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Old 29-06-2014, 10:25   #1
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Family member as partner or charterer?

Looking for advice from folks who may have had experience with this kind of scenario in the past... Also looking for experiences/advice from folks who have done similar scenarios, but with a non-family-member as the partner...

My brother and I have been boating much of our lives. He lives down in southern California, I am up in northern. I have a 37' SeaRay express cruiser, he has a similar, but smaller and older boat.

He lives in a much more interesting area for boating, at least from the perspective of my kids and the admiral (which, let's face it, is really the only perspective that matters... :->). So I've been entertaining moving the boat down there, and we would head down maybe 1 weekend per month for trips to Catalina and the channel islands.

My brother would love to have the use of our boat, and sell his...

In theory, that sounds find to me, but I worry about the complications that can arise in an informal boat partnership, and would rather keep things formal. I'd also rather remain the owner of the boat, and not share ownership.

So, I'm trying to figure out an equitable division of expenses, that makes sense given those criteria.

Things that I'm trying to factor into the equation are:
- slip fees
- routine maintenance
- unexpected maintenance
- insurance
- taxes
- fuel
- wear-and-tear/depreciation (not entirely the same thing as maintenance...)

My brother would be using the boat a lot more than I would, since he lives down there. So that suggests that he should bear a larger amount of the maintenance and slip fees? I suppose the amount we divvy routine maintenance could be a function of the engine hours (and generator hours) used on the boat?

I'm fairly sure that we could work out the fuel split, since that's at least easily documented (again, at least as a function of engine hours, which is not exactly the right division, but might serve as a basis).

It would seem reasonable that as the owner, taxes would be my concern? Likewise for any documentation-related stuff (should the USCG start charging fees for renewal, as they've been threatening to do...).

But what about slip fees? On the one hand, since I own (and thus pay for) the boat, one might imagine that he should bear a larger portion of the slip fees, but I'm not sure I want to play that card?

And then there's insurance... Should we split the insurance costs, or (as the owner) should I bear the brunt, and simply ask him for the differential required to add him to the policy?

And what about unexpected maintenance due to mechanical failure? Should I bear that solely as the owner? Or should I factor in the wear and tear of the greater usage?

It all seems rather complicated for someone who just wants to enjoy a boat in a different environment...

Thanks in advance...
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Old 30-06-2014, 01:23   #2
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Re: Family member as partner or charterer?

If you can afford your boat on your own I would say don't do a partnership at all. You can work out some sort of under the table rental agreement with your brother - Like $100 day plus gas or something. This should still be cheaper than him owning a boat - you'd have to set expectations for how often you'd let him use it etc. It also give you the flexibility to terminate the arrangement.

If you decide on a partnership make it formal with rules. No handshake agreements - even with (especially with) family.

I was in a partnership - It worked out good for a couple of years and then it worked out badly - the partnership agreement specified all that would happen. Basically he lost his job and got way behind on the financial side of his commitments.

I kept the books in Quicken and ran a monthly report that tracked everything. Balance Sheet, Cash Flow, P&L etc. The separate joint savings account was critical.

My agreement is attached. I'd be happy to answer any questions.
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File Type: doc Co-ownership agreement sample.doc (67.0 KB, 32 views)
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Old 30-06-2014, 02:25   #3
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Re: Family member as partner or charterer?

Quote:
Originally Posted by Ex-Calif View Post
If you can afford your boat on your own I would say don't do a partnership at all. You can work out some sort of under the table rental agreement with your brother - Like $100 day plus gas or something. This should still be cheaper than him owning a boat - you'd have to set expectations for how often you'd let him use it etc. It also give you the flexibility to terminate the arrangement.

If you decide on a partnership make it formal with rules. No handshake agreements - even with (especially with) family.

I was in a partnership - It worked out good for a couple of years and then it worked out badly - the partnership agreement specified all that would happen. Basically he lost his job and got way behind on the financial side of his commitments.

