New Boat Purchase Questions

[sailingirl]

Buying a new boat. How does this work? Boat will be "owned" by manufacturer and vendor until it is transferred into my name.

Does a new boat need a boat survey?

When should the entire purchase price be paid? When the boat arrives at the vendor's who will then add on many expensive options? What then motivates the vendor to complete the work and additions in a timely manner? And with what quality?

If one is to "hold back" some of the purchase price until satisfaction is obtained, how much should be held back, and what kind of time frame for payments should be setup?

All help greatly appreciated in answering these

[mcerdos]

Originally Posted by sailingirl

Buying a new boat. How does this work? Boat will be "owned" by manufacturer and vendor until it is transferred into my name.

Does a new boat need a boat survey?

When should the entire purchase price be paid? When the boat arrives at the vendor's who will then add on many expensive options? What then motivates the vendor to complete the work and additions in a timely manner? And with what quality?

If one is to "hold back" some of the purchase price until satisfaction is obtained, how much should be held back, and what kind of time frame for payments should be setup?

All help greatly appreciated in answering these

You do not need a survey.

You will mostly have to make a down payment which at some point becomes non-refundable. The balance is due when you take procession of the vessel. Never pay anything more until all work (by selling agent) is completed to your satisfaction.

Make sure all additions, especially electronics, are working and per your specs. Any additional add-ons or work performed should be outlined in your purchase agreement.

If you are financing any portion of the vessel, the bank will pay only when you take possession.

You own the vessel at the time you take possession. You are not responsible for the vessel prior to this point in time.

Hope this helps

[Vasco]

I have bought three new boats. The first two were direct from the manufacturer and I had to wait longer than promised for the boat. In addition the second one I bought direct was during a downturn in the economy when boat manufacturers were going out of business all over the place. I had to worry that the builder did not go bankrupt or stop building before my boat was finished. I had a considerable sum at risk. The boat is not yours until it is registered in your name. Even if it is completed and sitting at the builders it can be seized by the bailiff unless it is registered in your name.

I got a bit smarter with my final boat. I bought it from the dealer's inventory. I specified all the extras I wanted and the dealer installed them. The boat was already pretty well equipped from the factory with quite a few upgrades. I gave the dealer $1 down and a bit more during the installation of the extras. The rest was paid when commissioning was completed.

If you intend to buy a production boat visit the dealer and see what he has in his inventory.

Many folks say that you should get a survey even with a new boat. I did not. I saw the boat every day during the commissioning and checked everything.

[AndrewB]

How careful you need to be depends on how significant this purchase is to you in cash terms.

The following assumes you are planning on blowing a large chunk of your life savings here, in which case you need to take precautions!

If you are buying through a broker it is generally easy. He will handle all the steps for you. If things go wrong, you will probably have a claim on his insurance. But, very occasionally, brokers have known to default, so make sure he is reputable.

If you are buying privately, the single most important thing is to ensure that the seller is actually free to sell the boat: it is not mortgaged, in lien, or part of a messy divorce suit. This can be tricky to determine, but the registration authorities can help in part.

If you are buying a boat in build, you need to protect yourself against the builder going broke. Staged payments are the usual rule.

In the latter two cases, were you based in the UK, I would strongly recommend the RYA boatbuyers handbook, http://www.rya.org.uk/shop/pages/pro...DefaultCatalog), which lays down a protocol for buying, and the legal issues and pitfalls. This could still be worthwhile for a Canadian purchase.

Personally, I would definitely have a survey, even if you are reasonably experienced sailor. The advantages are:
1. You may be saved a very expensive mistake.
2. Even if it subsequently proves to be a very expensive mistake, you then have a major claim against your surveyor's insurance : always easier than trying to pursue the seller.
3. Even if very little is wrong, the surveyor will probably find enough minor niggles for the seller to correct, to spare you the cost of the survey.
4. Many insurers require a recent survey. If you do not have one, it could prove difficult to get insurance.

[Capt Phil]

I would be inclined to accompany the broker on the commissioning cruise to ensure all is working, particlarly electronics, to your satisfaction. Many times equipment installers accompany the broker during the commissioning stage to sort out any minor technical glitches that crop up. This is a good time to develop a relationship with the installer for future help/guidance in equipment operation.
Holdbacks are common and vary from 20% both ways. Operational perfection should be demonstrated before releasing the final payment. This can be held in escrow pending your approval for dispersement.
When buying a new boat, at particular points in the build, the manufacturer will want a payment to be made before proceeding on to the next stage of construction. For example... a payment of 20% of the purchase price may be required to start, then another 20% when the hull is completed, another 20% when the deck is laid and superstructure is completed and the final payment less 10% when the vessel build is completed. Sea trials normally follow then when commissioning is completed, the final payment is due. Your bank can help with the disbursement schedule. Like building a house each situation will be different but variations on the same rule of thumb should apply. Add-ons, like electronics, gen sets, appliance upgrades should be paid for but $ held in escrow or at least more than 10% held back until everything is demonstrated to operate as advertised to your satisfaction.
If you are having a vessel built from scratch, arrange with the builder to be able to drop by their yard and view your boat periodically through the build process. You will learn a lot and be able to make minor modifications as the build progresses. You might want to sit down with the naval architect in the planning stages to discuss your needs and wants depending on the size of the boat. On larger vessels, there is usually a build manager in charge who will be assigned to oversee the constuction, someone with whom you will want to develop a close working relationship.
Good luck with your project... Phil

