Cruisers Forum
 


Reply
 
Thread Tools Search this Thread Rate Thread Display Modes
Old 30-09-2015, 13:34   #1
Registered User

Join Date: Sep 2015
Posts: 9
Is 10% normal earnest money before contract accepted?

Is it normal for a broker to ask for 10% down even before a buyer has done a survey or sea trial? What if we don't want the boat? Even if the contract stipulates that we can refuse if we don't like survey or can't get financing. Thanks! We live in Florida.
Sailgirl58 is offline   Reply With Quote
Old 30-09-2015, 13:43   #2
Registered User
 
travellerw's Avatar

Join Date: Jan 2014
Location: Martinique
Boat: Fortuna Island Spirit 40
Posts: 2,298
Re: Is 10% normal earnest money before contract accepted?

That was how my purchase went.. %10 down to show you are serious.

You really should have your financing options in order before you start putting offers. Otherwise, how will you know your budget window!
travellerw is offline   Reply With Quote
Old 30-09-2015, 13:49   #3
Registered User
 
Mike OReilly's Avatar

Join Date: Sep 2011
Location: Good question
Boat: Rafiki 37
Posts: 14,151
Re: Is 10% normal earnest money before contract accepted?

Yes. Pretty normal in my experience. Even when I sold privately I made this a stipulation. Shows the buyer is serious, and not just kicking tires.
__________________
Why go fast, when you can go slow.
BLOG: www.helplink.com/CLAFC
Mike OReilly is offline   Reply With Quote
Old 30-09-2015, 14:15   #4
Now on the Dark Side: Stink Potter.
 
CSY Man's Avatar

Join Date: Aug 2003
Location: Palm Coast, Florida
Boat: Sea Hunt 234 Ultra
Posts: 3,963
Images: 124
Re: Is 10% normal earnest money before contract accepted?

Yup, 10% is standard.
__________________
Life is sexually transmitted
CSY Man is offline   Reply With Quote
Old 01-10-2015, 04:27   #5
Senior Cruiser
 
GordMay's Avatar

Cruisers Forum Supporter

Join Date: Mar 2003
Location: Thunder Bay, Ontario - 48-29N x 89-20W
Boat: (Cruiser Living On Dirt)
Posts: 49,143
Images: 241
Re: Is 10% normal earnest money before contract accepted?

Greetings and welcome aboard the CF, Sailgirl.

Yes. See para. 2 ➥ http://my.boatus.com/consumer/Forms/...-Agreement.pdf
__________________
Gord May
"If you didn't have the time or money to do it right in the first place, when will you get the time/$ to fix it?"



GordMay is online now   Reply With Quote
Old 01-10-2015, 08:03   #6
Registered User

Join Date: Feb 2015
Boat: Pearson 36 cutter
Posts: 46
Re: Is 10% normal earnest money before contract accepted?

Same for me - I put down 10% with stipulation that survey had to be clean. I added the "opt-out" clause to the contract using some language I got from my brother-in-law who is a realtor.
BHI_Guy is offline   Reply With Quote
Old 01-10-2015, 08:28   #7
Registered User

Join Date: Aug 2015
Location: South Dakota
Posts: 46
Re: Is 10% normal earnest money before contract accepted?

Quote:
Originally Posted by GordMay View Post
Greetings and welcome aboard the CF, Sailgirl.

Yes. See para. 2 ➥ http://my.boatus.com/consumer/Forms/...-Agreement.pdf
GordMay, Is this form valid in all states? Our broker used this form when we made an offer on a boat, but the form was not signed in front of a Notary. Is this agreement still valid?
mramoo is offline   Reply With Quote
Old 01-10-2015, 08:38   #8
Moderator

Join Date: Jun 2015
Posts: 6,197
Re: Is 10% normal earnest money before contract accepted?

Sailgirl:

You may want to be judicious in the use of terminology! Under Canadian (and English) law "earnest money" means just that: A gift you give to the seller, or his broker, to show that you are earnest. and IF you conclude the purchase the full purchase price is payable in ADDITION to the earnest money.

