Nightmare Buying - Broker Threats

[jrbogie]

Originally Posted by Tspringer

I find myself in a downright surreal scenario that feels like a bad twilight zone episode. The listing broker - who contractually is also my broker according to the purchase and sale agreement - has deliberately and repeatedly misrepresented the vessel (in writing), lied to me, cursed and screamed at me, called my insurance people and screamed/cursed at them, and is now threatening to withhold $6,000 of my deposit on the boat. This quick description does not scratch the surface of all that has taken place. I have comprehensive documentary evidence of ALL of it.

Now I cannot close on the purchase of the boat because the survey notes over 15 different essential repairs that would be required for the boat to be seaworthy. The survey has been rejected by 5 different insurance companies. They will not write the insurance until the repairs are done.

When 3 of these insurance companies had rejected the survey, I engaged the broker. He screamed at me cursing that I had messed up the entire insurance process and potentially killed the deal by disclosing too much information to the insurance underwriters and because of my screwing up the deal, he was going to hold back $6,000 of my deposit money if I did not pay out of my pocket for the repairs the insurance required prior to closing. He wants me to pay to repair someone else's boat. Repairs some of which he had assured me in writing had already been completed - straight up lies. He says the $6K is to cover his travel expenses, commissioning the boat for the survey, re-winterizing the boat, for removing and then installing new shrink wrap on the boat (note that at survey the shrink wrap was NOT removed) pay for his time spent on the survey and working on the deal. He is absolutely insistent (screaming - literally) that HIS insurance contacts would have gotten the policy bound without any issues at all and so all of the problems were caused by me and this justifies his keeping $6K of the deposit on the boat.

So I cannot buy the boat because it is impossible to get insurance due to boat condition issues and the broker says he is keeping $6K of my deposit.

Do I need a lawyer? This is a complete disaster. I did not enter into this seeking a legal nightmare - I want to buy a boat.

please, oh please tell me that you didn't give deposit funds directly to the broker. an escrow account was opened was it not. oh please tell me all money for deposits and such are in escrow.

[letsgetsailing3]

Seems to me that it depends on the contract.

Details matter.

Do you want the boat, and it's a matter of getting a better price, or are you using the survey and insurance companies to break the contract? The fact that you've contacted three insurance companies as "proof" does make it appear you're using the survey to try and get out of the deal.

Seems like we have insufficient detail to adjudicate this, given that we don't know what the contract says, don't know the details of the issue, and don't know the broker's perspective.

But since the deal has turned nasty and resources have been expended, it may come down to the letter of the contract. And if there was a contingency based on your ability to insure the boat, or satisfactory survey results, you may have a case.

[Tspringer]

Thanks for all the replies so far... lots of good feedback.

Relative to the broker representing both the buyer and seller - here is the section from the purchase and sale agreement that seems relevant:


"BROKER REPRESENTATION: The SELLER and the BUYER each acknowledge that the SELLING BROKER represents the BUYER, and the LISTING BROKER represents the SELLER, each representing the party that the respective BROKER has brought to this transaction. The SELLER and the BUYER also acknowledge and agree that in the case of a sole BROKER, such BROKER represents the interest of both the SELLER and the BUYER and that such representation shall not render this AGREEMENT voidable"


I read that to mean the broker represents me just as much as her represents the seller.


The broker is with a large well known brokerage company. His website profile says he is licensed and bonded. On his website profile, it also has the CPYB Logo (Certified Professional Yacht Brokers) but when I search for him on their website he is not there. So he may have also lied about being licensed and bonded.

My deposit was sent to an escrow account in the name of the big brokerage - not to an account that has his name on it or something.

This seems to be a standard purchase and sale agreement. Here are the parts about accepting the vessel and conditions it can be rejected for:


ACCEPTANCE OF THE VESSEL: The BUYER shall notify the SELLING BROKER of his ACCEPTANCE of
the VESSEL and its inventory in writing. If said notice has not been received by the ACCEPTANCE DATE, the
BUYER shall be deemed to have rejected the VESSEL and its inventory, subject to the terms, if any, of Paragraph 8. IT IS THE BUYER’S RESPONSIBILITY TO OBTAIN ANY ASSURANCES HE REQUIRES REGARDING THE AVAILABILITY OF SATISFACTORY FINANCING AND INSURANCE PRIOR TO ACCEPTANCE DATE.

