Retention of a down payment for a faulty cruising yacht by broker in Sneek, Netherlan

[pjmrichard]

Hello cruisers,
Being recently retired in Britanny, France, my project was to sail to northern Europ and possibly to Iceland. The best Country to buy a robust second hand steel boat was the Netherlands.



End of April 2018, I payed a visit to 3 cruising boats in the Netherlands. I agreed with a surveyor recommended on CF on a survey date for the first, provided I was pleased with the boat (this was agreed by the surveyor). She had been caught in a hurricane and I was not willing to go on. I asked the surveyor to cancel his survey and went on my visits. For the second one,



The boat was according to my requirement but the owner tried to increase the required price due to some interest by an other buyer. To avoid coming back without result, I decided to go for the third one (already visited in September 2017), a Van de Stadt 34’ with a steel hull although she was not entirely coping with my requirement. I asked the surveyor to perform his survey before signing a purchase agreement. He could not before 10 days. I booked for the possible day of survey but decided to sign the agreement with a 10 % down payment (4500 €) payed immediately. The completion of the sale was subject to the outcome of the survey 10 days later.


The survey revealed hidden defects and mishaps which should have been disclosed before signing the purchase agreement, for instance, the bottom of the boat including the keel was deeply corroded, a welded patch on the hull meaning a former replacement, the fact that the boat had a sea mishap coming up with dismasting, some critical equipment were out of service (the VHF said to have been repaired, the bilge pump, the radar, the engine counter). The AP was faulty, the engine did not perform correctly (white smoke).


I informed the broker by mail and by registered letter that due to the outcome of the survey, I decided to cancel the intended purchase.


I referred to an arbitratror who wrote the following to the broker:
« ...please refer to the article 4.2 of the trade agreement followed by the article 4.3 which establishes that the buyer has the right to cancel the purchase contract if the amount of the necessary repairs, further to the reports of the expert exceeds 0 euro". That is the case in this affair (see the survey report).
Because of these various points to which there is good reason to add to it the lack of documentary evidence of maintenance of the boat during the last 17 years, the buyer maintains his demand of cancellation of the contract and the repayment of the sum of 4 500 euros, according to the contract signed between you and him ».


The broker denied to proceed with refunding the down payment for the reason the surveyor had rated the boat as « adequate to more than adequate » (the surveyor report should not have been disclosed to the broker) and do not answer to our mails and letters anymore (the boat is still advertized on their web site).
The expected cost of proceedings (attorney, expert,…) in a dutch court would be certainly be higher than the expected refund. So I am not keen to go for a lawsuit but I am extremely frustrated and will go on talking about this case in the french sailing community.


This is happening in a western country, jeopardizing my former confidence. You can agree on whatever protecting clauses, if the guy is simply not answering, what can you do ?



Please CF members, could you advise an other solution than the court to get my money back (through a state administration or else)?Thanking you

[S/V Illusion]

Virtually none of us are knowledgeable about Dutch statutes. Consequently, anything you read here is written by uninformed people. It doesn't cost much to consult with an attorney familiar with local case law and from whom you will get some reliable advice

[Jd1]

Is there no such thing as the small claims system in North America?
It is fairly trivial to launch a small claims case and no lawyer is required. If things are as clear cut as you suggest than this would be what I would suggest.
Note that it is a long way from getting a verdict in your favour to actually getting you cash back if the broker wants to be difficult .... so be prepared for that eventuality (this would require further court appearances).

[jibstay]

Please provide name and contact information for the broker.

[Montanan]

Do you know which agency the vessel was titled with?

There is the prospect of filing a lien on the vessel with the agency to which the vessel's title is registered.

One would need to research the laws of the jurisdiction of for that agency as to the nature of lien claims could be filed and whether your deposit is of the sort of claim that can validly be established.

The vessel's title could thereby made messy [not clear] and thereby make for difficulties to transfer to another prospective buyer.

You mentioned that the survey report was provided to the sellers broker, that would be expected as the results thereof could trigger one or more of the contingencies you should have included into your purchase agreement. If the survey supports the triggering of a contingency then it becomes useful for aiding the determination of the resolution of the payment of the escrowed funds by the trustee. If the survey does not specifically support the triggering of a explicitly stated contingency then it would not support the return of the earnest money deposit to the buyer. The devil is in the details of the purchase agreement and the inspection report. If you have discerned problems with the vessel that the inspector did not note then I would suggest you have such items reexamined by the surveyor, people miss things, or come to different conclusions [that is to say, you may have a different opinion then the inspector, but if the purchase agreement contingencies are based on the opinion of an inspector and NOT your opinion then your opinion does not factor into the contingency very much. Your opinion allows you to default on the purchase, to walk away and lose your earnest money deposit.]