Florida law may be different, but better check it.

Make sure therefore that the cheque you give for the ten percent is annotated "Returnable Deposit" on purchase of xxxx, and that the written offer you make refers to the cheque (by number and date) as a "deposit which shall form part of the purchase price"

Provided you have acted in good faith, you are then entitled to return of the 10% if for reasons beyond your control - such as the offer being found too low by the seller - the deal is never concluded.

Discretion is the better part.... :-)

TrentePieds
TrentePieds is offline   Reply With Quote
Old 01-10-2015, 08:39   #9
Registered User

Join Date: Jul 2011
Location: Atlantic ICW 29N/81W
Boat: Beneteau Oceanis 36CC, now sold
Posts: 823
Re: Is 10% normal earnest money before contract accepted?

being normal doesn't make it 'right' IMO. We came up against this in buying a boat and a condo, despite being cash buyers and being able to prove the funds were immediately available. On the boat side we had an understanding broker working for us who made sure our offer would be accepted if we proceeeded to a full 'subject to satisfactory survey' contract.


Buying a condo we had a realtor who insisted on a full contract and 10 % up front before even asking the seller if the offer price was acceptable. we did so on one property and when we arrived with our building surveyor and our realtor, we found a tenant on site in what was supposed to be an empty, vacant posssion property, said tenant turning out to be an employee of the seller's realtor. We had to return another day for the survey AND obtain an additional written assurance there were no tenants, existing or planned, however we found multiple problems with the survey itself and finally pulled out. It took way too long to get our 10% deposit refunded and soured our relationship with our realtor who accused us of harrassment for getting angry when she was on her cellphone to the sellers realtor saying she would 'talk us round'...! We parted company and found another and more honourable realtor and bought another nearby property next day.


Asa Brit having bought many boats and homes over many years, I found the Florida way a real PITA, We Had actually sold our house in the UK the previous year and the price there was agreed with the buyer before the legal contract to buy was drawn up and completed and the buyer's 10% deposit received and held in escrow by our legal representative pending completion, final payment and handover.
Robin3 is offline   Reply With Quote
Old 01-10-2015, 08:49   #10
Registered User
 
LeeV's Avatar

Join Date: Apr 2013
Location: Md
Boat: 2013 FP Lipari 41
Posts: 1,298
Re: Is 10% normal earnest money before contract accepted?

We are closing our loan today, and it was made much trickier because the boat was in B.C. Canada. I liked their broker's form as it had "subjects:"

1. SUBJECT: This offer to purchase is subject to the following conditions for the sole
benefit of the Purchaser:
1): Walk through

2):Sea trial

3): Positive Survey

4): Trailer prep
which subjects shall be removed not later than noon on this date:
. If the Purchaser, using the best efforts and acting reasonably, does not remove all of the above subjects, then any deposit shall be refunded and this Agreement shall be at an end.
__________________
LeeV
Lipari 41
s/v AMERICAN HONEY
LeeV is offline   Reply With Quote
Old 01-10-2015, 08:56   #11
Registered User
 
hamburking's Avatar

Join Date: Feb 2013
Location: Kingston Ont Canada
Boat: Looking for my next boat!
Posts: 3,101
Re: Is 10% normal earnest money before contract accepted?

The brokers like 10% down, because they can hold on to it, and thats their commission. Its kind of their way of being certain they get paid. However, if the price is high, a couple thousand dollars is sufficient for a legal transaction. Be sure to read the contract about how your deposit will be handled if you don't buy the boat!!!!

Having said that, I sold my boat recently (last week). The buyer liked the boat, we went to his bank, he paid in full, I signed a receipt. Done deal. Now he has my wonderful sailboat, and all I got was money. The next day he crashed my boat onto a breakwall. Don't worry, the breakwall sustained no damage.
hamburking is offline   Reply With Quote
Old 01-10-2015, 09:04   #12
Registered User
 
seasick's Avatar

Join Date: Sep 2007
Location: Bend, OR
Boat: Brewer designed Pacific 43 in fiberglass. Center cockpit set up for long-distance single handing.
Posts: 472
Re: Is 10% normal earnest money before contract accepted?