[Cheechako]

Vasco makes a good point. It can be risky for sure. My feeling is buying a new boat built to what I want on it is not worth the risk. Better to live with one available NOW.

I ordered a new boat once, schedules were delayed, eventually the builder was close to bankruptcy, I got a lawyer involved and the builder threatened to just close the doors. So I took the other approach; met over a drink and worked it out. He eventually completed most the work and I got my boat... which I finished. The next guy in line didn't get his boat done, and mine was finished with his deposit money!
If I were to order a new boat I would ensure the contract said:
* it was My boat once the hull was layed up. If the Sherriff chains the doors you MAY eventually get as much as you've paid for.
* If any way possible I would have money go into escrow until the boat was delivered. This will likely be impossible as often builders are using the new buyers money to build the prior party's boat! However, a financially flush builder, who doesn't need the money for the prior boat may go for this..? Tells you something anyway!
* I would have a schedule of payments based on certain things being complete.
ie: $XXXX paid when hull and deck are joined, $xxxx paid when engine installed , etc. Keep in mind that the finish work is a huge part of the job... and most difficult. Don't underestimate what the final work will take! Hulls are cheap comparatively to finalizing the boat.
A surveyor specified in the contract could be the verifying source that the work is complete.
* Schedule: any way to get a builder to have a penalty clause? anything over 30 days late costs $300 per day. etc
* Require proof of payment for the material put on the boat before final payment is made. This is common in construction, if the engine, rigging etc isn't paid for the supplier can lien YOUR boat.
*Require everything to be built per ABYC.... it gives you leverage ....as it's nearly impossible to build every boat to ABYC!

[JK n Smitty]

I find the no need for a survey a bit odd.

Maine Sail and others have pointed out several things that have often been done wrong by the manufacturer or the dealer (through hulls that don't meet specs comes to mind, as well as undersized wire and incorrect fusing). On my own boat, 10 years old when I purchased her, the surveyor found several factory or commissioning mistakes. Like the propane lockers not being properly vented.

For the cost of say $350-400 for a non-sea trial survey, I would get it done and have the dealer fix any problems identified. The fixes for many of these issue are simple but access can be the challenge. For instance the propane locker thing. A normal size person cannot get to the vent hoses. All that needed to be done is shorten the hose and reattach it. But in the end you have to either remove the propane locker and reinstall it or remove the water heater. Neither of which are easy tasks on my boat.

[djmarchand]

You have gotten some good advice and also some total BS on the previous threads.

If as one poster said, you are spending a significant chunk of your retirement savings on your boat, then I would consult a marine attorney. You can find a reasonably priced one in any of the big recreational boating markets: Annapolis and Ft Lauderdale for sure.

What you want to do is spend an hour in consultation. At most you may need him to set up a contract defining when you take ownership and giving you rights to that part of the boat that you have paid for during manufacture. That way the sheriff can't take it away if he goes bust.

But I was once advised by a boat owner/attorney friend (not paid advice, so it was worthless of course) that boats are different. If you can't afford the loss, then don't buy. Boat contracts are like prenups. They often take all of the fun out of the experience.

David

[Vasco]

Originally Posted by djmarchand

You have gotten some good advice and also some total BS on the previous threads.



What you want to do is spend an hour in consultation. At most you may need him to set up a contract defining when you take ownership and giving you rights to that part of the boat that you have paid for during manufacture. That way the sheriff can't take it away if he goes bust.



David

Just how do you do this? The boat is not yours until it's registered in your name. You cannot register the boat without a builder's certificate of origin which you will not get until the boat is fully paid for. If the sheriff comes in they will seize every little thing in the factory including your partially built boat. You may have a hull number on a contract but you will not have a boat or even the shell of a boat. There have been cases where prospective buyers have not only not gotten a new boat they also lost their trade in boat which at the time of the seizure belonged to the manufacturer.

If a production boat, buy one out of the dealer's inventory. A reputable dealer will usually have a few models in inventory. Put the smallest amount possible down and the remainder when the boat is commissioned.