I kept the books in Quicken and ran a monthly report that tracked everything. Balance Sheet, Cash Flow, P&L etc. The separate joint savings account was critical.

My agreement is attached. I'd be happy to answer any questions.
i cant open the attached document, would it be possible to pm it in plain text to me.

i have now sold half of the macwester 26,but need to draw up some sort of contract,so no tears or surprises for either party.
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Old 30-06-2014, 04:03   #4
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Re: Family member as partner or charterer?

Ex-Calif, that's a nicely crafted document. I've know a few boat partnerships but never been in one. Some were good some were not so good. Seems like an agreement this comprehensive would be a very useful tool for maintaining good relationships. Thanks for sharing.
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Old 30-06-2014, 04:18   #5
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Re: Family member as partner or charterer?

"Blood (family) and money" rarely mix well.

But if you are going to give it a shot, document the expectations in some manner. It looks like ex-cal has a good start to one. I would only add have a joint "boat bank account" that you both have access to and keep funded at a certain level. This way you know where all the money is going.
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Old 30-06-2014, 04:43   #6
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Re: Family member as partner or charterer?

Quote:
Originally Posted by atoll View Post
i cant open the attached document, would it be possible to pm it in plain text to me.

i have now sold half of the macwester 26,but need to draw up some sort of contract,so no tears or surprises for either party.
TXT version attached - Word did it in "Windows compatibility mode" whatever that is. I can also pdf if anyone wants that.

(Whoops - Edit - Apparently CF only allows txt up to 1000 bytes. Here is the pdf version - you should be able to copy paste.)

Quote:
Originally Posted by Delancey View Post
Ex-Calif, that's a nicely crafted document. I've know a few boat partnerships but never been in one. Some were good some were not so good. Seems like an agreement this comprehensive would be a very useful tool for maintaining good relationships. Thanks for sharing.
Thanks - I actually leveraged that from an airplane partnership agreement that had 8 partners and seemed to work.

I converted a lot of articles into boat stuff. IFR became operation in Fog - LOL.

Caveat sailor. IANAL and you should have this reviewed if you use it.

In terms of maintaining relationships it doesn't do that - My ex-partner wasn't happy but I let him get a couple thousand behind on his obligations it was partially my fault.

I ended up "suspending" his use privileges per the agreement. Then it got sh!tty.

If you don't enforce it, it won't work and it's hard not to let it get personal. I ended up going to court to take the boat - he didn't contest but I had to prove I had foundation to take it - by this time he had left the scene. The agreement, coupled with bullet proof financial tracking carried the day for me.
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File Type: pdf Co-ownership agreement sample.pdf (133.5 KB, 41 views)
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Old 30-06-2014, 08:12   #7
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Re: Family member as partner or charterer?

Quote:
Originally Posted by Ex-Calif View Post
My agreement is attached. I'd be happy to answer any questions.
Thanks, Ex-Cailf! This is a good read, and looks like you covered lots of contingencies and conditions that I had not considered.

Quote:
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NAME: __Relax Lah!________
Love the boat name! We've been to S'pore many times, and that's just an awesome and fitting name for a boat there...
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Old 30-06-2014, 08:44   #8
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Re: Family member as partner or charterer?

Family partnerships?

A member of mine dun dun it. I suggested strongly not to do it.

Now. One is brother in law and the other is brother of his wife. She found him cheating.
Left him
So now there is $300K in shared boat, bad feeling and legal involvement. Neither can use the boat and the lawyers are making hay.

I would strongly suggest not to do it.
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Old 30-06-2014, 10:00   #9
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Re: Family member as partner or charterer?

The worst kind of ship is a partner ship.

Better to charge him a flat monthly fee.

Just my opinion.

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Old 30-06-2014, 10:03   #10
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Re: Family member as partner or charterer?

ex-calif thanks the pdf worked
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Old 03-07-2014, 12:04   #11
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Re: Family member as partner or charterer?

If charging a fee for usage, check your insurance. You may find yourself with no coverage if that person is involved in a serious accident.
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