I have been a commercial vessel and commercial real estate broker for four decades.

In reality there is nothing set in stone regarding earnest money percentages. Buyers can offer anything they feel is appropriate. How earnest do you feel?

In my opinion Earnest Money is a joke. It only becomes an issue if all contingencies of the transaction have been met and the buyer simply gets cold feet. No client of mine has ever forfited their EM because I protect them by not removing all contingencies until just prior to closing.

US contract law states that for a contract to be valid there must be remuneration. This can be in any form. A dollar would suffice.
seasick is offline   Reply With Quote
Old 01-10-2015, 10:17   #13
Registered User
 
jreiter190's Avatar

Join Date: Apr 2015
Location: Melbourne, Fl., Patrick Airforce Marina
Boat: 1965 Pearson Alberg 35 #190
Posts: 322
Re: Is 10% normal earnest money before contract accepted?

I was a state certified and licensed yacht salesman in California and worked under a brokers' license. I've also bought and sold many boats for myself and others
The way it works best, in my experience, is, you put a 10-20 per cent DEPOSIT down, which goes into an escrow account at the brokerages ' bank. This give you a xxx days' OPTION on the vessel subject to SURVEY and SEA TRIAL
The costs of haulout, survey, etc. Come out of that deposit. You can back out at ANY TIME until you ACCEPT the vessel, so, you see, the BUYER is safe. While you have this option, the broker can only accept BACK UP offers, who have to wait in line until you accept or reject the vessel. Do the sea trial FIRST, so you can reject the vessel and renegotiate the price. This doesn't mean any back up offers go into play, as you haven't yet done the survey. This is the safest way to buy a boat. The buyer is in control start to finish!
jreiter190 is offline   Reply With Quote
Old 01-10-2015, 11:09   #14
Moderator

Join Date: Jun 2015
Posts: 6,197
Re: Is 10% normal earnest money before contract accepted?

"US contract law states that for a contract to be valid there must be remuneration. This can be in any form. A dollar would suffice."

English and Canadian law no longer requires MONETARY "consideration" to validate a contract. A promise to pay (on specified conditions) given "in consideration" of an offer (to sell) validates the contract.

The long and the short: don't assume that words used in legal contexts have the same meaning in law that they have in daily, vernacular speech. And deal through a broker who stands to lose his licence, and therefore his livelihood, if he messes with the deposits held in escrow.

TrentePieds
TrentePieds is offline   Reply With Quote
Old 01-10-2015, 11:47   #15
Registered User

Join Date: Sep 2015
Posts: 9
Re: Is 10% normal earnest money before contract accepted?

Ok. Not "earnest money", but it says it is a "deposit on account towards the purchase price"
we want to make sure in our contingencies that:

Acceptable survey and sea trial by buyer
ability to secure financing under a certain percentage

Is this unreasonable?
Sailgirl58 is offline   Reply With Quote
Reply

Tags
contract, money

Thread Tools Search this Thread
Search this Thread:

Advanced Search
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
Money, money money.. and Banks Tortz Liveaboard's Forum 29 29-09-2016 17:13
Earnest money, who holds it? Clipper4730 Dollars & Cents 4 06-06-2014 10:59
An Earnest Beginners Search For Advice? Jeffrfritz Our Community 10 22-02-2014 12:23
Money Money Money loop Dollars & Cents 46 01-05-2011 17:54
'Contract Before Boarding Boat!' - ? Whispering Star Monohull Sailboats 18 16-06-2009 04:51

Advertise Here


All times are GMT -7. The time now is 02:04.


Google+
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.
Social Knowledge Networks
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.

ShowCase vBulletin Plugins by Drive Thru Online, Inc.