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  #1  
Old 07-01-2010
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at what point is the purchase contract binding?

At what point during the purchase contract can I no longer get out of it? My broker has told me (I think, my memory may be fuzzy) that once the offer is accepted, it's binding, and the only thing we can do after a survey is adjust the price by an escrow amount specified in the purchase contract (on the order of 5% of the boat's value). I was thinking that it was normal for after an unfavorable survey to be able to walk away. If the engine is bad or somesuch, that's way more than 5% of the boat's value! I also don't know where the sea trial fits into this... should it be before or after the survey?

My broker has an excellent reputation and he seems very trustworthy, so I don't think he's trying to screw me by roping me into a contract. I think I've just somehow misunderstood something. I'm hoping to get an idea of what is typical in a boat purchase before I go back to him and ask him to clarify. If it makes a difference, the boat, the broker, and me are all in MA.
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Quote:
Originally Posted by rmeador View Post
At what point during the purchase contract can I no longer get out of it? My broker has told me (I think, my memory may be fuzzy) that once the offer is accepted, it's binding, and the only thing we can do after a survey is adjust the price by an escrow amount specified in the purchase contract (on the order of 5% of the boat's value). I was thinking that it was normal for after an unfavorable survey to be able to walk away. If the engine is bad or somesuch, that's way more than 5% of the boat's value! I also don't know where the sea trial fits into this... should it be before or after the survey?

My broker has an excellent reputation and he seems very trustworthy, so I don't think he's trying to screw me by roping me into a contract. I think I've just somehow misunderstood something. I'm hoping to get an idea of what is typical in a boat purchase before I go back to him and ask him to clarify. If it makes a difference, the boat, the broker, and me are all in MA.
You can put whatever you want into your offer. Don't think that just because a broker hands you a piece of paper to sign that has "Offer" written on it that you are under any obligation to use it - that's just some piece of paper a broker handed you, you can use it, change it, or make up your own. It is your offer, make an offer you are completely comfortable with, don't let a broker push you into anything.
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Old 07-01-2010
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If it is a more "standard" contract...you are able to walk any time after the survey, for any reason, if you do not like the results of the survey for what ever reason...

In the real world, since you now have some $$ in the game and likely want a boat, the broker counts on you to now negotiate those things in the survey that you feel are show stoppers. The seller nor he, are going to be real interested in negotiating B or C list stuff or nickle/dime stuff...They better negotiate the A list stuff, as much of it will prevent you getting insurance if it is not fixed.

If in fact there is a 5% clause in the purchase contract, then you need to read it and see what you have signed on to. I certainly would not look for a broker, no matter what the reputation or past experience has been, to look out for YOUR best interest....he is looking for a commission, nothing more.

I have always done the sea trial in conjunction with the survey, I notify the owner/broker that I want a cold engine, and potentially the boat for the whole day. Bring your digital camera and use it. This day is on my nickle so I don't feel bad at all about this, and if either refuse, then I walk.

On survey day, I and my wife show up at least an hour before the surveyor, she does aesthetics and I do technical. We then compare notes, and notice what is on the boat, what is in the listing, and what we want that is not in the listing. I have been burned in the past...broker used a "sister" ship photo, that had davits, dinghy and "all related sailing" gear. When we came aboard the second time, all the sailing gear had been removed, the new avalon with engine swapped with a no name and no engine. (about $20K difference - we walked)

I have my list and notes ready and have a chat with the surveyor first thing, I tell him what I want, confirm the price and any terms he has. We then walk around the boat, talking about this and that, I add to my notes, he does the same. By now the broker/owner has appeared and with their permission we start the engine and the genny, disconnect shore power and make sure everything idles, comes up to temp and things are nominal. IF the surveyor, I and the owner/broker all agree, the survey will continue...or it stops now, if the engine doesn't start, smokes, leaks, won't go in gear, etc, etc, same for the genny. Genny shut down.

We do the sea trial and I ask to SEE everything work. I want every sail unfurled/furled, all points of sail, backs and forwards, turns on a dime, stops. I want the swim ladder down, the anchor gear tested, etc etc. If it has a knob or a latch, it is exercised. Results noted.

If the sea trial goes well, I call the marina for the short haul (you have contacted them and explained that you plan on being there between such and such time) and ask whether they want me bow to or stern to. We head to the marina. Step ashore. I and wife on one side, surveyor on the other as she comes out of the water. We trade places. Take notes and pictures.

I then poke and look. If there is a show stopper here, or any where along the line, I or the surveyor can ask to step aside, discuss and make the call - BEFORE we haul completely. IF it looks OK to proceed, then we do so. hammer and moisture meter, sharp knife or awl for blisters. Then I step back and let the surveyor do his thing. I am within ear shot for any thing he has to say about the boat.

Once he is done, he and I talk, and with in a short time have his preliminary findings so that I can notify the owner/broker while she is hauled that I want the bottom scraped and painted, thruhulls repaired, zincs, and other maintenance I WANT done, and make sure that everyone knows it is on my nickle. Again you need to speak with the marina and make sure they can do the work YOU want done. Make it clear who is paying and who the marina answers to.

I then ask the broker for a few minutes, and say either "we are good to go and we have a deal, draw up the final papers", or "WE have some things to negotiate, when and how would you like to do that" (usually they will want to SEE the survey, so it may be a day or two to get your copy) or " I am sorry this boat has too many serious issues, such that I am no longer interested, please have my deposit and a release available by close of business" today or tomorrow - your call here.