Also, earnest money deposits are typically required to be paid into held in escrow trust, they are not to be held by the broker. Do you know who the trustee is? If so file a claim for repayment with the trustee of the escrow account.

Earnest money isn’t always refundable. For example, the seller gets to keep the earnest money if the buyer decides not to go through with the purchase for contingencies not listed in the contract, or if the buyer fails to meet the timeline outlined in the contract. And, not surprisingly, the buyer will forfeit the earnest money deposit if he or she simply has a change of heart and decides not to buy.

Earnest money is always to be returned to the buyer if the seller terminates the deal.

Protecting Your Earnest Money Deposit

Prospective buyers can do several things to protect their earnest money deposits.

Make sure contingencies for transfer of a clear title, financing and inspections are included in the contract. Without these, the deposit could be forfeited if the buyer can’t get a transfer of a clear title, financing or a serious defect is found during the inspection.

Read, understand and abide by the terms of the contract. For example, if the contract states the vessel inspection must be completed by a certain date, the buyer must meet that deadline, or risk losing the deposit – and the ability to purchase the vessel.

Make sure the deposit is handled appropriately. The deposit should be payable to a reputable third party, such as an escrow company, title company or legal firm (never give the deposit directly to the seller, and I do not favor paying the deposit to the seller's broker to act as the escrow agent, even if the broker has a good reputation).

Buyers should verify the funds will be held in an escrow account and always obtain a deposit receipt directly from that specific escrow account. That is NOT a receipt from the broker, it is a receipt from the financial institution who has the account. The receipt should include that the escrow account list the buyer's and seller's name. Note the account should be interest bearing.

Not sure about the rules in the country you are dealing with but in the States if an escrow agent receives claims from both parties of a transaction they need to promptly file a report with the State. That is to say there are standard procedures for resolution of disputed earnest money deposits and brokers, trustees and escrow agents will defer to [escape from] the liability of their making the decision and allow the government to make the determination.

By way of example, as to Florida Real Estate Licensed Brokers:

Click on link, read and follow the related links. http://http://myfloridalicense.custh...ng-held-by-the
A snipet therefrom:

"However, if the licensee, in good faith, entertains doubt as to what person is entitled to the accounting and delivery of the escrowed property, or if conflicting demands have been made upon the licensee for the escrowed property, which property she or he still maintains in her or his escrow or trust account, the licensee shall promptly notify the commission of such doubts or conflicting demands and shall promptly:
a. Request that the commission issue an escrow disbursement order determining who is entitled to the escrowed property;
b. With the consent of all parties, submit the matter to arbitration;
c. By interpleader or otherwise, seek adjudication of the matter by a court; or
d. With the written consent of all parties, submit the matter to mediation. The department may conduct mediation or may contract with public or private entities for mediation services. However, the mediation process must be successfully completed within 90 days following the last demand or the licensee shall promptly employ one of the other escape procedures contained in this section. Payment for mediation will be as agreed to in writing by the parties. The department may adopt rules to implement this section.

When purchasing a vessel, it is typically much easier to buy in your own country and avoid the travel and legal issues of a foreign nation.

[mikecambrai]

Dutch brokers usually belong to an association. You could look at the rules of the association and see whether the broker is in breach of them, and perhaps he would not want to be shown up to his peers in the Association. Write or telephone the Association and put in a formal complaint.
I have found Dutch Brokers to be aggressive and you need to stand up to them.

[jakkum]

Hello, I am a dutch citizen, living not far from Sneek, and am very interested in which broker and which surveyor have been handling this.
If the yacht was really in bad condition, and refering to all the thi gs that were not good,
I cannot understand how a surveyor can call it adequate to more than adequate.
This really sounds strange but perhaps I am misunderstanding something.
If a sale will be made, pending survey, and the survey is not good, repair costs are higher than agreed, yhe transa tion is not valid.
Downpayme ts should be paid back.
ButI am surprised that you made a downpayment. I think, if you make a contrac pending survey, a downpayment is not necessary but can be made after the survey and possible negotiations after that.

[Montanan]

Reference link to the European Maritime Certification Institute to which the Netherlands requires certification to be a yacht broker.

This link is to the complaints procedures. Fill in the online forms, up load documents and send to initiate their dispute resolution. Good luck / Bon Chance.

All information about disciplinary complaint handling and dispute settlement at a glance!
Global Network Group holds:
(1) disciplinary complaint handling & sanctions
(2) dispute settlement, (non) binding advise & arbitration
(3) internal investigation
(4) fraternal counselling for registered/certified practitioners

http://https://emci-register.com/complaints

[TrentePieds]

Few of us here are lawyers (I am not one), and even fewer would have the requisite knowledge of Dutch law to guide you, let alone of whether any enactments made by the EU might override Dutch law in a case such as this.

