What are your thoughts about fractional ownership?

[grantheadifen]

Agreed on friendship and business - so caution is advised there. The key is a good and solid contract regardless. Use a contract that has been professionally developed and looked over by a maritime attorney - many items will be in there that you have not thought of. I used to own one of the big fractional sharing companies out there - so I have seen it work well - AND - it makes total sense. You don't use your boat all the time so share the time available. Another key is the scheduling - best to use a software program for that. A proper software sharing program will allow you to gain access to more time than the exact share of time split because even your other partners won't fully use their time. One more big piece of advice is to ensure that the other partners are competent - with proper knowledge, skills, and experience. Simply a certificate issued by an association is not enough. Proper competence should be required. NauticEd has free tools for developing a sailing resume to help measure competence. Disclosure - I own NauticEd - but those tools are free so I feel it is ok to post that.

[skipperguy]

worked fine for me with an old friend. only 3 rules: leave boat real clean, in and out, leave fuel full, leave fridge empty. scheduling was workable since we both were easy going

[garyfdl]

Originally Posted by Andy64

I have owned fractions of sailboats. I think the most important thing is that you have an exit agreement before you decide to buy the boat. If you have two owners the exit agreement should be as follows: If owner X wants to quit the co-ownership, he must set a price. Owner Y has now the option to sell or to buy with that price.

This same logic also works if you have three owners. If owner A wants to quit he will set a price. If B and C both want to sell A has to buy both A´s and B´s shares. If B and C both want to buy then A will have to sell his share to B and C 50/50. If B wants to buy and C wants to sell then B and A must buy C´s share 50/50. If A still wants to quit he must set a price and B will choose if he wants to sell or buy.

I disagree. the owner who wants out doesn't 'set' the price.

The price is what was paid for the boat, plus/minus appreciation/depreciation, assuming the costs of repairs or improvements were shared equally. If the owner who wants out didn't contribute their fair share, that is also deducted from the price.

[Sailorman97]

My thoughts are never. Maybe 1 person, preferably the wife, more than that, no way.

[clakiep]

As the old saying goes : two is company, three is none - or it is a firm, from which you better rent. Carefull : two might be company ! As a student I had a sailing boat in 50 % partnership with a friend. Most of the time very harmonic. We sailed together as well as each one with his friends and crew.

Capt. Claus - ocean tramp of the eighties

[TrentePieds]

O-ho :-)! Another man with his wits about him :-)!

There are only two legally recognized forms of organization for the purpose of owning chattels: Partnership and incorporation.

The latter is a royal pain for something so straight-forward as a pleasure boat, tho' it does compel decent paperwork including books of account.

The former is an - often sloppy - arrangement in which case it leads to grief. If properly done, subject to a sensible Partnership Agreement, it can work very well indeed.

BUT: If a man cannot afford to buy a boat in Sole Proprietorship, what will he do if his partner(s) want out, and the partnership agreement, by giving him "first dibs", compels him to buy out his partners if he wishes to keep the boat he couldn't afford in the first place? And if he DOESN'T have dibs, he likely to get cranky at having been "evicted" from "his" boat by virtue of its sale to a third party.

garyfdl is spot on: The settlement price needs to be + appreciation/ — depreciation, but who determines that? Surely not the partners? That is just exactly how the grief starts! In the given situation "selling price" is not available to use in this determination, so therefore this metric has to be determined by a disinterested party. A broker? Hm... A surveyor? Hm...

That the thought of partnership even suggests itself to a man is a sign that he is getting over his head :-)!

Cheers

TP

[guitarrich]

Originally Posted by garyfdl

I disagree. the owner who wants out doesn't 'set' the price.

The price is what was paid for the boat, plus/minus appreciation/depreciation, assuming the costs of repairs or improvements were shared equally. If the owner who wants out didn't contribute their fair share, that is also deducted from the price.

It’s easier than that. The title of our yacht is divided into five. If we sell our share, we have to find a buyer. We are entitled to sell at whatever the market reckons it’s worth. We might choose to sell it more cheaply for a quick deal if we want to. It would be our loss. The new owner owns a fifth of the yacht, which retains a nominal residual value that isn’t necessarily equal to five times the price recently paid for a single share.

[Rightbrainer]

Worked great for me...
We set up an annual budget and stuck to it. We funded the budget up front so there were no unilateral surprises. We sat down with a calendar in February over a cup of coffee and divided the season out: alternating weekends and alternating weekdays. Then we swapped days for mutual convenience. On the days that you had 'dibs' you could take the boat without checking in with the other partner. On your off days, you could check with the other partner and use the boat if it was available. The guy with dibs could say no without giving any reason.

We didn't have a buyout clause, but in the end we wound up splitting the purchase price.

This was a sailboat, so fuel costs were next to nothing. On a power boat I'd keep an hours log and pro-rate accordingly.

You were expected to leave the boat as you found it.

[Dooglas]

Originally Posted by ChrisJHC

The important thing is to make sure that all arrangements are well understood (and preferably documented) before going into the deal.

