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Old 14-04-2015, 04:39   #1
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Escrow Funds

I am being asked to send 10% of the anticipated purchase price for a catamaran to a "buyer's broker". I understand the need for placing the funds in escrow and have no problem doing so. However, I have yet to be able to get anything in writing and signed detailing how and what the escrow fund can be used for, or who the escrow funds belong to. I am not in the habit of handing over chunks of cash without some type of executed agreement in place. Do any of you know of any such documentation that I should be getting? Is it normal to wire funds to unknown accounts without documentation in order to purchase a boat? I can see where the ownership and use of the funds are addressed in the purchase agreement, but the purchase agreement will not be executed until I agree to purchase a specific boat.
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Old 14-04-2015, 07:10   #2
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Re: Escrow Funds

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Originally Posted by jacks88 View Post
Is it normal to wire funds to unknown accounts without documentation in order to purchase a boat?
No. Here in Florida, at least (practices vary in different parts of the world), you would not put up any cash until you were prepared to make a formal, signed purchase offer. The purchase offer would then include a down payment to be put into an escrow account (your "earnest money").
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Old 14-04-2015, 07:35   #3
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Re: Escrow Funds

Deposit goes with the written offer. No written offer, not deposit.

The written offer should outline the purpose of the deposit and who it goes to under various conditions. Ie:
- If the boat survey comes back fine and the buyer decides to just walk away, the seller may be entitled to keep some or all of the deposit to cover their costs in dealing with you and lost time on the market.
- If the boat comes back with major undisclosed issues, the buyer would be entitled to a full return of the deposit.

FYI - I am in a similar but different situation. We are looking at a private party sale in Europe and trying to figure out how not to just randomly transfer money to an internet person only to find they are a scam. We found a website suggested by ebay: escrow.com

For a small fee, they will hold the deposit hold the deposit subject to the terms you agree to and release it when the sale goes thru. They do have the ability to do a transfer in dollars or euros.
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Old 14-04-2015, 07:51   #4
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Re: Escrow Funds

The brokers in Fla. and Cali are licensed and the funds are supposed to be held by the book like in real estate. Oddly enough many states have no licensing.

On a private sale including internationally you can use one of the many boat documentation/title companies. They'll hold the funds in escrow.
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Old 14-04-2015, 07:55   #5
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Re: Escrow Funds

your 10% is only for intent to purchase, to asure you are serious about buying the boat and is based on your purchase of the boat at asking price IF and only If the inspection survey comes clean.
After the survey comes back, and is clean, the balance is due.. if not, you have the option to drop it and get your money back or negociatete..
The 10% is to keep all the tier kickers from going out on the sea trial for a free ride..
And everything should be on paper.. we added a blip to the contract when we bought our 42 as it was on stands in a boatyard.. 20k was to be left in escrow to cover the motor once the boat hit the water.. it was almost a months befor we finished hauling the boat to the west coast and doing the bottom on her that she was put in water and only then, after having a survey done on the motor, did we agree to reliese funds from escrow..
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Old 14-04-2015, 08:19   #6
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Re: Escrow Funds

No paper no money.
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Old 14-04-2015, 15:15   #7
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Re: Escrow Funds

Has scam written all over it. Run away.
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Old 15-04-2015, 05:15   #8
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Re: Escrow Funds

Ill do it for just 5%, funds will be used for gear, fuel and food. Lol seriously. It doesnt sound right at all

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Old 23-04-2015, 02:42   #9
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Re: Escrow Funds

I suggest you consult a lawyer for that especially if you are not that sure in buying it.
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Old 23-04-2015, 05:25   #10
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Re: Escrow Funds

Quote:
Originally Posted by jacks88 View Post
I am being asked to send 10% of the anticipated purchase price for a catamaran to a "buyer's broker". I understand the need for placing the funds in escrow and have no problem doing so. However, I have yet to be able to get anything in writing and signed detailing how and what the escrow fund can be used for, or who the escrow funds belong to. I am not in the habit of handing over chunks of cash without some type of executed agreement in place. Do any of you know of any such documentation that I should be getting? Is it normal to wire funds to unknown accounts without documentation in order to purchase a boat? I can see where the ownership and use of the funds are addressed in the purchase agreement, but the purchase agreement will not be executed until I agree to purchase a specific boat.

The "buyer's broker" should be working for you. You may do well to have a broker in your corner - because if it isn't "your" broker he's working for the seller, not you - this is an important distinction. Just like in real estate you can use a "buyer broker" that has YOUR financial interest at stake, not the seller - and they will work the commission split out amongst them. Your "buyer's broker" should be someone you know and have a relationship with and can and will arrange for you to see the boats you want to see. If you didn't talk to your own broker and have him contact the broker that is listing the boat...the selling broker is not your friend in this transaction. You should be able to trust him as much any professional, however his responsibility is to the seller.

If you called from an ad and got the seller's broker they won't want to let another broker in at this point.
-------------

I've never been asked to wire funds for the deposit, I've always written a check - even with a $50K+ down payment it was a personal check.

The funds should go with a signed Purchase and Sale agreement. Your written offer includes the P&S, signed by you, with terms outlined including the survey, and a copy of the 10% check to show you've made it. If the seller doesn't agree to the contract the check will not likely even be cashed. If it's an out of town deal with an out of town broker, he will usually accept a fax of the check and P&S to get the deal & negotiations going, then you can Fedex him the originals if it is accepted.

However...the way every boat I've bought has gone down has been with verbal negotiations (maybe with the initial P&S being filled out and sent in), but no one really signs anything or exchanges any money until you agree on the terms. THEN you send the final signed P&S in with the check. This is when you have two brokers talking to each other; on your own working with a seller's broker he should sent you a contract to sign and return with a check, though again faxing/e-mailing a copy to start the transaction then dropping it in Fedex is generally acceptable.

So when the P&S goes in "for real" with the check the seller isn't going to counter offer or continue to negotiate, this part is all done.

Your P&S should spell out among other things...
  • Terms for acceptance based on a satisfactory survey. This should be intentionally vague and have a fair amount of wiggle room.
  • Terms for the disposition of the Deposit in the event of a buyer default or a seller default.
  • If you are financing the deal, a condition that the deal can only go through subject to your financing the boat. Otherwise if the financing doesn't work out you might not get your deposit back.
As far as the Survey related language goes - you shouldn't see any real specifics unless there are specific items the seller has disclosed to you already that are included in the pricing - e.g. if it is known a certain system does not work (in my case the forward looking sonar was known to be kaput) that is something that might be spelled out as known, accepted and accounted for in the deal already.
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