Here is the referenced paragraph 8 giving terms to reject:

ADDITIONAL PROVISIONS:
1. Visual inspection and approval by Buyer.
2. Marine survey consisting of structural, mechanical, electrical and rig all acceptable to Buyer.
3. Marine sea trials acceptable to Buyer.
4. Financing approval and its terms acceptable to Buyer.


TERMINATION OF AGREEMENT: If the BUYER gives notice of his intention to reject the VESSEL under the
terms of AGREEMENT, such notice shall constitute termination of the BUYER’S obligation to purchase and the
SELLER'S obligation to sell, and the BUYER and the SELLER both authorize the SELLING BROKER to return the
deposit to the BUYER, after deducting any fees and charges incurred against the VESSEL by the BUYER, or by the BROKERS on behalf of the BUYER, including the cost of the survey and related expenses.



The vessel acceptance date on the contract was 4/1/19. So I rejected the vessel. According to the agreement my deposit should be returned. Note that at no point did the broker EVER say anything at all about any expenses of any kind that in any instance or circumstance would be things I could be held responsible for.

I live in GA. The boat is in MD.

The part that really sucks is I love the boat. I want to buy the boat. The seller wants to sell the boat. The broker has made this impossible.

[dochip]

If the purchase was contingent on the survey you can walk away. If you're in CA or FL where brokers have to be licensed report him to the state licensing agency. If he works out of a brokerage house (not an independent) contact the employing broker (the boss) and see what can be done. If none of that applies get a lawyer, or an arbitrator as many buy/sell agreements require arbitration.

[Hardhead]

Being a lawyer, I'd first check to see if he is licensed in your state - and directly contact the licensing authority. Provide any evidence you have of suggested insurance fraud, and any shady dealings. Communicate by email with the broker, so you have a written record. If the licensing authority does not help, see if your state has a consumer protection office. After that, get a lawyer. Get your money back, and get away. The guy sounds like a first class nut - and probably stupid to boot.

[letsgetsailing3]

Originally Posted by billknny

This very first statement indicates a serious potential problem.

A broker is a legal "agent" of ONE party. Usually the broker works for the seller, and has fiduciary responsibility to the SELLER ONLY. You can contract a "buyer's broker" who will have fiduciary responsibility to the you as the buyer. BUT... one broker CAN NOT have fiduciary responsibility to both buyer and seller. That is a classic conflict of interest, and is illegal--everywhere.

If the broker is working for both parties, it's called "dual agency", and that's NOT illegal most places. But it's definitely a "buyer beware" situation. Then again, ALL buying situations should be "buyer beware".



Legally speaking, this is a situation that's going to depend on how the offer and contract were written.

[rbk]

Originally Posted by billknny

That is a classic conflict of interest, and is illegal--everywhere.

No, dual agency is a thing and it is legal in some places.

Originally Posted by billknny

Since you have already told us that he has basically told you to commit insurance fraud, we can bet this guy is a total scumbag and is capable of anything.

This, if you have evidence that he tried or conspired to commit fraud I would be threatening to take it to the authorities, or just take it to them.

Originally Posted by billknny

We can only hope that he actually has your deposit in a real escrow account and hasn't spent it all on the ponies... which I am betting is actually the case. It is one possible explanation of why he is so desperate to close the deal.

x2 Monies most likely gone and he doesn't have the means to repay.

Originally Posted by billknny

Hopefully, you have signed a standard brokerage contract that specifies exactly the conditions under which you can back out of the deal. Typically this relates to unsatisfactory survey, or unsatisfactory sea trial. A lawyer knowledgable in admiralty law and boat sales issues can certainly help, but it won't be cheap.

You nee a contract lawyer, this is simple contract law for agreement of purchase and sale, not salvage rights etc; I would exhaust all other means before contacting a lawyer, you'll blow through 6k before you get to court and you'll both most likely come out losing. If possible in your jurisdiction, you may be able to initiate the claim without legal representation. 9/10 times people will back off when they get served papers by the court clerk/sheriff etc. it makes it official and costs very little to do.

[letsgetsailing3]

After looking at the contract, it seems to me you get your deposit back, [EDIT: there is a clause there about expenses, but they do need to be documented.]