I think "preferably" is something of an understatement. Anyone who enters into an arrangement like this without a detailed and legally binding agreement has truly taken leave of their senses. Even then, you better have picked your partner(s) well and prepared yourself to possibly lose a good friend in the process.

[garyfdl]

Originally Posted by guitarrich

If we sell our share, we have to find a buyer. We are entitled to sell at whatever the market reckons it’s worth...The new owner owns a fifth of the yacht

I get the gist, but who decides what 'the market reckons it's worth' if one of the other owners wants to own 2/5ths? I know, I'm splitting hairs.

And as to bringing in another owner, I hope you have a vetting process.

Off on a tangent, I do think joint ownership among strangers might have a better chance than between friends.

[nonav]

A friend who owned the fuel dock/bait station we frequented said this about partnerships…

“Partners in boat ownership only works when one of the partners dies”

Thought it was funny, though I suppose sometimes it’s also true.

[kingle]

Originally Posted by sailingblue

Curious if people have experience with owning a fraction of a sailboat with a couple of people.

Not referring to our heading from a company who sells to 10 owners. Specifically curious if anyone has teamed up with others to buy a dream boat to share ownership in.

Would you?

Have you?

I split a sailboat with a good friend. Went really well. No issues about use and costs. I handled the administrative details. The partner usually paid one or two big bills that would equate roughly to my costs. There was no problem with the boat ownership in two names, the insurance in two names and use of the boat at a yacht club - we both had to join. I would NOT suggest any type of loan or joint encumbrance. We agreed that any damage or insurance deductible would be the responsibility of the operator. One could imagine some further owner liability none the less. I tended to do more work on the boat - my partner acknowledged this effort and would be generous with some expenses or meals. No complaints from my end. Obviously, you break something - you own it. There wasn't much of that over 24 years and we were both adults about it. Like a winch handle going overboard. Good luck with your future endeavor.

[Bill_Giles]

Three older friends and I were sat in the bar of the sailing club fretting about the state of our collective knees after years of dinghy sailing Lasers and the like. So we decided to sell our dinghies and buy a yacht. Between us we bought a 3 year old Bavaria 36. That was in 2006. The forth share has changed hands twice. Recently we changed to 5 shares in case age or infirmity stops one of the original continuing to sail when we would probably go back to 4 again.

We have got on very well. At the beginning of the year we have an ‘Annual General Meeting’ and decide on cruising and maintenance plans for the year. We often sail with fellow syndicate members. Obviously the arrangement makes cruising cheaper, maintenance tasks are shared (we each bring different skills to the table) and we all get great sailing in with long term good friends.

Maybe 17 years on we have been very lucky with our choice of partners.

[CaptJPMcGuire]

Originally Posted by sailingblue

Curious if people have experience with owning a fraction of a sailboat with a couple of people.

Not referring to our heading from a company who sells to 10 owners. Specifically curious if anyone has teamed up with others to buy a dream boat to share ownership in.

Would you?

Have you?

No I have not. I have read comments made by others. Once you finish the digging of the hole in the water by buying a boat--you then get to pour money into the hole! But you're buying a lifetime of experiences that can be delightful and terrifying in the same instant.
A friend was in a three person Airplane partnership-(throwing money in the air) THey seemed to make it work. THe aircraft was always available bu reservation -a head of time or at the sudden urge to fly. They charged each other $50 an hour for use. That money paid for hanger space, 100 hr inspections, new equipment, electronics and other repairs. My fried was getting dementia and knew it was time to sell his 1/3 .. His co-owners each bought him out. They are all still friends ---but my friend can't rent the plane any longer IT WAS A SMART MOVE for him at the time both gettin in and out.
He got to fly across country and visit most all National Parks. His only regret was not buying stock or interest and owner benefits in a car rental company. Little regional airports are not often 'down town'

[WE9V]

As other stated, it could go well or it could go bad. I'm in about year 7 of a 3-way partnership. In our case, it was a boat to be used mostly for racing (beer can type). Having 3 partners, all interested in racing, meant having 3 crew built in. It also meant one-third of the financial responsibility, and one-third of the work. In our case, we were all friends/acquaintances and similar minded and equally motivated. There were no slackers, we each did our part, physically and financially.

Everything was great for 7 years, until I wanted out of the partnership. Our written partnership agreement explicitly spells out the procedure for doing so. Was quite simple: 1) agree on a price among ourselves, 2) if a price isn't agreed, exiting partner pays for an appraisal survey. Other owners can buy out exiting owner at either 1 or 2, or find a new partner at that price, or 3) if no agreement, the boat has to go up for sale in 12 months and proceeds split equally. I went straight to option 2 in order to keep emotions out of it, and they refused the appraisal, counter offering with a 40% off offer. So now we are onto option 3, if they don't change their mind or find another partner at the apprised price, the boat will go up for sale.

I don't think I'd go into a partnership for a cruising boat. Way too much scheduling issues. But a day cruiser or racing boat, sure, I'd do it again.