Are you thinking about buying a boat? Recently we’ve seen an upturn in the acquisition of pleasure vessels in the UK and abroad, particularly as lockdowns have eased. Here are some key points to consider.
Owning and buying a boat can be a hugely rewarding experience. However, the requirement to outlay significant expenditure in return for an item that may have an uncertain history means that diligence and care are required to ensure that the vessel will be fit for purpose.
In this article, we highlight some of the key issues to consider when buying a boat in the light of the current circumstances.
Who is selling it?
Ensure that the person selling it to you is actually the owner.
As lockdown progressed, traditional hard copy “Wet ink” contractual documents became more difficult to deal with in practice, so if the vessel has changed hands very recently it is worth ensuring that the manner in which the seller acquired it represented a binding and enforceable legal arrangement.
Depending on whether or how the boat is registered, there may be additional useful information available on the relevant registry in the UK ship register, and it may be possible to trace ownership through successive bills of sale back to the vessel’s construction.
Is there any borrowing or other charges attached to the boat?
Check that the boat is not secured by any form of lending or charge, and if so, ensure that any charge is either removed, or is to be removed from the vessel using sale proceeds.
It can be worth making enquiries as to the vessel’s current boatyard to ensure that that there are no outstanding dues in respect of the boat. If you have the boat’s service history, you may also wish to see if there are receipted invoices in respect of major expenditure.
Is the boat safe and fit for purpose?
Check that the vessel is seaworthy. This may be particularly important if it has not been used for an extended period.
Boats are often purchased on an “as is, where is” basis, meaning that the purchaser is not able to rely on any implied warranties as to the standard or condition of the vessel. Therefore, it is important that the buyer undertakes a thorough survey of the boat and its condition prior to purchase. The use of a marine engineer or surveyor can be invaluable.
What are the terms of the contract?
Ensure that you understand, and are comfortable with, the contract and the contractual process for buying a boat.
There are a number of industry-standard terms used (in whole or in part) for second-hand vessel acquisitions, but whatever the terms, it is necessary to ensure that you understand and can comply with them. A common process for buying a boat, as is often seen in standard form vessel contracts, will be as follows:
- Exchange of contracts and payment of a deposit;
- Survey and sea trial; and
- Completion and delivery, at which point the vessel is handed over and the transaction concluded.
It is, however, necessary to carefully consider the contractual provisions and ensure that it will work for you. For example, it is important to ensure that the contract is sufficiently clear around the circumstances and timing in which a survey and sea trial may take place; if a buyer is unable to comply with this timeframe, the buyer may be deemed to have waived their right to those inspections.
This is particularly important where regional lockdowns may affect you or your surveyor from honouring pre-agreed deadline for undertaking a survey, and surveyors and shipyards are dealing with pent up demand.
What happens to the deposit?
Ensure that if a deposit is needed, you are comfortable with who will be holding it, and that it is going to be sufficiently safeguarded against insolvency or misuse by the deposit holder.
What is included with the vessel?
Ascertain whether any stores or equipment such as spares, tenders, radios and other equipment are to be included in the sale, and, if necessary, ensure they are included within the contract.
Will you have everything you need to transfer ownership?
Ensure that on completion of the transaction, you will have everything you need to take delivery of the vessel and register it as appropriate including a proper bill of sale. Boats bought in other jurisdictions may need particular care in this regard.
What else is there to bear in mind?
There will be other considerations such as:
- Mooring arrangements;
- Use of radio communications;
- Insurance; and
- Any applicable ongoing maintenance and inspection requirements.
VAT can propose a particular issue and specialist support should be sought as appropriate.
Taking the time and effort to properly understand the vessel you are buying and the requirements you need to follow when buying a boat is vital to ensure that the vessel will be properly transferred, fit for purpose, and safe.
If you would like advice on selling or buying a boat, please get in touch with our Marine team.