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Old 17-05-2007, 10:36   #1
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escrow for a new to us boat???

Hey folks,
We're getting very serious about buying our next boat, but I've got a few nagging concerns.....

We live in FL and the boat is also here (and registered here)but the owner is in MO. We are not using a broker and I'd like to secure the boat with a deposit, but how do I go about protecting myself from him running off? Are there escrow companies that do this? Another concern is the title clear and how do I know it is?

All suggestions are appreciated!
CHeeRS!
-dennis
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Old 17-05-2007, 11:25   #2
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Quote:
Originally Posted by fla.sailor
Hey folks,
We're getting very serious about buying our next boat, but I've got a few nagging concerns.....

We live in FL and the boat is also here (and registered here)but the owner is in MO. We are not using a broker and I'd like to secure the boat with a deposit, but how do I go about protecting myself from him running off? Are there escrow companies that do this? Another concern is the title clear and how do I know it is?

All suggestions are appreciated!
CHeeRS!
-dennis
Yo Dennis,

There are companies which specialize in title searches and documentation. Call Dono Jenkins in San Diego @ 619 224 2279.

Also a well-regarded yacht broker could handle the escrow process for a small fee. Additionally you might find an attorney who specializes in this. Talk to your bank manager as well.

best, andy
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Old 17-05-2007, 14:38   #3
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Well, this is something that brokers are good for. But, talk to your local bank. Back in the '80s I bought a boat in a private transaction and my local bank was willing to act as escrow agent. I'm sure they charged something, but it wasn't much - it's something that banks routinely do for other kinds of transactions. Obviously, the seller would have to agree to this.
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Old 17-05-2007, 15:01   #4
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Marine Documentation Services in Anacortes WA did a good job for me. Also Dianne at First American Title Anacortes WA.
Telephone: (360) 336-1031
> Fax: (360) 293-7257
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>
In order for the title to be clear on a documented boat you need to have a Coast Guard search done. I don't know how it works with a registered boat. I imagine it varies by state.
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Old 17-05-2007, 15:35   #5
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Dennis-
Escrow is usually used to assure that money will be held in reserve for surprises, like "Gee, when we hauled it we found the keel had holes in it." It is NOT normally used to make sure the seller won't run off. You certainly can arrange that, any attorney or bank can set up an escrow fund--but the seller may rightfully say no, he wants his money.
That's one reason brokers are often used. You may be dealing with a stranger (the broker) but at least you aren't dealing with a total unknown--the seller in another state. And the seller may be thinking the same thing about you, i.e. even if you hand him $20,000 in cash, there's no way he knows if the cash is the real thing.
Finding a local broker or attorney to act as the middleman for both parties might be a good idea that way.
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Old 17-05-2007, 16:08   #6
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An escrow agent is the only thing that should be acceptable to a buyer or a seller. They both need the security. Any broker will perform this function well. It's the law! without a broker you need the service and it's worth a lot of good nights sleep.
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Old 17-05-2007, 20:51   #7
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When we purchased our catamaran in Florida, we used Elaine Grossman who is a documentation agent who knows all the ins and outs of doing the transaction, and she can connect you with an attorney if there is a need for an attorney. She is extremely professional and kept us from having problems on our yacht purchase. Her contact information is:

Grossman Elaine Yacht Documentation. Categories: Boat Dealers, Marine Documentation. 1909 Southeast 4th Avenue, Fort Lauderdale, FL 33316 (954) 463-0770

Elaine is awesome.

Cheers,
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Old 17-05-2007, 22:24   #8
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Quote:
Originally Posted by hellosailor
Escrow is usually used to assure that money will be held in reserve for surprises, like "Gee, when we hauled it we found the keel had holes in it." It is NOT normally used to make sure the seller won't run off.
Actually, it is. Escrow is about having a trusted third party hold the money so that none of the parties to a transaction can rip off any of the others. Even in real estate transactions (where it is hard to just disappear with the object being sold), escrow is used to protect the buyer from a seller who takes the deposit and doesn't bother to complete the transaction.

