My answer to What’s the catch with Escrow when you want to buy a boat through a broker?
Answer by Desmond Last:
As the instigator and founder member of the Marine Brokers Association of NSW Australia and owner boat broker of Sydney Boat Sales for 12 years I can explain how the buying process should operate. There will be variations to this but the principle will remain the same – your money is kept in a Trust account which is only used for the sale and purchase of boats. Everything I have listed below should be the responsibility of the boat broker.
- When you have decided to buy the boat you should be given a contract to sign. Make sure the broker confirms he or she has a written agreement to sell the vessel.
- The contract will list the inventory and the conditions of sale.
- You will be asked to place a refundable deposit to secure the vessel. Should you decide not to buy the vessel the deposit will be returned to you.
- The conditions of sale should state that you are buying the vessel subject to a survey.
- The survey cost and the removal of the vessel from the water to inspect the hull and fittings etc will be paid by you or the owner. This will vary from broker to broker. However normally it is paid by the buyer.
- The deposit is placed in a dedicated account which can only be used to the holding of monies for the sale and purchase of boats. This safeguards your money.
- You will be given a receipt for the deposit which is normally 10 per cent of the sale price.
- The receipt should be from the bank not the broker.
- Once the inspection is completed and any post-inspection negotiations are carried out you will be asked to sign that you are now buying the boat. Your deposit now becomes non-refundable and you must pay the remainder of the sale price.
- This should be completed within 5 days of the agreement to buy.
- You should also be given confirmation that there is no money owing on the boat and as far as is legally possible you are getting clear title.
- Do not under any circumstances accept the vessel until you have proof that any outstanding loans on the vessel have been paid out – this can be done with your payment.
- If the vessel is owned by several people make sure they have all signed the sale contact.
- If it is a commercially owned vessel make sure the company secretary and all the directors have signed the sale document.
- Very Important for Commercially owned Vessels. Make sure the vessel is not listed as an asset on a company loan – the broker should do this.
- If the vessel is being sold as part of a liquidation sale ensure that the finance company are able to prove all loans caveats etc have been paid out. They must also show the court order or documents giving them authority to repossess.
- Make sure the inventory is checked during the inspection and signed by the owner as all its inclusions being part of the sale.
- The sale of a vessel must be accompanied by a document clearly showing you are the new owner and by the same legally witnessed by the owner(s) stating they are the owners and agree to sell.
- If in doubt check with the local Marine Brokers Association.
- If the vessel has been registered overseas you will need to check for any liens or caveats from those countries.
- The specific answer to your question is that all documents should be prepared and ready when the vessel is listed. Your money should be held no longer than a week unless the owners cannot be contacted.