A further complication - for us and for you - arises from the fact that what you tell us is clearly a (very good) translation from the French, while much of what we have told you is subject to the fact that terminology offered to you by American members of the forum is expressed in American terms, while what those of us who do not reside in the US may tell you uses English terminology.

In dealing with these sorts of things PRECISION in the use of words may make your case, and IMPRECISION may break it. Words used in a legal contexts may not have the same meaning that we laymen ascribe to them, so IMO you'd better have a DUTCH Avocat ("attorney" in American, "solicitor" in English) advise you if you want to pursue your money.

Three things this layman can offer you to think about and to "massage" into something you can use in French:

a) "Ernest money" (as referred to to by one of our friends in a prior post) is a very specific thing, and in English law Earnest Money is NEVER refundable, because it is a token of your serious intent to MAKE AN OFFER (to buy). Money paid to induce the seller to CONSIDER your offer is called a DEPOSIT.

b) A broker will be only too happy to take Ernest Money. That is like taking candy from kids. When you make an offer to the owner/broker/agent of a boat, he will insist on "seeing you meddle" (meaning "seeing your metal", i.e. money) which is why you let the offer be accompanied by a sum of money. The t of this deposit must be specified in the offer, and the deposit should be clearly stated to "be part of the purchase price". Unless a deposit accompanies the offer the seller/broker/agent is not even required to consider your offer, but can simply ignore it. The act of CONSIDERING your offer is a separate matter from the act of ACCEPTING it. If a deposit has been paid, the seller MUST consider your offer and if you offer satisfies the conditions set out in his INVITATION TO BID, i.e. in his advertisement of the boat for sale, he cannot refuse your offer.

c) An offer should therefore be hedged in with "subjects", i.e. statements of conditions that the offer is "subject to", i.e. conditions that the SELLER must meet in order to be able to hold the BUYER to his offer and turn that offer into a CONTRACT FOR PURCHASE AND SALE. Americans appear to call such subjects "contingencies", though I have that only via American laymen, so it may not reflect the true state of American legal practice.

At all events, see if what I have said seems to be congruent with French legal practice, and, thereafter, with Dutch legal practice. You will need a Dutch lawyer ("advocaat", or at least a "notaris") to tell you the latter.

If you have not followed the Dutch equivalent of the procedure I've outlined here, you may find that the broker will succeed in having your 4.5K Euros deemed "ernest money". If that were to be the outcome, the only thing you can do is learn from it and be more careful the next time.

Hope this turns out well for you.

TP

[techmans]

Write a letter to the brokers association

https://www.nbms.nl/

[Montanan]

Complaints regarding EMCI certified Ship and Yacht Brokers: to be submitted in writing to the European Maritime Certification Institute (EMCI), info@emci.nl (www.emci.nl ).

Complaints regarding NBMS extraordinary members and beneficiaries: submit in writing to the secretary of the NBMS, info@nbms.nl .

[psk125]

The return of the deposit is going to depend very much on the precise wording of the sales agreement. There are a good number of VandeStadt 34's for sale - from Florida to Germany, but perhaps it is this boat?https://www.botenbank.nl/zeiljachten...0-a2d9531d64a9 ?

[Horus]

Please note that the drawings for building a v.d. Stadt 34 were sold to anyone. So there is no standard for a v.d. Stad 34; one may be TOP; the other may be rubbish.

[pjmrichard]

Hello CSF members,
I was away during a period.
I am back to read your posts and thank you for your support.
I have to modify one detail: I have writen "The AP was faulty". I should have written "During the sea trial their was a significant offset between the heading as indicated by the liquid compass and the autopilot. Surveyor wrote "Compass(liquid) Operational, Fluid, to be adjusted to this steel yacht.". I am surprised that after 17 years, the course compass was not compensated regarding the steel hull. So their was a problem between the AP and the course compass but seatrial was too short to investigate. I confirm otherwise all the defects listed. Others are not listed (the hanging unused wires among the used ones being not the least).

I have selected a boat in Netherlands (and not in France) for 2 reasons:
- I am a European citizen and I feel "at home" in an other country of the European Union. Not sure now that we share more than a common currency.

- I need a boat with a steel hull to sail to Iceland (no problem on the south coast but maybe growlers on the north coast and from time to time containers as it happened recently in the North Sea). Netherlands has a strong reputation in this field.
I have payed a 10% down payment because the broker required me to do so. I understand it was not cautious and not required since the survey would take place 10 days after.
I would like to attach 2 photos showing the state of the bow to give a feeling of my disapointment but I don't know yet how to set up a jpg file as an URL.

[pjmrichard]

Hello again,
URL for the boat is:
https://www.uwjachtmakelaar.nl/zeilb...n-de-stadt-34/