Cruisers Forum
 


Join CruisersForum Today

Reply
 
Thread Tools Rate Thread Display Modes
Old 11-03-2007, 15:00   #1
Registered User
 
kenackr's Avatar

Join Date: Mar 2007
Posts: 22
Seller Financing?

Just wondering if seller financing is ever done at all? Has anyone out there accomplished this?

Is there any way a buyer could assure a seller that the payment will be there or they get the boat back, etc?
__________________

__________________


Ken

Like a moth to a flame, I am drawn to the sea.
kenackr is offline   Reply With Quote
Old 11-03-2007, 15:07   #2
Marine Service Provider
 
AnchorageGuy's Avatar

Join Date: Mar 2003
Location: Wherever the boat is!
Boat: Marine Trader 34DC
Posts: 4,618
Ken, As a former broker I can tell you that it is done all of the time. I do caution anyone that is considering this to do a thorough check of the background and credit of the potential buyer. Once that is satisfied, draw up a legal and binding contract including the specific terms of payment, penalties and relief for the seller should the buyer fail to perform. Depending on the amount the seller is going to carry it might not be a bad idea to have legal council draw up the contract. be sure all signatures are witnessed and notarized. Many times with older boats where financing is hard to find this can be a good alternative. But it can also be full of problems if not executed properly.
__________________

__________________
Chesapeake Bay, ICW Hampton Roads To Key West, The Gulf Coast, The Bahamas

The Trawler Beach House
Voyages Of Sea Trek
AnchorageGuy is offline   Reply With Quote
Old 11-03-2007, 16:29   #3
Moderator Emeritus
 
Pblais's Avatar

Join Date: Mar 2003
Location: Hayes, VA
Boat: Gozzard 36
Posts: 8,700
Images: 15
Send a message via Skype™ to Pblais
If the boat is large enough to be US Documented it's best to have the boat documented so you can establish the title along with your contract. If it is not big enough to document then seller financing is a poor idea. State boat registrations are a joke when it comes down to dealing with multiple states. You don't need that hassle.

US documentation makes it a lot easier to track the owner/boat down and clearly prevents the boat being re sold without you knowing it and not legal without clearing your loan from the title filed with the USCG. Any professional lender will do this so a private party would be wise to do like they do.

Walk the papers with the new buyer through the USCG process (it's pretty simple) to make sure your loan is recorded with the vessel transfer at the USCG. The title can not be changed until you issue a written waiver to the USCG. You basically hold up the title until the loan is satisfied. The cost will be an extra $5 per page recording fee. The only other problem is making sure you get enough money down in case they trash the boat. Proof of insurance would also be wise where you are a named inssured. This way if they cancel the insurance you will also find out too.

In addition to a proper contract these two elements of protection will give you some additional piece of mind.
__________________
Paul Blais
s/v Bright Eyes Gozzard 36
37 15.7 N 76 28.9 W
Pblais is offline   Reply With Quote
Old 28-03-2007, 21:13   #4
Registered User

Join Date: Oct 2006
Location: Green Bay, Wisconsin
Boat: 1976 Oday 27' Booty Call
Posts: 141
Images: 24
boat ownership & title

Pblais> so what if the seller and buyer, agree to a payment arrangement, where there are no banks involved. Would the USCG notation of the vessel transfer be all that's needed? And also who would be responsible for the vessels registration with the state? (Wisconsin in that case?)

Good topic, something worthy of asking .

