Originally Posted by Mike Sibley
I am talking with the owner of a boat that I like and I may make an offer on it. The seller has indicated that he would expect a deposit if my offer is accepted. No boat broker
is involved. So, how is the deposit (say $10,000) handled? Is it necessary to set up an escrow account at a bank for the deposit? Are there alternatives? I trust the seller, but still ....
In theory, if all goes well - you will never see the $10k again
In practice, if all goes badly - you will never see the $10k again
.....even though you may
be entitled to it back.
Unless the Vendor has buyers queing up around the block, then I would "counter indicate"
that a $500 deposit would be enough, with a signed contract (make sure you read it!) - on condition that both any haulout and any surveyor
are booked (by you) within a week - with a short completion date. Vendor can continue to market / show the boat, you just have first dibs on the sale
. Could also throw in that if the sale
gets aborted he gets a copy of the Survey report (a very useful marketing
tool for future buyers - even though they cannot rely on it)......if both sides willing and are acting in good faith, the transaction could easily be completed within a month, if not a few weeks.
A buyer willing to spend $1k (plus?) on Survey and haulout is (IMO) not a tyrekicker - doesn't guarantee that the sale will complete, but nothing does that.
Personally I don't see what the Vendor has to lose (apart from not being able to sign another sale Agreement for a few weeks or so) unless he wants (or needs?!) to have a Buyer by the short & curlies by holding onto the $10k to be argued over if things go badly (for him)....if the Vendor does not have at least some rights over the deposit, even in Escrow - then it serves no purpose whatsoever.....odds on that even if the deposit is refundable under the contract there will still be the possibility of an argument. He who holds the cash holds the whip hand.
Escrow upon completion is another matter. If the Vendor is local to you and boat - could do the paperwork and funds transfer same day in person....or use an Escrow service
My worry with a transaction like this is that the Vendor may not have given any thought to a Buyers likely (and valid) concerns by already having an agreement and terms sketched out, plus how to translate those into practice - especially covering the payments (deposit and balance).....unless he is just expecting a buyer to hand over cash on trust
. Good luck with that one
is that you end up with a transaction where both parties expect different things - because they are "obvious". Good agreements make good transactions.
Anyway, so ends another longwinded post from DOJ
- that just grew wayyyyy past the original intention