Buying vs "Indefinite charter"

[mamazgdyni]

As I am about to purchase a 5000 $ USD of a Folksong i was wondering for the legal ramifications of asking the seller to charter it to me for " 100 years " instead of buying it from him and becoming an owner, the boat would still hold its current registry saving me from going through all the hassle of registering it

[valhalla360]

1) Is he going to add in annual re-registration fees and profit for him to do so?
2) Is he going to include liability insurance?
3) If you travel internationally, it's can add a hassle as you aren't the owner.
4) If you get an ornery official who catches on, does he impound the boat because you aren't the owner.
5) Does the country come after you for tax evasion for not paying the sales tax?
6) Boat sinks and you walk away, who's responsible for recovering it and paying environmental penalties?

I could probably come up with more but lots of potential issues and the "owner" would likely be on the hook for many of them and have ongoing costs. If I was selling, I wouldn't touch that with a 10ft pole. At the very least I would want $1000/yr to cover my risk and efforts, so now you are at $105k for the boat.

[StuM]

To summarise the most important point Valhalla's excellent list in one word: LIABILITY!

[mamazgdyni]

By the looks of it already is a no even if i would pledge a full insurance although hardly anyone wants to insure a single handed sailor (would need some advice or recommendation what is the walk around insuring the boat and sailing single handed) nevertheless as the idea sounds attractive to me it probably would / is not to current owner on top UK leaving the EU and me being an EU citizen I am not sure about current tax situation and the legal requirement

[valhalla360]

Originally Posted by mamazgdyni

....on top UK leaving the EU and me being an EU citizen I am not sure about current tax situation and the legal requirement

Add in the whole Brexit deal and the acrimony and fighting between the UK and the EU, make that a 100ft pole. Their leader are looking for ways to needle each other and scamming the rules would seem a perfect way to make an example of someone.

[BillKny]

Originally Posted by valhalla360

3) If you travel internationally, it's can add a hassle as you aren't the owner.
4) If you get an ornery official who catches on, does he impound the boat because you aren't the owner.

I am curious why this would ever be an issue? Boats that are in long tern charter and lease cross international boundaries every day without getting "impounded"

Boat without the owner aboard cross international boundaries every day--without getting impounded.

Let's change the wording just a bit... instead "permenent charter" let's call it a renewable lease... Virtually every cargo and cruise ship in the world is leased, and a good many superyachts.

I'll agree that the "owner" in this proposal does carry a bit of liability, and would need to be insured and that would be a complication. THe whole thing seems silly for a $5000 boat, but not for these reasons which seem to be made up up out of a foc'sle lawyer's dreams.

[valhalla360]

Originally Posted by BillKny

I am curious why this would ever be an issue? Boats that are in long tern charter and lease cross international boundaries every day without getting "impounded"

Boat without the owner aboard cross international boundaries every day--without getting impounded.

Let's change the wording just a bit... instead "permenent charter" let's call it a renewable lease... Virtually every cargo and cruise ship in the world is leased, and a good many superyachts.

I'll agree that the "owner" in this proposal does carry a bit of liability, and would need to be insured and that would be a complication. THe whole thing seems silly for a $5000 boat, but not for these reasons which seem to be made up up out of a foc'sle lawyer's dreams.

Charter boats typically operate in limited cruising areas with the local authorities accustomed to it. The charter bases have a relationship with those authorities.

Likewise, commercial shipping, the captain has all the paperwork, the lawyers have confirmed it and it fits with normal operational expectations of the authorities.

Superyachts have professional crews and lawyers who handle the paperwork and again, it fits in with expectations from the authorities.

A small boat with a UK citizen and French registration shows up in Malaysia probably won't be impounded but I would be surprised if there wasn't a good bit of explaining to be done. Everything about you entering the country better be squeaky clean as you are now suspicious because you don't fit the norm.

[ohdrinkboy]

Why would he take on any liability on a $5000 boat? Sorry, but I would tell you it is a sale or get lost.

[mamazgdyni]

Originally Posted by ohdrinkboy

Why would he take on any liability on a $5000 boat? Sorry, but I would tell you it is a sale or get lost.

Thinking the whole thing over from the former owners view it certainly could be a potential worry that one could live with out on the other hand thousands of boats are chartered or co-owned and in case of having a valid insurance that could be checked with the insurer and some sort of written charter arrangement with the person that shows on the registration certificate a french national on a british boat would fit the norm and the official to further inquiries on to reason for such arrangement would find ones disgust with paperwork, forms and the like logic since it is 'the same sailor" only with less paperwork

[boatman61]

Sounds like a lot of hassle to get out of the VAT and negligible liability insurance.
If you can't afford the extra £1200 buy a cheaper folksong..

https://yachts.apolloduck.com/boat/f...or-sale/526053

[denverd0n]

These kinds of arrangements do exist, but not for a $5,000 boat. Not even for a $50,000 boat. When you get into the $50,000,000 range is where it might make sense from the seller's perspective.

[Lake-Effect]

Originally Posted by ohdrinkboy

Why would he take on any liability on a $5000 boat? Sorry, but I would tell you it is a sale or get lost.

Exactly... no individual seller in their right mind would agree to such a scheme. Charter companies are limited-liability corporations with proper insurance and other protections for the company owners and for any affected 3rd parties. At worst, if a charter company is faced with unpayable liabilities from accident or incident, they can go bankrupt. Would your seller be willing to go bankrupt if your boat runs over a dinghy of wealthy children? Or if you walk away from this $5k boat cos it's too much to restore, and it becomes a shipping hazard or costs thousands to remove and demolish?

[goboatingnow]

Nobody who has ever owned a boat would offer this approach. It’s madness

[valhalla360]

Originally Posted by boatman61

Sounds like a lot of hassle to get out of the VAT and negligible liability insurance.
If you can't afford the extra £1200 buy a cheaper folksong..

https://yachts.apolloduck.com/boat/f...or-sale/526053

I'm not sure this does anything for VAT. It's not like US state sales tax where you pay sales tax on used boats when you buy them.

If the boat is VAT paid and in the EU, I believe, if a UK resident buys it, it retains VAT paid status in the EU.

[valhalla360]

Originally Posted by denverd0n

These kinds of arrangements do exist, but not for a $5,000 boat. Not even for a $50,000 boat. When you get into the $50,000,000 range is where it might make sense from the seller's perspective.

Superyachts are a whole different world.

Setting up an LLC and paying a foreign resident act as principal, may make sense (CPA & Lawyers would have to verify the specifics). Of course, $5,000/yr to do so is pocket change when you are running a $50mil boat.