the vendor has no claim to your money, then tell them the truth and ask for your funds back. If they refuse to return them, send a registered letter, then have your attorney send one.

If you proceed with some subterfuge, then you've got no reason to complain or be surprised the next time someone treats you dishonestly.

Good Luck ! :)
 
#28 ·
There are no "ethics" involved here. You are not bending the truth to say you don't want the boat and if the contract gives you that out then tell them you don't want the boat. The reasons are your business and you need not let anyone on this forum guilt you into doing more than is in the contract. The "out" clauses in a contract are there to provide fairness to both parties on major purchases like boats and houses.
pigslo
 
#30 ·
This thread has probably about run its course, but the language of the standard Yacht contract seems to me to be one of the few contracts you'll see that favors the buyer.

The way I read the standard contract, a buyer can pretty much reject a yacht for any reason, or no reason, up until the point they say they will accept the boat after survey and sea trial if desired and before a specified date. Prior to that, there is no obligation (including any obligation to survey the boat) and you have every right to expect back every dime of your earnest money.

Once you have said you'll take the boat though, your deposit belongs to the seller/broker as per the agreement.

For an ethical dilemma is it unethical if you reject the yacht after saying you'd accept it, so long as you agree you've forfeited your deposit and you take no action to try to reclaim it? You've reniged on your promise to buy, but have abided by the contract language.
 
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