Boat Purchase Agreement
On the Boat Buyer’s Guide page we reviewed finding just the perfect boat; we are now ready to make that offer, so what happens now.
We must prepare a boat purchase agreement for your signature.
The Offer Price – Once we determine what similar boats have been selling for, we will arrive at an offer price. The price will reflect:
- what your budget will allow
- what is fair
- what is realistic to buy the yacht based upon her age and condition, and
- protection for you as conditional.
I then prepare a formal written Boat Purchase Agreement (offer) for your review and signature. The Boat Purchase Agreement will be a legal binding contract between you and the seller. Here are the critical elements of that agreement. All dates and numbers are for illustration purposes only.
Boat Purchase Agreement – Line 1
The Boat Purchase Agreement will specify by name, brand, year, model, hull ID and documentation number exactly what boat you buying.
Boat Purchase Agreement- Line 2
The purchase price is (example) $170,000.00 US Dollars. The sum of $17,000.00 US Dollars is hereby paid to the escrow account of the Broker acknowledged below, as a deposit toward the purchase price, and subject to the terms of this agreement; said funds to be cleared into said account following acceptance by Seller. The offered price for the vessel will be specified here along with the amount of your good faith deposit.
I am required by law and do use an escrow account for your offer deposit.
Boat Purchase Agreement – Line 4
This offer to purchase shall be accepted by Seller, and written evidence thereof delivered to the selling Broker on or before August 11,2009 5:00 PM or this offer shall be deemed revoked and the deposit shall be returned to Buyer.
The date by which the seller must either accept or reject your offer is placed on this line. We will require his signature on the Purchase Agreement by this date or your deposit is refunded.
I typically allow 3-5 days from your offer date to allow verbal negotiations to take place between the parties. But usually price negotiations are complete in 24-48 hours. If any adjustments are made to the agreed upon price, we’ll modify the price on Line 2 and get your initials confirming your acceptance of the changed purchase price.
Boat Purchase Agreement – Line 5
Written acceptance or rejection of the vessel must be made by the Buyer within (by) August 25,2009 5:00 PM. Buyer’s failure to exercise his right of acceptance or rejection as specified shall be construed as rejection. In the event of rejection the deposit shall be returned to Buyer after all expenses incurred against vessel have been paid.
Here we will insert the date by which you must either accept or reject the boat. I typically allow 14 days to complete your review of the boat from the date on Line 4 but it can vary depending on holidays etc. During this period, we will set up and perform the survey and sea trial (Line 6) so you can be sure its the right boat for you.
By this date I will ask you to sign a written Acceptance of Vessel if you wish to follow through with the purchase. When you sign this document, this is my cue to begin the closing process. If you do not want to go forward with your purchase, your deposit will be refunded.
If items are found on the survey that affect the value of the boat, we can/may accept the boat with additional price reductions.
Boat Purchase Agreement – Line 6
The sale of the vessel is subject to (write in N/A if not applicable): Usually, the offer is be made conditional on that satisfactory marine survey and sea trial. Other conditional items may be added as well.
In the event this sale is subject to survey and sea trial, the Buyer acknowledges and agrees:
- He will/has selected a surveyor who is in his employ and is responsible solely to Buyer for any errors or omissions, notwithstanding the fact that the Broker may have provided information and assisted the Buyer with hiring said surveyor.
- He shall instruct his agent or surveyors to examine and/or sea trial the vessel to ensure the vessel meets the Buyer’s requirements;
- All costs of the survey shall be at the expense of the Buyer, including but not limited to all associated costs such as haul out, dry dock charges and/or subcontractors, if applicable.
In the event that the sale of the vessel is subject to sea trial or trial run, the Seller agrees that any sea trial which he authorizes shall be made at Seller’s sole risk and expense. Preparation for survey and operation of the vessel for sea trial is the Seller’s responsibility.
Boat Purchase Agreement -Line 8
In the event the closing is not consummated due to non-performance of Buyer,…. all deposit funds paid prior to closing shall be retained by the Seller and Broker as liquidated and agreed damage and the parties shall be relieved of all obligations under this Agreement.
If you as a buyer do not follow through with the purchase after signing the Acceptance of Vessel your deposit can be retained by the seller.
Boat Purchase Agreement -Line 9
In the event the closing is not consummated due to non-performance of Seller regarding any of the covenants in this contract, all money paid or deposited pursuant to this contract by the Buyer shall be returned to the Buyer.
If the seller does not follow through with the sale, all deposits are returned to you the buyer.
Boat Purchase Agreement – Line 10
The said vessel is being purchased free and clear of all debts, claims, liens and encumbrances of any kind whatsoever, except as noted hereinafter, and the Seller warrants and will defend that he has good and marketable title thereto and will deliver to the Broker all necessary documents for transfer of title to the Buyer on or before the closing date, which is agreed to be on or before September 2, 2009 5:00 PM.
The boat will be cleared of all liens and debts prior to your taking delivery. The closing date is specified here which is about 7 days from the signing of the Acceptance of Vessel. There is no formal closing meeting such as real estate. All signatures and documentation will have been processed after the date of your signing the Acceptance of Vessel.
Final payment due at time of closing shall be in the form of cleared or negotiable funds acceptable to Seller. By the date of closing the vessel shall be delivered at Boat Location together with all gear, machinery, equipment, furnishings and all other articles and appurtenances thereto agreed upon.
Boat Purchase Agreement -Line 11
Sale or use taxes, if applicable on this purchase, are the responsibility of Buyer. Taxes on Florida vessels will be collected by the selling Broker at time of closing or affidavit submitted for exclusion. Duties, taxes and/or fees on the vessel of any state, country, city, regulatory and/or taxing authority incurred prior to the date of closing of this transaction shall be the responsibility of the Seller and shall be paid by closing date.
Florida boat purchases may qualify for a sales tax exemption.
Boat Purchase Agreement – Line 19
The Broker will retain an independent closing company to handle the documentation for the sale. The cost of the closing will be paid by the Buyer.
Paradise Yachts retains an independent documentation company to handle all sales. They will process your new boat legal paper work including lien checks, registration and federal documentation transfers. Their costs to you will be about $600.00 for a typical purchase.
Your deposit will be recorded on the Agreement; a copy of signed documents will be provided to you.
To experience the liveaboard lifestyle, visit our MV Patricia Ann blog.