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Old 08-03-2011, 03:56   #1
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Unhappy Purchase Deposit Threatened

A few weeks ago I agreed to purchase a large catamaran in Italy. The deal was to pay 480.000 euros cash and take on the remains of a loan from CGMer for 220.000 euros. The purchase is being made via a broker based in Germany, Cat_Sale. The broker assured me that there would be no problem taking over the loan. AS I had enough money to pay cash for the boat, the presence of the loan did not concern me. I signed the contract and handed over a 50.000 euro deposit into what I have been assured was an Escrew account, which neither buyer nor seller could touch until the conclusion of the deal.

The finance company now tells me that I effectively do not earn enough to take over the loan (it is about 10.000 euros a month) and as I have now been told (only after handing over my deposit) because the loan is linked to a French Vat tax avoidance scheme, if I clear the loan I would have to pay a fee of 42.000 euros as the proportion of the VAT still due.

I have refused to do this and the broker tells me that my deposit will be forfeit unless I buy the boat by 30/03/11 for the agreed price plus the 42.000 VAT.

This boat was due to become the home for my wife and I to sail around the world as we both retired to do this. We have sold our home to do this.

What advice can people offer?

Many thanks,

Paul
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Old 08-03-2011, 04:24   #2
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Re: Purchase Deposit Threatened

My initial questions are:

1…What other contingencies were there on your agreement to purchase the boat?


2…Who did you hand over (sign) the deposit to and was it written as an escrow amount based on contingencies?

You really need a lawyer to sort this out.
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Old 08-03-2011, 04:27   #3
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Re: Purchase Deposit Threatened

check your contract,most marine contracts have a clause that says the vessel is "free of encumberences".

also if you are a non eu citizen,you are not required to pay vat if the vessel is being exported.

would be well worth getting a tax lawyer involved due to the short time before your contract expires.
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Old 08-03-2011, 04:36   #4
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Re: Purchase Deposit Threatened

What an easy trap to fall into.

I have no knowledge of Euro banks or VAT issues, but coming from a finance background I can think of 2 things worth trying with the finance company - best with a personal visit if possible.

1. Suggest a simultaneous settlement that you will hand them xxx Euros (an appropriate amount to reduce the debt sufficiently), and they should then be comfortable with your repayment capacity for what remains.

2. Offer sufficient security as a term deposit to be invested with them, so they have no risk.

You may need to get beyond the rules based front line personnel to achieve this. However, they may not wish to bend the rules if they think there is only a small short term profit.

Presumably as soon as you clear the country, the VAT liability disappears, and you would then clear the loan. Be aware there may be exit fees on the finance.

As an aside that must be one magnificent cat.
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Old 08-03-2011, 05:11   #5
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Re: Purchase Deposit Threatened

Quote:
Originally Posted by paul_doolan View Post
The broker assured me that there would be no problem taking over the loan.
Is it possible you have some comeback on the broker with this - surely he could be held liable for the extra fees if he gave you false reassurances, since it's his job to broker the deal?
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Old 08-03-2011, 05:16   #6
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Re: Purchase Deposit Threatened

I asked the broker, who is German, for confirmation that it was an escrew account and he said it was and that neither side could touch the money.

The contract warranties that the boat is "free from all charges and emcumbrances". I too take this as meaning there was no VAT charge pending.

The contract does not specify any conditions for the return or keeping of my deposit if the deal falls down.

I am an EU resident and therefore buying a yacht that is not VATpaid is not an option

All advice gratefully received, Paul
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Old 08-03-2011, 05:22   #7
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The VAT issue is not related to the boat. In Italy there is ( or was) a system where a private individual could lease a boat at the VAT free price and pay the VAT on the lease payments ( this happens a lot for car purchase by companies). Italy ( and France) then reduced the VAT rate on leases as an incentive to purchase a boat manufactured in Italy.

If the lease is redeemed you will have to pay all the outstanding VAT payments on the lease. Since the lease is a " service" offered in Italy it can't be "exported ". Hence your stuck with the VAT.