The whole point is that you don't trust that a random guy off the street will not rip you off, but you might trust a lawyer or a bank to hold the money for you.
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Old 18-05-2007, 13:21   #9
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Mark-
"Even in real estate transactions "
But let's keep this in context. In SMALL CRAFT sales, when have you ever known the principal, or the down payment, to be fully placed in escrow until after the title transferred and the sale completed? Especially during direct-party sales?
In context, as I said, it's not normally used that way. It might be a good idea, but I'd expect the seller to get all upset about it and if they got flustered, perhaps to walk away fearing a "problem buyer". (Presentation counts.)
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Old 19-05-2007, 04:35   #10
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Escrow is an arrangement in which money and/or documents are held by a neutral third party (the escrow agent), on behalf of the buyer and seller (& lender). The escrow agent gives the money and documents to the proper parties at the proper time, according to instructions from the parties

The purpose of escrow is to ensure that the seller receives the purchase price, the buyer receives clear title to the property, and the lender's security interest in the property is perfected.

Escrow protects each party from the other's change of mind.

Many (most?) jurisdictions licence escrow agents.
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Old 20-05-2007, 21:27   #11
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Quote:
Originally Posted by hellosailor
Mark-
"Even in real estate transactions "
But let's keep this in context. In SMALL CRAFT sales, when have you ever known the principal, or the down payment, to be fully placed in escrow until after the title transferred and the sale completed? Especially during direct-party sales?
In context, as I said, it's not normally used that way. It might be a good idea, but I'd expect the seller to get all upset about it and if they got flustered, perhaps to walk away fearing a "problem buyer". (Presentation counts.)
It depends how small you consider "small craft". If "under 50 feet" counts, then, yes, I have used escrow when buying and selling a boat. If you mean "under 15", then, no, I have not, but can think of one instance where I wish I had.

I personally would not worry about suggesting an escrow for a down payment of thousands of dollars. If that suggestion scares off the seller, I would be annoyed, but happy to have discovered that he was a "problem seller" so early in the process.
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Old 21-05-2007, 10:37   #12
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Mark, did you "use escrow" in the normal sense of setting aside a repair fund? Or have you really said "I'll make you an offer on the boat...I'll pay you for the boat...But you can't have any money until I have the title."

??
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Old 21-05-2007, 18:29   #13
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"Mark, did you "use escrow" in the normal sense of setting aside a repair fund?"

I have only purchased and sold a couple of boats and a few airplanes - most at a distance. Nothing over about $40k yet. I have never escrowed and never been burned so far - YMMV.

I write up a sales agreement that states a deposit - more of a good faith deposit - I have never put down more than $2k - I guess it I were putting down 10% on a $100k I would definitely escrow the deposit and the purchase funds.

Anyway, the agreement states the "agreed" price prior to inspection - at this point no one can change the price. It also states the owner takes the item off the market and makes the boat/plane available for inspection and sets the time limits for the buyer to get the inspection done and make the decision.

On the buyer side it states that an inspection will be done at buyer cost and a list of discrepancies will be generated. The buyer has the right to present the discrepancies to the seller and renegotiate the price. The seller is under no obligation to renegotiate or fix anything. If the buyer decides to accept everything the sale goes through. If the buyer decides not to buy the item the seller returns the deposit.

The only time the buyer loses the deposit is if the buyer cannot come up with the purchase amount on time. This is a default on the part of the buyer.

For the final transfer we have always used cashier's checks.

Escrowing is about risk tolerance. You have to weigh the cost of escrow against your tolerance to lose the deposit or whatever is on the table.
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Old 22-05-2007, 00:20   #14
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Quote:
Originally Posted by hellosailor
Mark, did you "use escrow" in the normal sense of setting aside a repair fund? Or have you really said "I'll make you an offer on the boat...I'll pay you for the boat...But you can't have any money until I have the title."

??
The second. For example, with my first boat:

On signing the purchase contract, I gave a deposit in the form of a check made out to the broker's escrow account. The contract gave a certain amount of time for various contingencies (e.g. survey, funding). If I failed to follow through with the purchase (or refuse it on a contingency term) in the specified time, the broker was authorized to break the escrow and give the deposit to the seller. The seller could then start again with somebody else. If the seller failed to complete the sale, the money in escrow would return to me.

If I remember correctly, I would have been entitled to void the contract because settlement was a few days late, but the contract only said that I could, not that I must.

Later, when I sold that boat, it was essentially the same, but with a different broker. I did not receive any money until after settlement. There was no "repair fund", but I gave a list of know defects in advance of the contract, and the buyer had the opportunity to examine the boat in detail. He even found some things in the survey that I didn't know about, and we negotiated a contract modification (i.e. lower price). After settlement, the boat was his, and not my problem any more.
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Old 24-08-2007, 08:02   #15
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We're buying a cat in the Annapolis area for cash. It needs the expired documentation updated and transferred. Any recommendations for escrow, title search and transfer? thanks
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