Mark
__________________
shellback is offline   Reply With Quote
Old 28-03-2007, 21:40   #5
Kai Nui
Guest

Posts: n/a
My experience, every boat I have owned has been seller financed. They have all been written on a piece of notebook paper, and they have all gone well with a handshake. That said, you can get thoroughly screwed. I have been lucky, but it really depends on the boat, the people, and the deal. Never set, or agree to unrealistic expectations. Always communicate, and, most importantly, if it doesn't feel right, walk away. Trust your instincts.
Back in my biker days, we used to say there were deals, then there were Harley deals. I have found it to be the same in the boating world. A person who wouldn't pay back a borrowed dollar to his best friend will sell blood to make a boat payment on time.
Obviously common sense needs to reign here, as you don't pay $10k down to a guy living in his car who can't show you the title, and you don't agree to take a hundred a month from a guy with six months provisions in the trunk of his car, bragging about the places in Mexico he plans to see next month.
Good luck in the hunt. If you look long enough, you will find the boat you want, and the seller who wants you to have it.
__________________
  Reply With Quote
Old 29-03-2007, 05:18   #6
Registered User

Join Date: Apr 2006
Location: Galveston
Boat: C&C 27
Posts: 724
The Real Point

Quote:
Originally Posted by Kai Nui
Obviously common sense needs to reign here, as you don't pay $10k down to a guy living in his car who can't show you the title, and you don't agree to take a hundred a month from a guy with six months provisions in the trunk of his car, bragging about the places in Mexico he plans to see next month.
From a sellers point of view it seems like a risky deal. Like Kai said, the boat could dissappear in a moment. Or as an example, you might find yourself one day with a harbormaster calling you to come get your derelict off the bottom of his marina. Then you have a worthless boat you have to pay to remove.

A letter of credit might be applicable but I doubt it would be practical.
__________________
Pura Vida is offline   Reply With Quote
Old 29-03-2007, 07:55   #7
Moderator Emeritus
 
Pblais's Avatar

Join Date: Mar 2003
Location: Hayes, VA
Boat: Gozzard 36
Posts: 8,700
Images: 15
Send a message via Skype™ to Pblais
Quote:
so what if the seller and buyer, agree to a payment arrangement, where there are no banks involved. Would the USCG notation of the vessel transfer be all that's needed? And also who would be responsible for the vessels registration with the state?
When you get a bank loan on a house the it is recorded on the deed so that you can't sell the house and transfer title without settlement with the bank. Many loans are made from organizations other than banks. The same can work for ordinary people too. It is the same as car loans too except they are recorded in the state. For some reason car registration is handled better in most states than boats.

It works the same with the USCG. The note would be recorded with the boat records at the USCG. If you transfer title on the boat all you need to do is fill out the USCG bill of sale notarized and send in the original registration As long as there is no prior note registered with the USCG the paperwork just happens. If you have a note you add those document pages to the filing you make with the USCG. It takes a signed release from the loan holder to release the title. So long as the seller files the documents the deal is iron clad. It also allows to buyer to have a certificate to show ownership when required so it does not look like they stole the boat.

When you use the USCG there is no state registration at all. There may be taxes and some states require stickers but it has nothing to do with ownership title. If a buyer and seller make a side deal with no recorded note whoever has the title registered owns the boat. The contract is still a contract but the title says who owns it. Recording the note with the USCG keeps both parties secure as far as ownership goes. They of course won't collect the debt for you but they can make sure neither party transfers the title out from under the other.

Doing the same thing within a state can be done but it's not as effective. The states don't all have uniformly consistent methods. My last two dinghy's are good examples. Both were improperly registered by a prior owner and took extra work to sort out. Neither boat they were attached to had one bit of trouble with title.
__________________
Paul Blais
s/v Bright Eyes Gozzard 36
37 15.7 N 76 28.9 W
Pblais is offline   Reply With Quote
Old 29-03-2007, 08:36   #8
Registered User

Join Date: Oct 2006
Location: Green Bay, Wisconsin
Boat: 1976 Oday 27' Booty Call
Posts: 141
Images: 24
boat ownership

Well, that makes good sense of documenting the sale/note between the seller and buyer with the USCG.

So, if the title remains in the hands of the buyer until seller pays the debt completely, does registration with the state also remain the responsibility of the seller as well? Since the title is still in his/her name? Title registration/renewal will remain to be financial responsibility of the seller until the sale of the boat is noted as paid in full?

Opinions on that?