It's a common occurance, but really you should have insisted on clean unencumbered title. The owner redeems the lease etc. If you had intended to take over payments why didn't you have a confirmation from the lease company before any deposit was paid. The lease company actually will have title and be the owner and normally should be involved from the get go.

I'm sorry you have been badly advised here possibly a route is to sue the broker.

Dave
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Old 08-03-2011, 05:29   #8
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Re: Purchase Deposit Threatened

Thanks for this clarification ave. I thought I was buying the boat unencumbered by anything related to VAT. I have a number of emails stating to the broker that I will need proof of VAT having been paid. All of this was glossed over by the broker in his keeness to get this sale! There is also nothing in the contract about it.
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Old 08-03-2011, 05:46   #9
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Re: Purchase Deposit Threatened

I further note that the sales particulars for the boat from the broker clearly state "VAT is paid".
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Old 08-03-2011, 05:46   #10
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This unfortunately is a very common problem with brokers, who often leave all this to the end. I sold my boat in France recently and it wasn't until 3 months after the sale ( when I had the money) that the broker came looking for the VAT and CE declaration of conformity. Both of which I had. Imagine if I hadn't. !! ( and I had the money and don't live in France)

Brokers can be very negligent.

If I was you I'd threaten the broker legally. Get a german legal firm involved and shake his tree. It sounds like you have good ground

Dave
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Old 08-03-2011, 05:50   #11
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Quote:
Originally Posted by paul_doolan
I further note that the sales particulars for the boat from the broker clearly state "VAT is paid".
Be careful. That could be the case. When the lease company buys the boat. It will pay the VAT . It will also claim that back through the normal business VAT procedures. ( businesses don't pay VAT, in general, as VAT is a retail tax). Hence the boat should and would be VAT paid.

The issue is the lease payments have VAT on them and it's this that will have to be repaid if you redeem the lease.

Dave
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Old 08-03-2011, 05:51   #12
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Re: Purchase Deposit Threatened

Dave,
Since the boat is located in Italy, I imagined that the case would be heard in Italy and I therefore thought I should instruct an Italian lawyer.
Paul
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Old 08-03-2011, 05:57   #13
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Re: Purchase Deposit Threatened

Hello Paul,

I think that Wanderlust advice is the very prroper one.
As understand Your deal was stopped by Societe Generale and it will be the easiest solution now to deal straight with them. It will surely involve the personal meeting with them, but if You can put enough security with them they will probably give You green light.

On the other hand - if it is Your feeling that You were cheated by the German broker, try to contact his Handelskammer (he is almost surely the member of one), before going to court. They can try to solve the situation without the court.
Industrie- und Handelskammer

All the best ! ! !

Tomasz
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Old 08-03-2011, 06:10   #14
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Re: Purchase Deposit Threatened

Document everything. Save all emails and make sure all your communications with everyone involved are clearly and concisely documented with an index which tells them exactly where they can find any and all claims you are making. This will reduce the amount of time it takes you to get a lawyer up-to-speed in either Italy or Germany. Most contracts include a statement that states which jurisdiction a contract is being signed under (Country & State) and this should be where you file your claim. If you do not have this then try to find ways to gain leverage while you settle dispute. For example, if the boat is in Italy and you do not want it sold while you work things out and think that the Italian courts will freeze the assets while the issue is being resolved that might be incentive for the seller to find a solution. If you think there is more recourse in Germany then go that route. The important thing is to try and find a way to get some leverage so they need to work with you to find a solution.
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Old 08-03-2011, 06:31   #15
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Re: Purchase Deposit Threatened

Many thanks again for this advice. I will as suggested get all of my notes and emails together. AS also suggested, I have just contacted The Multihull World Brokerage, of which this broker is a member. Their managing director is going to call me tomorrow to discuss. THis is set to run and run. Very stressful. I had so been looking forward to make this purchase of a boat to take us around the world!
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