Putting Your Dream Boat Under Contract

Buying a boat is a complex process that requires a legally binding and comprehensive agreement to protect all parties involved. A boat purchase agreement outlines the rights, obligations, and specifics of the transaction. It is important to note that the agreement should include identification of all parties involved, a description of the boat, payment terms, delivery date, warranty information, and more. This process can be done through a broker, who will use a standardized contract, or independently, using a generic boat purchase agreement template.

Outline the terms of the sale in writing

Outlining the terms of the sale in writing is a crucial step in the boat-buying process, as it ensures a smooth and secure transaction for both parties. This written agreement serves as a legally binding contract that establishes the rights, obligations, and responsibilities of the buyer and seller. Here are the key components to include when outlining the terms of the sale in writing:

Identifying the Parties

Provide the full legal names and contact information of both the buyer and the seller. This step is essential for establishing the identities of the involved parties and ensuring clear communication throughout the transaction.

Describing the Boat

Offer a detailed description of the boat, including its make, model, year, hull identification number (HIN), and any additional equipment or accessories included in the sale. The HIN should be permanently marked on the boat's transom, and if the boat has an outboard motor, list its serial number separately.

Specifying Purchase Price and Payment Terms

Clearly state the agreed-upon purchase price for the boat and outline the payment terms. Payment terms should include the payment schedule, accepted forms of payment, and any deposit or down payment requirements. It is also important to mention any loans or financing involved in the transaction.

Stating Conditions and Warranties

Address the condition of the boat at the time of sale and any warranties or guarantees provided by the seller. Specify whether the boat is being sold "'as is' or with specific warranties. Outline the buyer's rights and responsibilities in case of defects or issues discovered after the purchase.

Addressing Title and Transfer of Ownership

Detail the process for transferring the title and registration of the boat to the buyer. Include any necessary paperwork or documentation required by the relevant authorities. Discuss the requirements for registering the boat, which may vary depending on the boat's length and the state of purchase.

Including Inspections and Surveys

Allow provisions for the buyer to conduct inspections, surveys, or sea trials to assess the boat's condition and verify its compliance with the agreed-upon specifications. The buyer typically pays for the survey and haul-out, while the seller provides a captain for the sea trial.

Outlining Closing and Delivery

Specify the closing date and location of the transaction, as well as the responsibilities of each party regarding the delivery of the boat. Include any costs or arrangements related to transportation and the expected delivery date.

Stating Governing Law

Include provisions specifying the jurisdiction or governing law that will handle any disputes arising from the agreement. Outline the preferred method of dispute resolution, such as mediation, arbitration, or litigation.

By outlining these terms in writing, both the buyer and the seller can protect their interests and ensure a clear understanding of their obligations. It is always recommended to consult with a qualified maritime attorney to ensure that the agreement is comprehensive and compliant with the relevant laws.

Include a deposit

A boat deposit receipt is supplied to a buyer who has placed a down payment on a vessel. This deposit will go towards the total sale price of the vessel, but the buyer must complete the purchase within an agreed-upon number of days; otherwise, the seller may keep the deposit. The deposit is usually 10% of the total sale price and is due at the presentation of the offer. It can be made via check or wire transfer.

The deposit should be included in the boat purchase agreement, which is a legally binding document that outlines the terms and conditions of the boat transaction. It is important to have a written agreement to protect both the buyer and the seller from potential legal disputes and to clearly outline the specific terms and conditions of the sale. This agreement should include the full name, address, and contact information of both the buyer and the seller, as well as a thorough description of the boat, including its make, model, year, hull identification number (HIN), and current registration number.

The agreement should also state the total sale price of the boat, the currency, the amount of the deposit, and the balance due. It should outline the payment terms, such as a lump-sum payment or instalment plan, and the accepted payment methods. The boat purchase agreement can be executed before the sale is final, with the deposit acting as a form of security for the seller. If issues arise, such as the need for a repair, the terms can be negotiated and spelled out in a new agreement, or the buyer can walk away with a refunded deposit.

Detail the boat's condition

Detailing the condition of a boat is an important step in the process of putting a boat under contract. Here are some key considerations and steps to follow:

Exterior Boat Detailing:

Start by giving the boat a thorough wash and clay treatment to remove any loose debris, grime, and pollutants. Work from the top of the boat on the inside and make your way down and out until you reach the bottom. Use specialised products to remove heavy waterline stains, algae, and scum on the exterior. Pay attention to black rubber marks from docks, which can be removed with acetone and a white rag.

Gel Coat Finish:

The gel coat is a unique process applied to marine vehicles to keep the surface smooth and shiny. It is essential to repair and restore the gel coat to maintain the boat's appearance. Use a two-step paint correction process to remove oxidation and surface imperfections, and then polish the surface to bring out a high shine and vibrant colour. Be sure to cover the hull and full bottom surface area.

Paint Protection:

Apply a premium polymer boat sealant to provide advanced UV protection and make the cleaning process easier and quicker. This will keep the paint looking better for longer.

