Hello! Wanted some thoughts/advice on co-owning a boat

[MarinaDelReyGuy]

Hey from Marina Del Rey! I wanted to get thoughts from folks who are co-owning a boat with someone else (not counting spouses). What are some of the biggest challenges I should anticipate if I'm going to co-own a boat with someone? Would be great to hear from folks who have done this. Appreciate any advice and thoughts here.

[leecea]

If you're still in the process of deciding whether or not to do it, you might also want to hear from people who chose not to do it.

[MarinaDelReyGuy]

Yes, that would be great actually! Would love if folks shared why the didn't do it.

[Turtle Blues]

If the other partner/s suffer some extreme financial hardship can you take over?
Watched that happen next slip over on a 1/3 share.

[Solafide]

Well mate it would be you who would need to do your due diligence with the who. Reason of experience is you will be the one who spends the time repairing and what not fitting the vessel. Then the (CO) owner will come smash bag, over heat, abuse flood and break every god given part of the vessel. Now it will seem small. But if that person is not raised with the same values as you it will be time for a new boat to them and to you looking to repair the vessel. The others meaning ones who just go buy new, that prefer to not even clean it. that would mean you require a new one... I hope that helps.

[Captain Graham]

Many Many years ago when I was in High School my friends dad was co-owner on a sailboat.
They were both partners in a business first.
Everything was good, they had already learned how to work together.
So if your know the person well maybe it will work out but if you do not know the person beware.

[Sail Sail]

More of a commitment than marriage.

[Toccata]

I reckon the first thing to discuss and write down is the exit strategy.
Once that's clear, Enjoy the journey knowing you have a way out should things not turn out as you wish.
Co-Ownership wouldn't suit me as I'm too anal about everything being done right all the time. Many people are happy with a "she'll be right" approach. Conflict would be inevitable. The message is; to have really clear insight into your own personality and that of your co-owner.

[ChrisJHC]

Saw it work well with three co-owners who were mates first then bought the boat.

Every month they all paid a fixed amount into the “boat fund” to cover all running costs and build a kitty for the inevitable unplanned expenses.

During the year they alternated being skipper for a month for day cruising and “round the cans” racing. The other two were just crew members for the month.

Each year they did an extended trip where they had one member sail the boat to the chosen cruising area and have some time on the boat once there, the second member just cruised around while the third member cruised for a while then sailed back.
They swapped around the roles each year.

Seemed to work well until one member moved interstate and they sold the boat rather than bring a new member in.

And, probably most importantly, the arrangements were well understood (and probably written down) before they started.

[MicHughV]

Some years back, I co-owned a small fishing boat with a friend. The boat was on a trailer and parked nearby, which meant that I was the one doing all the maintenance, care, etc.
This got old pretty quick.
The other guy didn't use it much, but when he did, he didn't wash the boat down after use, flush the engine, etc.....as he just didn't see a need to do any of that stuff, not being a boater like me and considering me to be too fastidious in this regard. His point of view was that his financial aid, made it possible for me to have this boat in the first place, which he considered his part of the deal.

The trailer also needed maintenance, lights burned out, wheel hubs rusting out and so on.

During winter time, it wasn't used at all, so come spring time, battery, fuel, engine, canvas, woodwork, general maintenance, oil changes, etc, all needed to be done, and you guessed it, it was me doing it all.

After a year of this, I said to hell with it. My friend was miffed, but I no longer cared.
I put the boat up for sale, handled all the paperwork, etc, gave him his 50% and said never again.

Co-owning a boat, in my humble opinion is fraught with difficulties and can strain even a solid friendship.

I take the view that owning a boat is kinda like a love affair, Having a co-owner, doesn't fit well in this scenario.

My 2c....

[TrentePieds]

Marina:

If you are talking about a 14 foot "tinny" on a trailer, partnership is a trivial consideration. But I dare say that you, like most others who contemplate co-ownership of a yacht, are hoping to gain the use of a vessel that is bigger and more expensive than you feel you can handle financially on your own. We see it not infrequently. We see something very similar when children put more food on their dinner plate than they can eat :-)!

