Anyone have experience selling a boat by instalments?

[AD 2]

Hi, I have my boat up for sale, and have been contacted by a potential buyer who would like to be able to pay in installments. Sale price is less than twenty thousand, so, not a mega yacht situation...

My initial instinct is to say, what's to stop the boat sailing away? From the purchaser's side, what's to stop me running off with the money? Sober refection suggests there must be ways to do it. Escrow, maybe?

Without going to escrow, I'm thinking of requiring the following, but if anyone with experience of this kind of transaction would like to comment or add, I'd be grateful.

15% deposit upfront, balance to be paid over an agreed period.
Deposit refundable if I break off the sale.
Deposit not refundable if the purchaser breaks off the sale.
Purchaser assumes mooring fees once agreement to purchase is reached.
Boat doesn't move until payment is complete.

Anything I should be adding?

thanks for your help!

[5BTM]

Send him to the bank.

[Kettlewell]

I would avoid providing financing to anyone who wasn't a close friend/relative, and even then I would do it with trepidation. Even if the person is completely honest, you never know when someone will get hit by a bus, lose their job, or whatever. Too many risks.

[Ancient Dream]

I'm not knowledgeable enough to offer advice on setting up an installment sale for your boat, but I can share that there are specific rules you'll need to follow when reporting the sale to the IRS on your tax return. I've helped clients with installment sales for properties and vehicles in the past, but I haven't had experience with boats. That said, having a conversation with your tax professional before you wrap up the sales contract is crucial. The old saying goes, "An ounce of prevention is worth a pound of cure." In this case, it's easier to address any tax considerations upfront rather than trying to sort them out later.

[Tin Tin]

These sorts of time delayed private transactions often don't end well and end up in front of Judge Judy. DIY legal documentation and common law have traps for the unwary. If someone wants to buy it, that is a good sign, drop the price by a thousand to some one who can pay cash. If you proceed notify you insurer that there is now another interested party involved.

[siamese]

No, no, no, and absolutely no.

His parents won't loan him the money. Ditto for his siblings. The bank is way to smart to loan him anything. But you're looking at him and seeing opportunity?

If so, why not be fair with the guy? Maybe there's another boat he likes better. You could loan him the money for that boat.

[CarlF]

The way to do this is give him a mortgage for the 85% at a reasonable interest rate. If he stops paying, you call the mortgage and own the boat again. Require that he insure the boat at his cost with you named as an insured.

You don’t want to somehow “share” ownership. This could make you liable if he runs into another boat and hurts someone. With a mortgage you have no liability.

If there’s any chance he would take the boat to another state, I would consider getting the boat documented with the CG. Use a boat documentation company to do the paperwork. Being documented will let you get a “Preferred Ships Mortgage”. The documentation company will be able to help with the Preferred ships Mortgage paperwork too. While most mortgages are based on state law, these mortgages are under federal law applying in every state and even outside the US. A vessel with one of these special mortgages can’t be sold or mortgaged anywhere in the world without paying off the mortgage first.

[Captain Graham]

I understand you want to sell your sailboat.
So your plan it what?
Keep the title until he pays the last payment.
If you keep the title just think what happens if the new operator (he is not the owner until he has the title) does something stupid with the boat?
Damages it or does not pay the mooring fees.
You will still be the owner and you will be responsible.

Bottom line if a bank will not loan him the money most likely it is because he is high risk.
I would not do it.

As Tin Tin said negotiate on the price.

[5BTM]

Someone wants to go sailing but doesn't even have $20K is living in LaLaLand.

[Chotu]

How old is this person? Early 20s just getting started? Or older?

I bought my first boat from someone on the installment plan just like you are describing. Worked out just fine.

How long are the payments supposed to go and how frequent are they? I see you are in Toronto, so time to haul the boat out anyway. Have him pay while it’s on the hard.

[5BTM]

Originally Posted by Chotu

How old is this person? Early 20s just getting started? Or older?

I bought my first boat from someone on the installment plan just like you are describing. Worked out just fine.

How long are the payments supposed to go and how frequent are they? I see you are in Toronto, so time to haul the boat out anyway. Have him pay while it’s on the hard.

You can find the listing quite easily on kijiji.com.

IMO, the so-called buyer is looking for a place to live, not a boat to sail.
Toronto's housing situation is critical.

[Capt Clark]

As a yacht broker, I have facilitated this twice, both with disastrous results. The sticking points include:

When does the title change hands?
How do you enforce the promissory note when the borrower has no money?
What liability are you exposed to if there is an incident?
Do you really want to repossess the vessel after it’s been abused?

Chotu’s experience is the exception. He’s an honest and straightforward guy. Many people in this situation don’t realize the money they need to maintain a vessel and at some point just walk away.

I’m not saying do not do this but make sure it’s someone you can trust and believe they will follow thru.

Good Luck.

[lifeofreilly57]

No way, either the buyer has the money or not, if the potential buyer takes his time paying, then stops, you've lost precious time and potential buyers.
They either have the money or not.
Sold a number of boats over the years as well as motorcycles and cars, the only time I got stiffed was by a police officer who wrote a check on a closed bank account.
I was 19, since then I've either had cash in hand or an electronic bank transfer, either way, no title is signed over til the money is safely in my bank account.
As for showing a boat, I don't do individual showings, I've had too many tire kickers waste my valuable time. I'll set up a convenient afternoon on a weekend and let prospective buyers come in that time window.
I've seen some of the same tire kickers show up three years later still not in possession of a boat. Low ballers never get a return call.
The market may be soft currently, but a boat in the lower price ranges should still be able to sell.

[grantmc]

Originally Posted by AD 2

...
15% deposit upfront, balance to be paid over an agreed period.
Deposit refundable if I break off the sale.
Deposit not refundable if the purchaser breaks off the sale.
Purchaser assumes mooring fees once agreement to purchase is reached.
Boat doesn't move until payment is complete.

Anything I should be adding?

thanks for your help!

I've had experience with this a few times, never actually a party, but a as a bystander for friends. Not an uncommon scenario for lower value boats where I live.

When I initially read the post I thought what about insurance, but as I write this I realise that the issue is a tad wider.

So what I would add is for you to consider how you can mitigate your risk. Until the repayments are complete, if something goes wrong with the boat then the buyer may be reluctant to continue. Perhaps the motor over heats and seizes, or is involved in a crash, who knows, but in some way is seriously damaged. Or quite simply that the buyer comes to feel that the agreed price was too much.

So something else I'd consider, as the seller, is what would you seriously expect to sell the boat for. What's a realistic price. In my own limited experience these sort of deals have usually involved some poor naive schmuck buying their very first boat. And so the agreed price is well more than someone with a few clues would be willing to pay. I'm not suggesting that this is your situation, but that's my experience. So the seller gambles on getting considerably more money over time than they might realistically expect to receive in a simple buy/sell/pay situation to an experienced and knowledgeable boatie.

And for me 15% is way less than I would accept, unless, as someone else mentioned they're friends or family. I'd want at least 50% Again mitigate the risk.

And don't forget too that the buyer's outgoings need to also include mooring fees (maybe they're super cheap), but if not paid you'll be obligated or the marina or whoever provides the mooring will have a lien.

[Chris31415]

Originally Posted by 5BTM

Send him to the bank.

This.