Unless there are some other words somewhere about covering expenses. [See edit above, there is a clause like that there]

I'd kick my complaint up to the brokerage house management. I'd try to deal directly, and IN WRITING, before hiring a lawyer. And if that doesn't work, I'd hire a lawyer just to write a threatening letter before starting an actual lawsuit, which will be some REAL money.

Talk to the boat broker's boss, and be firm, but not insulting.


Side Note: If you still want the boat, and the buyer wants to sell it, tell the brokerage house that as well. I don't believe there is anything stopping you from making a counter offer. The broker is acting... Strange. Part of this is just normal negotiation, and shouldn't be all that hard. [Edit: Looks like you will be out the brokers expenses if you cancel the deal.]

[rbk]

Originally Posted by Tspringer

ADDITIONAL PROVISIONS:
1. Visual inspection and approval by Buyer.
2. Marine survey consisting of structural, mechanical, electrical and rig all acceptable to Buyer.
3. Marine sea trials acceptable to Buyer.
4. Financing approval and its terms acceptable to Buyer.

Define 'acceptable'...

Originally Posted by Tspringer

TERMINATION OF AGREEMENT: If the BUYER gives notice of his intention to reject the VESSEL under the
terms of AGREEMENT, such notice shall constitute termination of the BUYER’S obligation to purchase and the
SELLER'S obligation to sell, and the BUYER and the SELLER both authorize the SELLING BROKER to return the
deposit to the BUYER, after deducting any fees and charges incurred against the VESSEL by the BUYER, or by the BROKERS on behalf of the BUYER, including the cost of the survey and related expenses.

[newhaul]

Originally Posted by Cheechako

You probably need a lawyer, but if the state you are in has licensing requirements etc for Brokers, talk to that agency with your "proof". He will likely change his attitude fast if he's losing his license...
Also, Our state has an on line consumer complaint thing. I have used it twice and they acted super fast .....like in a couple days. When businesses get contacted by the Attorney General they start groveling fast...

sounds like a broker we have in the town of gig harbor

[Tspringer]

Originally Posted by rbk

Define 'acceptable'...

So the inability to obtain insurance due to underwriting rejection of the survey and thus inability to get financing approval would legally NOT meet the definitions of "acceptable" relative to financing?

[Baba Buoy]

Pardon my ignorance, but when I bought my boat, I acquired liability insurance only. The sale did not hinge on the defects found in the survey being fixed as a condition for sale by my new insurance company. If I wanted comprehensive insurance later on, I would have to get the boat surveyed again to document defects being corrected before receiving this type of policy. To help prevent such screw ups from happening, would it not be better to negotiating a lower selling price in response to defects (and fix it yourself) rather than relying on the seller to fix the boat and screw comprehensive insurance policies?

[wizoc]

While you probably need a lawyer the cost may be more than the recovery. At a bargain of 500/hr you will eat thru your claim quickly. Before retaining a lawyer contact the brokers employer. If that doesnt work consider small claims court. One thing that hasnt been asked is does the contract have a provision for recovery of costs, including attorneys fees, by a successful party. One last thing if you end up suiing name the company not just the broker.
Good luck!

[letsgetsailing3]

Originally Posted by Tspringer

So the inability to obtain insurance due to underwriting rejection of the survey and thus inability to get financing approval would legally NOT meet the definitions of "acceptable" relative to financing?

"Acceptable" would be defined by the buyer. No need to contact an insurance company.

A lot of people do a different kind of survey for the insurance company.

Which may be why the broker is upset. Now the fixes are REQUIRED in order to get liability insurance, which may be required to get financing.

[rbk]

Originally Posted by Tspringer

So the inability to obtain insurance due to underwriting rejection of the survey and thus inability to get financing approval would legally NOT meet the definitions of "acceptable" relative to financing?

should have a specific clause for insurability. It's no different than putting in an offer without subject to financing, then getting rejected by your financier, not the sellers problem. The dual agency may be a blessing as he has a higher duty of care to represent both parties and it appears he has failed to represent you adequately (prob another reason for the push back). When lazy contracts like this go to court, judges have little sympathy for what are supposed to be professional brokers/agents.

ps i have to shorthand all this typing with one hand