Mark
__________________
shellback is offline   Reply With Quote
Old 29-03-2007, 08:44   #9
Senior Cruiser

Cruisers Forum Supporter

Join Date: Jul 2006
Location: Chesapeake Region and Maine
Boat: 42' Bob Perry sloop
Posts: 4,038
Images: 4
If you are contemplating the sale of a boat and holding the paper yourself, please be VERY VERY CAREFUL.

There was a recent case in my club where a member sold his older 55' vessel and financed it himself. The boat was taken to another marina, and the new "owner" not only defaulted on payment, but the boat sank at the dock. This resulted in huge costs for the owner who had failed to take the necessary precautions and was stuck with the salvage and pollution cleanup costs. As a result, he not only lost the boat he'd "sold", but was ruined financially and had to sell his new boat at a big loss.

BE CAREFUL...IT'S A DANGEROUS WORLD OUT THERE THESE DAYS. Ruefully, the days of a handshake and a prayer are long gone.

Bill
__________________
btrayfors is offline   Reply With Quote
Old 29-03-2007, 09:05   #10
Moderator Emeritus
 
Pblais's Avatar

Join Date: Mar 2003
Location: Hayes, VA
Boat: Gozzard 36
Posts: 8,700
Images: 15
Send a message via Skype™ to Pblais
You want the loan contract recorded with the USCG. It makes the buyer the "owner" but the seller has a lien on the title. This is like a car loan or a home loan.

If the boat sank the buyer would be on the hook for the damages but the seller is left to collect on the debt. For that you want to be a "named insured". With a named insured the seller gets a letter in the mail that the buyer has not renewed or has canceled the insurance. the seller gets a shot and the settlement too so far as the remaining debt on a total loss.

Titles, recording and all the paper work are not about collecting the debt. To collect on the debt you have to go through normal legal processes. What it does do is allow the buyer to be held liable for damages and not the seller.

If you still hold the title it's like you are loaning the boat to the seller and you still own it even if you have a sales contract. What you want to do is encumber the title so he can't sell the boat until you send in a written notarized official satisfaction of mortgage! At that point the seller can transfer the title to another party.

Loan companies bill the seller a huge fee so they can file the USCG papers themselves so they know for sure their loan is recorded with the sale. You could walk through the paperwork with the buyer and then mail the paperwork in as you walk to the post office or mail box. A buyer is wise to get a USCG title search before the closing to make sure they are not getting screwed by a crafty seller.
__________________
Paul Blais
s/v Bright Eyes Gozzard 36
37 15.7 N 76 28.9 W
Pblais is offline   Reply With Quote
Old 29-03-2007, 14:37   #11
֍֎֍֎֍֎֍֎֍֎

Cruisers Forum Supporter

Join Date: Apr 2006
Posts: 13,042
"The boat was taken to another marina, and the new "owner" not only defaulted on payment, but the boat sank at the dock."
Is THAT what finally happened?!

Ken, you have to decide on your own about the risks. If you keep the title in your name, you are responsible for the boat (including state registration, pollution cleanup, salvage clearance, and accident liability) so while it is easier to "reposses"...you are open to liability. I'd suggest a million dollar liability umbrella policy added to the sale price, for the period of the "loan".

Or, you sell the boat outright and it is now the buyer's responsibility. You record the lien against the title with the USCG, as Paul said, and "all you've got" is a lien against a title. If the buyer is judgement-proof and has no assets--you may never collect anything. That's a lot of risk.

Get your ducks in order, do a formal credit check, and if you really want to do this, get a local lawyer to do the paperwork with you. If the buyer financed through a bank or anyone else--they'd have to pay some closing costs for work like this. Well...they've got to expect it for this too, unless they can put up some kind of equity to protect you. Heck, maybe they could buy a "performance bond" to guarantee paying you.
__________________
hellosailor is offline   Reply With Quote
Old 29-03-2007, 16:10   #12
Senior Cruiser

Cruisers Forum Supporter

Join Date: Mar 2006
Posts: 1,594
Quote:
Originally Posted by kenackr
Just wondering if seller financing is ever done at all? Has anyone out there accomplished this?