[Jammer Six]

Originally Posted by AndrewB

2. Even if it subsequently proves to be a very expensive mistake, you then have a major claim against your surveyor's insurance : always easier than trying to pursue the seller.

In a former life, I inspected houses in Washington state.

Every inspector I knew had a clause in the contract that any claim against the inspector would not be settled for more than the inspection fee.

In other words, if an inspector makes a mistake, we'll give you your money back. That's it.

If the marine surveying industry is different, I should go into business teaching seminars on how to lower their risk.

I don't believe for a moment that a sane marine surveyor would take a half million dollar risk for a five hundred dollar fee.

[Cheechako]

Originally Posted by Vasco

Just how do you do this? The boat is not yours until it's registered in your name. You cannot register the boat without a builder's certificate of origin which you will not get until the boat is fully paid for. If the sheriff comes in they will seize every little thing in the factory including your partially built boat. You may have a hull number on a contract but you will not have a boat or even the shell of a boat. There have been cases where prospective buyers have not only not gotten a new boat they also lost their trade in boat which at the time of the seizure belonged to the manufacturer.

If a production boat, buy one out of the dealer's inventory. A reputable dealer will usually have a few models in inventory. Put the smallest amount possible down and the remainder when the boat is commissioned.

I've documented quite a few boats, never been asked for a builder's certificate. Is this new? The new boat and problems I mentioned above... I documented that boat prior to it's actual full completion while it was still at the builders. Never has the CG come to inspect one of my documented boats.
If the boat is still at the builders and he goes out of business, you definitely could still have problems though. Even if documented, the suppliers can put a lien on it, and it may be up to the court whether to release it from the yard.
I think the bottom line is having a boat built is risky business, regardless of what you do contract wise. "you cant squeeze blood out of a turnip" comes to mind.
Probably the best thing a buyer can do is ask for financial info on the seller/builder, use a seller/builder who is large and not a mom and pop place and pay for a D&B and have someone look it over.
It's not that boat builders want to take advantage of people, many just get in trouble financially on a regular basis.
Also.. you better know and document specifically what you are getting if you care; type of seacocks etc etc. ie: don't assume because a display boat had bronze seacocks that yours wont come with gate valves.

[Vasco]

Originally Posted by Cheechako

I've documented quite a few boats, never been asked for a builder's certificate. Is this new? .

from USCG site Part 1 - Regulations and Other Information
It's been around since boats were built.


Part 1—Regulations and Other Information
"NO CERTIFICATE—NO NUMBERS!"

When a boat manufacturer or importer sells a recreational boat, the company should provide a Certificate of Origin to the purchaser. The purchaser needs a Certificate of Origin to obtain a title or register a boat with state numbering authorities. The procedure is the same as when an automobile is purchased. In the boating world this document is also often called a Manufacturer’s Statement of Origin, Master Builders Certificate, Carpenters Certificate, etc. They are all the same thing.

We receive numerous complaints from owners who are unable to register their boats and obtain State registration numbers because they do not have a Certificate of Origin. The State authorities tell many of these people to request a form from Coast Guard Merchant Vessel Documentation offices called "Builder’s Certification," which the Coast Guard offices use to establish the fact that vessels intended for documentation were U.S. manufactured. It is not necessary to use the "Builders Certification" form for boats which will be registered in a State.

Contact the titling and registration office for the State in which you sell most of your boats and ask them if they have a Certificate of Origin form that they would prefer for you to use. Go to the National Association of State Boating Law Administrators website and follow the link to "Contact your State Boating Safety Agency Here" to find the correct titling and registration office. If the State does not have a preference, printed below is a prototype Manufacturer’s Certificate of Origin for the use of recreational boat builders and importers. Copy this form, or use it as a model for designing your own. Put your company logo on it if you want to. Just try to make sure you complete a Certificate of Origin and that the form accompanies each boat you build. This will make it much easier for the eventual first purchasers of your products to title and register their boats.

[Cheechako]

Part 1—Regulations and Other Information
"NO CERTIFICATE—NO NUMBERS!"

When a boat manufacturer or importer sells a recreational boat, the company should provide a Certificate of Origin to the purchaser.
Interesting, regardless... never needed one, although I think they ask a question about if it's US built. Maybe the key word in th first line is "should".. not "must"?

[Vasco]

Here's the second sentence: The purchaser needs a Certificate of Origin to obtain a title

[Cheechako]

Originally Posted by Vasco

Here's the second sentence: The purchaser needs a Certificate of Origin to obtain a title

Yeah, all good points. There's a lot of legalese in the world. As I said, never needed it!
WARNING: Your results might vary!
At any rate we digress, if the COO was the only thing missing that would probably be a best case scenario! Just say you built it.