Interior and Cabin Boat Detailing:

Wash and scrub the interior floor, deep clean the seats, and storage compartments. Use suitable cleaning agents on various surfaces such as vinyl, carpet, plastic, and glass. Ensure all nooks and crannies are thoroughly cleaned.

Metal and Glass Polishing:

Restore the shine to all metal surfaces and clean all windows and glass, eliminating any streaks. Give the boat a final buff with a clean microfiber towel to remove any excess wax, chemicals, or dirt.

Maintenance and Repairs:

Regular maintenance is crucial to keep the boat in good condition. This includes waxing or buffing the gel coat at least once every 3-4 months to prevent breakdown and oxidation. Additionally, proper maintenance will remove barnacle buildup, rust, water stains, and corrosion.

Pre-Contract Inspection:

Before putting the boat under contract, conduct a thorough inspection to identify any issues or repairs needed. This will help potential buyers or brokers assess the condition of the boat and make an informed decision.

Documentation:

When detailing the boat's condition, create a comprehensive report or checklist that outlines all the work done, any issues found, and the overall state of the boat. This documentation will be valuable during contract negotiations and can help protect both the buyer and seller from potential misunderstandings.

Specify a delivery date

When putting a boat under contract, it is important to specify a delivery date. This is a crucial aspect of the contract as it outlines the expectations and responsibilities of both the buyer and the seller. Here are some key considerations and steps to take when specifying a delivery date:

Delivery Date Considerations:

• Mutual Agreement: The delivery date should be mutually agreed upon by both parties. It is important to consider the preferences and availability of both the buyer and the seller to ensure a smooth process.
• Preparation Time: Allow sufficient time for the seller to prepare the boat for delivery. This includes any necessary maintenance, cleaning, or repairs to ensure the boat is in the agreed-upon condition.
• Location: Determine whether the delivery will take place at the seller's premises or an alternative location. If the delivery is away from the seller's premises, discuss and agree on the delivery method, location, and any associated costs.
• Transportation: Consider the transportation method and any potential delays that could impact the delivery date. Transportation delays are often beyond the seller's control, so it is essential to build flexibility into the contract.
• Sea Trial: If a sea trial is required, coordinate with the seller to schedule it before or after delivery. The sea trial provides an opportunity to assess the boat's performance and ensure it meets the buyer's expectations.

Specifying the Delivery Date:

• Propose a Date: As the buyer, suggest a delivery date that aligns with your expectations and requirements. Consider your availability and any plans you have for using the boat.
• Negotiate: Be open to negotiation and discuss any concerns or adjustments suggested by the seller. Finding a delivery date that works for both parties is essential to maintaining a positive relationship.
• Flexibility: Understand that delays can occur, and build some flexibility into your plans. Unforeseen circumstances, such as transportation delays or last-minute repairs, may impact the initial delivery date.
• Documentation: Once a delivery date is agreed upon, ensure it is clearly specified in the contract. Include the date, time, and location of delivery, as well as any relevant details regarding transportation, inspection, and acceptance procedures.
• Contingencies: Consider including contingencies in the contract related to the delivery date. For example, you can specify that the seller must provide written notice if they anticipate a delay, along with a proposed revised delivery date.
• Signature: Both parties should sign the contract, indicating their agreement to all terms, including the specified delivery date. This creates a legally binding commitment and helps protect the interests of both the buyer and the seller.

By carefully specifying a delivery date and considering the above steps, you can help ensure a smooth and successful boat purchase transaction. Remember to maintain open communication and address any concerns promptly to establish a positive relationship with the seller.

Sign the contract

Signing the contract is the final step in the boat-buying process. It is important to have a legally binding and comprehensive agreement in place to protect all parties involved. The contract should be signed by both the buyer and the seller and, if applicable, the broker. It is not necessary to have a lawyer write the contract, but this should be considered, especially if you're buying a high-ticket boat or having one custom-built.

The contract should include the following:

• Identification of all parties involved, including full legal names and contact information.
• A description of the boat, including make, model, year of manufacture, engine type, hull type, length, width, and any other pertinent details.
• Payment terms, including the purchase price, deposit information, and how the balance will be paid.
• Delivery date and arrangements.
• The boat's condition and a list of accessories and items included in the sale.
• Warranty information from the dealer or manufacturer.
• Buyer's contingencies, such as the need for a satisfactory survey and sea trial, and the ability to obtain financing and marine insurance.
• A statement that the boat is free of all liens and encumbrances.
• Broker information, if applicable, including their representations and warranties for the seller.
• Indemnification provisions, limitation of liability clauses, dispute resolution procedures, and choice of law/jurisdiction clauses.

Once the contract is signed, the buyer should be aware of any potential liabilities they may incur, such as failure to pay for the vessel, damage to the vessel, or failure to disclose material defects. Similarly, the seller should be aware of their potential liabilities, such as failure to disclose defects, misrepresentation, or breach of warranty.

It is important to remember that a breach of contract may result in legal action being taken, and damages may be awarded to the affected party.

Frequently asked questions