Private Charter Rules

[brucechidester]

I have recently acquired my bareboat chartering certificate from ASA so I can rent sailboats for awhile to help me purchase a sailboat in the future.

I would like to rent sailboats and would also like to defer the cost if I can.

If I invite 4 friends and collect $100 each to rent a $400 sailboat, am I legally doing some kind of chartering business? Can you charge friends to offset the cost? What if I were to offer, "I don't care who has the $100", if your willing to pay, I will take you. Where is the line drawn as a business?

I would like reasons to sail and would like to do it at minimal cost. I am not out for a profit, but also would not mind if others cover my portion as well.

Advice here would be appreciated.

[goboatingnow]

if they are renting the boat, then yes you are in business, if they are helping you crew and defraying some of your costs, then they are not. Its a grey area


dave

[brucechidester]

I would ultimately rent the boat...and some friends just want to ride and not really "crew" the boat. This topic does not seem to come up to ask friends to spend $100 for gas, but with sailboats it seems to be a "gray area" as you mentioned.

Thanks for the first response.

[denverd0n]

There is, indeed, a lot of grey. What is not grey (at least to me) is that they cannot cover YOUR portion of the expenses. You can share the expenses, but you have to cover your own portion. If they pay for all of it, I strongly suspect that the USCG will consider that you are hiring yourself out to them to captain the boat, which would clearly be illegal without a license.

Of course, internet legal advice is worth exactly what you pay for it... NOTHING! You should familiarize yourself with the laws, and perhaps even check with your local Coast Guard office.

Good luck.

[brucechidester]

I like checking with the Coast Guard idea....is this the only authority for chartering questions?

[goboatingnow]

Originally Posted by brucechidester

I would ultimately rent the boat...and some friends just want to ride and not really "crew" the boat. This topic does not seem to come up to ask friends to spend $100 for gas, but with sailboats it seems to be a "gray area" as you mentioned.

Thanks for the first response.

Getting together with the "lads" to rent a charter is incredibly common. Just do it and don't over think it.


dave

[brucechidester]

I hate missing something really obvious, but things are only "obvious" to those that know the difference.

I was kinda going with the "just do it" attitude, but don't want to be "challenged" when I should have known better.

[brucechidester]

Originally Posted by denverd0n

There is, indeed, a lot of grey. What is not grey (at least to me) is that they cannot cover YOUR portion of the expenses. You can share the expenses, but you have to cover your own portion. If they pay for all of it, I strongly suspect that the USCG will consider that you are hiring yourself out to them to captain the boat, which would clearly be illegal without a license.

Of course, internet legal advice is worth exactly what you pay for it... NOTHING! You should familiarize yourself with the laws, and perhaps even check with your local Coast Guard office.

Good luck.

Not so sure that having others cover your cost is paying for your service. I see your point, and at first it made sense. Once I worked it out, if everyone else paid for the boat, there would be $0 left over to pay the captain, and I think it would be hard to justify that you were being paid to captain a boat. Ultimately you might be right anyway. Thanks for the post.

[brucechidester]

I think the "take-away" here is this: If I am not "making money" and trying to run it like a business, then "go for it".

[denverd0n]

Read the Coast Guard regulations. This is my interpretation of them.

It is very similar to the way the FAA interprets sharing expenses for those with only a private pilot's license. I can assure you (because case law exists) that if you have your buddies pay for every last penny of the expenses on a flight in your private airplane, instead of actually sharing those expenses, the FAA will be happy to charge you for operating commercially without the appropriate license. Doesn't matter that you are not making any net cash profit on the deal.

Now, I'm not aware of any existing case law concerning boat charters to establish things quite that clearly. On the other hand, the wording of the FAA rules, and the USCG rules, are strikingly similar as regards this sort of thing. Hence, my opinion that they would be interpreted similarly.

But... Your life, your choice. Good luck.

[accomplice]

If you own the boat, and they are paying you for a ride on it (chartering it), the vessel had better have the appropriate "coastwise" endorsement from the CG and you will need an OUPV or master's license, depending. Even if they don't pay you directly, but take you out to dinner after, you are being compensated which triggers different rules.

If you are part of a party that is renting the boat (that someone else owns), how you divide up the costs are up to you. (Bigger berth pays more, single person alone pays less than couple, etc.) You cannot be compensated for it, though.

[Stumble]

Denver,

You hit the nail on the head. I did a big research project on this, and case law is sparse, but it basically boils down two ways...

1) if you don't own the boat then slitting the charter fees and costs by the number of people on board is fine.

2) if you do own the boat then you can split the costs for the time the boat is being used. So all your marginal costs for a day at sea are fine typically this is just going to be gas (particularly for power boats) and no one raises an eyebrow. If you start trying to collect for per diem splitting of fixed operational costs... Well you might be able to do so, but it gets to looking suspicious and I would recommend against it.

[brucechidester]

I think that dividing up the cost is fine in my situation. It sure does make me sick how difficult the system is on those trying to make a living.

I don't own a boat in my case.

I appreciated more good advice.

[belizesailor]

Originally Posted by brucechidester

I would ultimately rent the boat...and some friends just want to ride and not really "crew" the boat. This topic does not seem to come up to ask friends to spend $100 for gas, but with sailboats it seems to be a "gray area" as you mentioned.

Thanks for the first response.

Technically my interpretation is that if you receive any form of compensation (whether cash or not) then that makes it "passengers for hire". Whether you make a profit is not relevant. Power or sail is also irrelevant...same laws apply regardless...and the same gray areas. I think the duscussion comes up more often regarding sailing vessels simply because charter of sailing vessels is more common.

To be on the safe side you could have them pay their share directly to the charter company. This way it is clear you received no direct compensation.

But from a practical perspective, unless you end up in court for some other reason, this issue is not likely to come up. Its not like the Coasties are out there actively looking for folks in the "gray area". I've been a charter captain since 1994 and have never had the Coasties check my papers or ask about the nature of a charter.

The only cases I know of where this distinction became critical was after related legal action had already been initiated. If the court decides it was technically "passengers for hire" then the rule of law changes substantially (as do the rules of insurance too).

Note that outside the USA officials may indeed be actively looking for folks operating in the gray area. It is not uncommon for cruisers to run illegal charters for which their clients posing as "friends" pay. This usually works OK until they piss off a local who then drops a dime on them...as they should.

[denverd0n]

Originally Posted by belizesailor

Its not like the Coasties are out there actively looking for folks in the "gray area".

That's true, though if you are doing it repeatedly you may begin to attract some attention. Most especially, if other charter boat captains in the area become aware, they may not appreciate the "competition."