I really try not to talk business with the owner, some are unrealistic in their expectations and you will not be happy. Some are the most wonderful people, though and are honest and willing to work with you.

Settle your yard bill, pay the surveyor and get ready to enjoy your new boat, or start the process over.

Sorry to hear the 5%, as you have said an engine could be way more than that.

keep us posted.
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Old 07-01-2010
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Take a digital camera and notebook with you when going to watch the survey...follow much the same rules as in my Boat Inspection Trip Tips thread and keep a record of what is said, done, and what is on the boat...
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kd3pc,

(Not that you would want to), But I don't think you and I would be doing business if I were the seller. You have lots of good things specified that a buyer should check, but in my opinion, you go well overboard in infringing on my rights as the owner.

First of all, if the boat goes out on a demonstration sail or is lifted out of the water, it won't happen if I'm not there. With this agressive process, what prevents you from breaking something or doing other damage and then just saying that the boat doesn't meet your needs?

As for that sharp knife or awl, the moment you or the surveyor sticks those things in my boat, the boat is yours. And that hammer, you'd better go easy on that or the survey is immediately terminated and there will be no deal.

Once the boat is yours, you can do what you want. But as long as it's my boat, you have to treat it with respect (no damage or abuse), and whatever you do, I'll be there. After all, there are other buyers out there.

Last edited by NCC320; 07-01-2010 at 03:32 PM.
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Where did it say that the owner was not allowed on a sea trial? He said that he would not talk business with an owner. I don't read that he would not talk with an owner at all, which I think is how you took it.

Also, Popping a blister with an awl to inspect the liquid inside is a standard survey practice as I see it. And every surveyor worth their salt is going to take soundings with a hammer.

I think you are taking the poster to be a bully - I take his post to convey that he is a serious buyer, taking the process seriously. After all, any problems after you own the boat are yours!!!

Chris

Quote:
Originally Posted by NCC320 View Post
kd3pc,

(Not that you would want to), But I don't think you and I would be doing business if I were the seller. You have lots of good things specified that a buyer should check, but in my opinion, you go well overboard in infringing on my rights as the owner.

First of all, if the boat goes out on a demonstration sail or is lifted out of the water, it won't happen if I'm not there. With this agressive process, what prevents you from breaking something or doing other damage and then just saying that the boat doesn't meet you needs.

As for that sharp knife or awl, the moment you or the surveyor sticks those things in my boat, the boat is yours. And that hammer, you'd better go easy on that or the
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I assume you will sign the standard broker agreement, see here
http://www.integrityyachtsales.com/i..._Agreement.pdf
as also discussed in this thread and others:
http://www.sailnet.com/forums/boat-b...hase-sale.html

You understand correctly that a P&S is a binding agreement, so you need to pay close attention to the terms. You can write in additional provisions in Section 7.

Funny, my past recollection was that failure of the buyer to reject the yacht in writing by the acceptance date indicated acceptance, this 2009 version has it reversed, probably the better way to write it, as buyers may not be paying close enough attention...

I suspect that what the broker said to you is "once YOU accept the yacht...it's binding", as that is what the agreement says...

You accept the yacht in writing (per this agreement version), and can do whatever due dligence beforehand you chose or not..after acceptance you are bound to the purchase. Actually works just like a buying a house...
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Quote:
Originally Posted by kd3pc View Post
...there is a show stopper here, or any where along the line, I or the surveyor can ask to step aside, discuss and make the call - BEFORE we haul completely. IF it looks OK to proceed, then we do so. hammer and moisture meter, sharp knife or awl for blisters. Then I step back and let the surveyor do his thing. I am within ear shot for any thing he has to say about the boat.....
Hmmm...Just to point out the right process also has to consider what you are buying. How would a cored hull that that has is completely saturated with water get found under a damp bottom?

The surveyor missed that condition on a friend's purchase, and my friend subsequently ended up losing a full year's use and over $15,000 having the bottom peeled, and no one should think he had any recourse...
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Old 07-01-2010
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BTW The hammer used in surveying is a small diameter, flat faced lucite hammer specifically chosen for the sound it makes and the fact that it does not damge the boat. The popped blisters is another story. Most contracts to purchase stipulate that the survey will only include 'non-destructive testing methods'. Slicing open a blister is by its very nature is destructive. On the other hand, there is no way to know how deep or active a blister is without opening it, so agreement must be reached with the owner before opening blisters as to tools, methods and how many. I typically push on the surface of a blister to see whether it is solid or hollow and if hollow, then decide if it needs to be opened. (My tool of choice is an Xacto #11 or very sharp chisel which allows a thin small cut so you can see the underside of the mebrane that forms the blister clearly.)

Jeff
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Old 07-01-2010
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Regarding the OP. The following quote is from a broker regarding an offer that I extended;

Quote:
...You would have the right to survey the boat to determine the condition of what ever equipment, and systems that you would like.

If there are big problems with that come to light during the survey you would have the right to negotiate a price adjustment or repair by the seller.

If negotiations are unsuccessful then you have the option of cancelling the agreement to purchase....
To put this in context, this is the same boat that I started the No Survey - No Deal thread about. Two an a half weeks after I agreed to meet the seller 1/2 way on their counter offer, they indicated that they would now accept my final offer. By that time, however, I was on to looking at other boats.

Not to hijak the thread, but the email quoted above also went on to say that the seller would not accept escrow as a condition of sale, and would not allow a sea trial, but would instead allow me to run the engine and transmission on the hard. The broker made several recommendations for surveyors that I should/could use... All of these conditions were glaring RED FLAGS for me, and I have not purchased this boat.
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