The secret to successful co-ownership of ANY valuable "shared use" tangible asset is to understand that the co-ownership will not survive for long UNLESS it is treated as a BUSINESS and STRUCTURED as a business. As you may know, but may need to have refreshed, there are three, and only three, "forms of organization" in business: 1) Sole ownership (which you are not contemplating), 2) Partnership and 3) Joint Stock Corporation.

The second form will not survive for long unless there is a WRITTEN PARTNERSHIP AGREEMENT, and the third form CANNOT exit unless it has BYLAWS subscribed to by the stockholders and REGISTERED with whatever authority has legal jurisdiction where the assets held by the corporation are located.

PAs and bylaws set out in legally binding detail how capital is to be raised, both in the first instance and during the partnership's or the corporation's existence. the set out in legally binding detail who has authority to incur expenses on behalf of the enterprise and how that authority is to be obtained and documented instance by instance. It is ESSENTIAL that the PA/bylaws stipulate that no partner/shareholder can compel another to sell his share, and that the partnership/corporation cannot be compelled to BUY a partner/shareholder's share.

So get you business ducks in a row before you even contemplate a co-ownership situation!

Consider also that in many jurisdictions, person "A", if he "holds himself out" as a partner of person "B", becomes personally liable for all debts person "B" incurs in respect of the operations of the partnership even if "B" has acted fraudulently. That way lies bankruptcy!!! Naivety is financially deadly! It is precisely that that accounts for the fact that corporations abound while partnerships are rare indeed.

Get your business ducks in a row. THEN you can begin to think about a boat. But NOT before.

Bonne chance!

TrentePieds

[kendrickwallace]

I'd need to be intimately familiar with someone to partner with, and even then I suspect joint ownership could strain a friendship as it is very unlikely that the partners will see eye to eye on all aspects of boat care and use. What about a charter partnership, where the charter company splits the proceeds and they are in charge of all upkeep? Might be something to look into if you are okay with the wear and tear on the boat in exchange for the offset in owner expenses. Maybe someone here who has done this can chime in on their experience. And hello from Southern California.

[MicHughV]

I think it is highly unlikely that "two friends" will enter into any kind of legal or binding agreement or paperwork, when it comes to sharing a boat.
Such a deal is invariably based on some or other friendship and the only agreement is typically the co-signature on the purchase agreement.

The various spouses also often throw a spanner into the works of these agreement usually by means of some or other verbal comment whispered into the ear at the appropriate time.

I find that one of the partners invariably thinks it's a grand idea which he then sells to the other friend, whom might not be so gung ho.

At the end of the day, odds are, that such an agreement, won't last long, often to the detriment of the friendship.

To tell the truth, other than my short lived co-ownership of a boat, I've not come across any other co-owned boats, attesting to the rarity of such a deal

[SVF]

I'm a co-owner of boat, a situation which has worked out very well. We're all good friends, but contrary to above, we decided to set it up as a LLC from the get-go to head off any potential arguments. We hammered out in writing how ownership percentages will work, who is responsible for what, and what happens if one of us passes or wants to get out. We're all getting older and didn't want an heir trying to figure out what to do with a share of a boat.

We really haven't encountered any big disagreements, mostly sail together, and if one person wants to do a big project the others aren't interested in, they pay for it and subsequently own a bigger percentage of the boat, like when I decided to put in a windless which no one else cared about. (I'm the only one who does longer cruising.)

Just like any relationship: communication and everyone being realistic about their level of commitment are key. I'd qualify my enthusiasm by saying I'd never go in on something like this with anyone who would routinely struggle having money for the basic stuff like slip fees.

[danstanford]

I was offered a partnership by a friend after I sold a boat and was very tempted. He and his wife are very honest and forthright people who gave me no cause for concern with respect to carrying their end of the bargain but I was concerned about future investments in the boat and what strain that might place on the relationship.
I know I would want to buy some sails for the boat along with perhaps some upgrading of instruments and I could anticipate having to sell the other couple on the need for these upgrades if I was going to be the only one wanting to race.

In the end I decided not to do it and fortunately for me the friendship was unaffected.