How Do I Sell My Boat?

[nolandinsight]

If I were going to owner finance my boat to a buyer, what paperwork would be involved? Do I become a Lien holder, and if so, how is that done? Has anyone ever sold their boat this way?

[denverd0n]

You need to be talking to an attorney, who will draw up the appropriate contract for you. What you do NOT need to be doing is asking for this kind of advice from a bunch of strangers on the internet!

[skipmac]

Owner financing a boat can be risky. It's a very portable asset so I would only consider that option if the buyer had very documentable ties to the community. It would be pretty difficult to track down the buyer if he/she decided to sail off into the sunset without paying.

Talking to a lawyer might be a good idea.

[SVRapture40]

Originally Posted by skipmac

Owner financing a boat can be risky. It's a very portable asset so I would only consider that option if the buyer had very documentable ties to the community. It would be pretty difficult to track down the buyer if he/she decided to sail off into the sunset without paying.

Talking to a lawyer might be a good idea.

Talking to a lawyer is the BEST idea! VERY risky business.

[nolandinsight]

Thank you so much for the replies. Before we get much further into this though, so as not to waste a poster's time, let me be specific about what I'm looking for.

I am aware of the risk of losing the boat and the money owed. To ease minds, I haven't decided to do this. What i need is not advice on wether to do it or not, but HOW to do it, should I decide to.

Again, thanks to everyone who has taken time to respond, your advice has not been lost on me!

Tim

[skipmac]

The how to is put a lien against the title of the boat or some other very negotiable collateral from the buyer.

To do this you should probably use a lawyer.

Also check the buyers references very carefully. If they own no home or property or other hard assets in the US then walk run away.

[WebWench]

You should also make sure they agree to an insurance policy covering liability and boat value as well...on an older boat it will probably require an insurance survey. You should be named on that policy as the mortgagee.
I would also suggest having other collateral, besides the boat. For example....they buy the boat from you and start tearing things out...maybe with the intent to upgrade...get part way done and then realize how much it costs and then run out of money or steam. At this point your boat might be worth less than you sold it for. If they default on the mortgage...you are out.
An unscrupulous buyer could also sell stuff off your boat and then default... same scenario for you.
There are lots of abandoned project boats in marinas....mostly older where good intentions end up scrapped. Lots of boat buyers who buy older boats and need to mortgage them do not have the money for the maintenance or repairs the boats need either... you end up holding the bag.

[jeremiason]

Consult a Lawyer and use a Marine Title Broker to handle the paperwork.

You will be placed on the documentation and the insurance as a lien holder.

Besides the normal payment stuff, you should have the Selling Contract written to make sure the buyer notifies you if the vessels is moved, chartered or used by anyone else but the buyer.

Also ask that the insurance company notify you the minute the buyer cancels or makes changes to the policy.

[rw58ph]

I would use a marine title company as they can document the boat, put a lien on the boat and maybe even write up a simple lone. When we bought the Eagle the owner finance part of the cost taking a lien on the boat, loan over 5 years. We were still house and kid poor at the time.

I would not financing the total, but finance what would be required by their bank to make the deal. If the bank would not do a partial loan, I don’t think I would want to finance the total. I would get a survey and offer to finance 20 to 30 % which should make a bank happy. Of course you loan would be subrogated behind the bank loan.

[letsgetsailing3]

There is a reason banks don't finance older boats, and they're experts at this.

However, if you can find the right terms, and get most of the money up front, you may be able make this work.

If the boat will need lots of work, it's probably better to make a clean sale.

[roverhi]

Financed the sale of our boat back in the days when interest rates were so high financing was nearly impossible. Did not change title to the boat. Had an attorney draw up a sales contract detailing the payments etc. and when and how title to pass when the boat was paid for, insurance obligations, etc. Got 40% down and something like 12% interest on the outstanding balance with loan amortized over 10 years and a balloon payment of the balance owed at 5 years. Sail worked out okay. The buyer trashed the boat and split for Thailand after making payments on it for 4 1/2 years. Since title never changed, we just took the boat back. Made out quite well pocketing the down payment, the principle and interest payments.

Sold the boat on terms again discounting the price to reflect the condition but still keeping the boat in our name. 2nd buyers were a young couple who'd lost their lovingly restored H28 on the rocks when the mooring line chafed through. Had no money for a down payment as all their money had been in the H28. Knew their ability to fix and maintain a boat so did a no money down sale with 10% interest and a 10 year amortization knowing they would do the boat proud. They spent 3 years totally going through the boat getting it ready for a cruise to SoPac. Boat was a thing of beauty right down to the chrome plated valve covers on the Volvo MD2 diesel when they paid us off and left on their cruise.

[scotty c-m]

I would ask for something more reliable than a boat as collateral. A house, pension fund, etc.

[belizesailor]

Financed the sale of a previous boat. Did all the proper filings and contracts, but what really saved me was maintaining a good relationship with the buyer. When things went south for him and he could no longer afford the boat, rather than just defaulting and creating legal hassles for me, he called me up and explained the situation. I let him slide on payments for a few months and helped him market the boat. We quickly found a cash buyer and I was paid in full.

Not sure I would risk financing a boat again, but in that case it helped make the sale the first time and worked out OK in the end.

[got seashells?]

Being in the banking field, I promise the law rides with the borrower. That being said I deal in high end home construction. I would find someone in the practice of contract and negotiation. Best of luck to you and the buyer. We love Belize and have spent quite a bit of time there. We are now in the market for the boat that will take us there as often as we like. Good luck and please let us know how it turns out.

[brownoarsman]

If you're looking for the how; I think what you're really talking about is peer-to-peer lending. I did some work for Virgin Money US before they shut down, and they did a lot of transactions on owner-financed house sales during the recession when credit was tight; where for a small fee they provided the boiler plate legal documents and also would take care of collections, processing, reminders, etc. It was priced quite reasonably.

With Virgin Money US shut down, you can find a variety of different providers here, and learn a bit more about the industry Getting Started With Lend Academy

Obviously caveat emptor, not legal advice, not a lawyer, just a suggestion. Hope it helps