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  #31  
Old 08-15-2013
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Re: Previous owner wants property tax credit?

I wouldn't give him any money, Just tell him your broke. Once you pay him he will probable call you next month and ask for money because he left fuel in the tank. If you start thinking like that you will owe a prorated amount for everything he bought on that boat.
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  #32  
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Previous owner wants property tax credit?

I have never seen a real estate contract that did not explicitly call for proration of items like property tax, fuel in the tank, etc. if your contract, not for real property, did not call for allocation, I would regard it as not your obligation.
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Old 08-15-2013
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Great points, Minnewaska.

To the other chap talking about a lien being filed on the boat... couldn't this be cleared up with the county with your bill of sale or title showing your date of purchase? Granted, nobody wants any kind of lien on their property, but there wasn't a lien on the boat when he bought it. The tax and any penalties for tardy payment should fall squarely on the previous owner.

Poster, was there a lien on the boat for these taxes when you bought the boat?
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I don't even think you could register a boat with a lien on it?? Poster, have you registered the boat since purchase?
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  #35  
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Re: Previous owner wants property tax credit?

The standard YBAA contract has the following language:

8. SELLER’S REPRESENTATIONS: The SELLER warrants and/or agrees as follows:

B. That the YACHT will be sold free and clear of any mortgages, liens, bills, encumbrances, or claims whatsoever.

D. To pay any and all duties, taxes, fees, or other charges assessed against the YACHT by any governmental authority prior to the closing, to hold harmless and indemnify the BUYER and BROKERS against any claims or actions for such fees, and to provide validation of such payments at the closing, upon written request by the BUYER.

(emphasis added)

I'm curious whether these parties used the standard contract, however, it makes common practice pretty clear, doesn't it?

Seller does not owe these in common practice, let alone if the seller did not negotiate them prior to purchase.

Real estate has a different common practice, because real estate can't be moved out of the jurisdiction. It's not applicable.
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Last edited by Minnewaska; 08-15-2013 at 08:30 AM.
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Re: Previous owner wants property tax credit?

I can't get over the fact that you have to pay annual taxes just to own a boat. I've owned boats in Louisiana for almost 20 years now and only paid sales tax on a new boat once, and every 4 years registration. I think people would be up in arms in the streets, er, bayous, if they tried that here.
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Re: Previous owner wants property tax credit?

Quote:
Originally Posted by El Rubio View Post
I can't get over the fact that you have to pay annual taxes just to own a boat. I've owned boats in Louisiana for almost 20 years now and only paid sales tax on a new boat once, and every 4 years registration. I think people would be up in arms in the streets, er, bayous, if they tried that here.
Every state divides up the tax burden differently. Here in the great state of Connecticut, we have very low income taxes. In fact, we had no income tax at all until about twenty five years ago. Towns and cities were basically on their own to fund schools, police, fire and snow removal (a very big budget item here) as they got little assistance from the state. The way they made up for it was to assess taxes on the real and personal property of their citizens. So we pay high annual taxes to our town or city of residence based on the value of our real property, as well on our vehicles. In a bid to increase revenue a couple of years ago, the towns had asked the legislature to allow them to also begin taxing boats and PWCs. That was defeated (with the help of BOATUS). I know that some states have chosen a different balance of the tax burden, choosing to have higher state taxes and lower local taxes; some states (like NY, Mass. and Calif.) just have all-around high taxes, while others have all-around low taxes. IMHO, one thing is universally true: while adjusting for the ever-present government inefficiencies, it all comes out in the wash. States with lower tax burdens get less in the way of government services. I do not offer an opinion if that is good or bad, just that I think its true. We get what we pay for.
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Old 08-15-2013
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Re: Previous owner wants property tax credit?

Quote:
Originally Posted by imasaluki View Post
...To the other chap talking about a lien being filed on the boat... couldn't this be cleared up with the county with your bill of sale or title showing your date of purchase?...
Possibly. Hire a lawyer and you can clear up almost any problem. It's just that as a practical matter it may be less expense to split the tax bill now to avoid the possibility of a lien placed on his boat later. OP can take his chances, but it may be a pay me now or pay me later situation.

If OP used a contract that has language to cover this, then there's an argument to follow the contract. But if a broker was involved this probably would not have happened at all, so I have a feeling that the YBAA agreement is irrelevant. Perhaps OP can tell us what language was in his purchase agreement.

But for all you guys advising to play hardball, remember that the seller might just be "holding the stronger hand" in this case. Of OP gets the seller mad, and the seller decides to play hardball by simply not paying the bill, it's the OP who may end up with a lien on his boat. This is not a legal opinion, just my hypothesis of a worst case scenario.
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Re: Previous owner wants property tax credit?

I believe, that the Lien is assessed to the individual not the boat. The individual that owned the " unsecured" property on January 1st. Any proration of the tax due is a private matter. The taxing authority is only interested in who owned the property on the assessed date.

It sounds like this should have been a separate line item in the sales contract and that any money carved out to pay taxes should have been placed in escrow to satisfy the tax bill when it came due.

I understand the rationale of fairness..and that you may need to call upon the sellers experience in the future etc. How much money are we talking about?

On the other end... when the new owner goes to sell the boat, you now know to put a clause in the contract regarding the tax or factor it in to the price.
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Re: Previous owner wants property tax credit?

Quote:
Originally Posted by Tempest View Post
I believe, that the Lien is assessed to the individual not the boat...
How do you put a lien on a person? Seize his birth certificate or passport?

While it is true that the liability falls with the person, the taxing jurisdiction's most effective way to enforce an unpaid liability may be to slap a lien on the taxed property, ensuring that it can never be sold, mortgaged, or otherwise monetized until after the tax is paid. It's possible that they won't care who owns it now, they may just put a lien on it and let the buyer and seller duke it out amongst themselves. Their attitude may be that it's not their problem, they just want their taxes.

I'm not saying that this will happen. But if the seller gets pissed off and walks away without paying, there would seem to be a risk that the buyer will be left with a lien on his boat.

I'm not an expert at this. If an expert were involved in guiding this transaction, this issue would have been anticipated and proactively covered in the contract, with moneys going into escrow until the bill came up, and the escrow agent making sure the payment is made so the buyer doesn't end up with a lien on his boat. But these guys apparently decided to save money by not paying a broker, and this is an example of the kinds of risks you get into when you do that. It's a choice, and even if he ends up having to satisfy the lien by paying someone else's tax bill, he's probably still saving money on the deal. Let's hope this remains a hypothetical worst case scenario.
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Last edited by TakeFive; 08-15-2013 at 11:01 AM.
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