Is there any way a buyer could assure a seller that the payment will be there or they get the boat back, etc?
Not IF I'm the seller. It's 2007 not 1957. Too many out and out thieves just looking for an easy mark. And you can believe they'll have all the right papers and documents to look legit. Stealing is their business after all and too many are very very good at it.
Just today I read a thread of a family in the USVI, I think, that ran up something like $25k in parts and service and took off. And from the different stories he told folks about where he was going it was 100% planned.
__________________
Randy

Cape Dory 25D Seraph
rtbates is offline   Reply With Quote
Old 29-03-2007, 19:05   #13
Moderator Emeritus
 
Pblais's Avatar

Join Date: Mar 2003
Location: Hayes, VA
Boat: Gozzard 36
Posts: 8,700
Images: 15
Send a message via Skype™ to Pblais
Quote:
as Paul said, and "all you've got" is a lien against a title.
There is no advantage in holding the title. All you really have is the contract. The contract is the basis of redress not the title. Holding the title isn't much of an advantage, it's just one stop gap measure. The contract and the terms and conditions agreed to are what in the event of a problem you will really need. It's a negotiated document that you and the other party have to feel good about to sign.
__________________
Paul Blais
s/v Bright Eyes Gozzard 36
37 15.7 N 76 28.9 W
Pblais is offline   Reply With Quote
Old 29-03-2007, 21:47   #14
֍֎֍֎֍֎֍֎֍֎

Cruisers Forum Supporter

Join Date: Apr 2006
Posts: 13,042
Paul, I'd have to disagree. I once had a minor dispute with my insurer about my car. Their line was "you'll never see it again". My reply was "this is titled property and I'm the title holder. You'll release it to me now, or I'll be back with the state police in twenty minutes and you'll release it then while you're being arrested."

Having the physical title to titled property can make life much easier. There is no "he said she said", if you need to seize it and you have the title--you can and the police will assist you. If you don't have the title--you have to go to court.

Police don't like to read contracts, that's work. Titles they understand. Same thing for most small town JP's and other authorities.
__________________
hellosailor is offline   Reply With Quote
Old 30-03-2007, 05:19   #15
Moderator Emeritus
 
Pblais's Avatar

Join Date: Mar 2003
Location: Hayes, VA
Boat: Gozzard 36
Posts: 8,700
Images: 15
Send a message via Skype™ to Pblais
The professionals transfer the liability and attach the title. It's how the real buying and selling business works. If you can work out some side deal off the public records then that is what it is - off public record. A recorded professionally prepared contract is what a serious judge is wanting to see.

I'm not all that sure how many buyers are going to pay money without a title. The buyer can not document or register the boat since they don't hold the title. The insurance company won't write a policy for a boat that does not have a title in the insureds name. Your insurance company won't like insuring a boat in your name when you have in a practical sense "chartered" to this other party. If he is paying and he does not hold title sounds like a charter to me. You'll need a lawyer to sort out that insurance claim.

The marina that the buyer left the boat at when they didn't make your loan payments wants the guy holding the title. The police will know where to find you but not to give you back the boat. The marina just confiscated it for back fees and damages with a lien on your title. They understand titles too.
__________________

__________________
Paul Blais
s/v Bright Eyes Gozzard 36
37 15.7 N 76 28.9 W
Pblais is offline   Reply With Quote
Reply

Tags
financing

Thread Tools
Display Modes Rate This Thread
Rate This Thread:

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Financing a boat for liveaboard sneuman Boat Ownership & Making a Living 58 19-07-2012 15:57
Financing Older Boats linuxchiq Off Topic Forum 14 08-08-2008 06:30
Financing Experiences & Suggestions Chuteman Boat Ownership & Making a Living 8 28-09-2006 11:43



Copyright 2002- Social Knowledge, LLC All Rights Reserved.

All times are GMT -7. The time now is 14:44.


Google+
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.
Social Knowledge Networks
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.

ShowCase vBulletin Plugins by Drive Thru Online, Inc.