Why are purchase contracts so not buyer friendly?

Every deal is different. Get an attorney who regularly does the purchase side of these contracts.

Because they're written through some combination of the broker's association and/or broker's attorney.

But then you don't have to sign them. I never sign any contract on anything with major dollars without my lawyer either reviewing and making changes if needed or writing himself or me writing and my attorney reviewing.

Precisely. None of the wording matters unless a problem arises and then it really does matter. Have your counsel look it over and then sign it, or don't. Just remember - to err is human, to really screw something up requires attorneys. An otherwise do-able deal can collapse under it's own weight if given adequate opportunity.

Why do people always assume they must sign a contract just because it's presented to them. Have your attorney draw it up or gut the one that the seller presents. Seems the cell, cable TV, airlines, etc. have conditioned us to giving away our rights. A seller needs your money more than you need his product.

Hi,

I heard of a contract negotiation where both parties had pretty heavy legal teams battling for each side.

The shipyard had clauses that were previously unheard of and it took some time to get to a position where both parties could accept the others ideas.

It seems the yards have really stepped up their efforts to reap as much from the contract as possible.

This is type of carry on seems to be only in the yacht business, the commercial world would not accept it where the contracts are normally biased towards the Owners not the yards.

Yes. To properly be considered an escrow the funds are segregated. Ideally not with an involved party unless an escrow controlled by law in some fashion. In a boat sale, often the Title company provides escrow services.

Licensed yacht brokerages such as in CA and FL are prohibited from using client's funds for anything other than the intended transaction. They are also prohibited from commingling the funds with the brokerage's other accounts, so funds are held in what is called a trust account which is just a separate checking account.

There is no escrow in a typical yacht brokerage transaction. If a lender is involved they will control the disbursement of balance of payment, however the deposit is typically the buyer's cash and it is held in the trust account of the buyer's broker.

That's why it is important always to work with a brokerage that has an honorable reputation.

The purpose isn't to get lawyers involved in detail and quibbling ad infinitum. In fact mine are fully aware I don't find that acceptable and don't want to nitpick every line and word. But it's the major things that could lead to trouble that you want reviewed for and corrected. In boat sales and brokerages some states have good contracts and regulations, others don't. Still reputation is very important. But if you're signing contracts, it's just wise to be careful. For instance, what about a rental contract that says if you die you have to give them 60 days notice?

In terms of initial payment we're talking deposits instead of escrow. Escrow is a matter for payment and closing. It's really much like home purchasing in that regard, just less regulated in some states. Again a good lawyer can advise you without causing undue hardship on an otherwise good deal. However, if someone is making unreasonable demands up front, then the deal might not be so good.

Everything is negotiable! NYCAP123 is correct. They need the sale more than you need the boat. I always, always, always! take the contract home with me for a careful read. If the seller bulks and comes up with some BS reason like it is propriatory it may be time to take a break. What about your or your admiral's disability or death? Escrow - who? segregated funds - how? The broker/seller's trust account. I came out of a biz requiring unearned dollars be held in a trust account. Ha! I hate to say how many were illegally using customer's money. I suggest that you take a pen to items that are onerous AND PROPOSE reasonable alternatives.
I had a standard sailboat builder build a boat for me with significant custom work . My point being we were talking substantial bucks. I rewrote their boilplate contract so that my major concerns were addressed. With a couple of reasonable touchs we had a good clearly understandable contract. I have used similiar approaches when buying through brokers.
Check out Boat/US' escrow service. I know nothing about it. But it is a place to start. Good luck!

Buying and selling assets that involve significant money in an international forum is not something one can take lightly.

Partly this is my aversion to brokers now-a-days they try to be everything to everyone but recognize legal in most jurisdictions they are solely responsible to themselves and not the buyer or seller. The other complicating issue is cross jurisdictional transactions involving assets in several countries with different laws applicable. Buying a boat in Florida from a US owner by a US buyer is one thing buying a boat owned by a Marshal Island corporation, registered in Guernsey, and operated in various spots around the world complicate things immeasurably. Along with the fact the decision makers are in different countries. Taxation authority complicates this more. I use the term decision maker rather than owner because most expensive yachts are not owned by an individual but by an entity of some kind controlled by a person. Once in awhile a person owned the thing as personal property but that is not smart now-a-days.

Most broker's agents are people living on the fringes. This is ok but would one trust them?

Sales contracts and buyers contracts are what they are but realize they must be taken to a court to enforce. And, the law in these areas is complex. So I would take any contract with a grain of salt.

Some simple personal rules apply:
1. Fundamentally, no matter the shells in the game it is one person buying an asset from another. Remember that and you will be a long way into not making a mistake.
2. NEVER buy a boat or asset from a financial institution.
3. NEVER use a loan to buy the boat or asset.
4. INSIST ON KNOWING THE BUYER OR SELLER (the person making the decision) in fact conducting the decision part of the deal with him or her if you can, yes intermediaries can to the forth and back but the initial start and completion of the negotiation should be done eye to eye or ear or ear.
4. AGREE up front the jurisdiction the transaction made, conducted and completed.
Brokers hate number 4. but once they understand it is the only way the deal will happen they come around. They are facilitators and need to understand that. What I mean is you may use a broker, attorney or other agent for the negotiations forth and back but you need to have that personal contact with your actual buyer or seller decision makers on expensive yachts. Houses are different and the law situation is different. Nearly decision makers on expensive yachts are business people to one degree or another... most are sophisticated.

At bit of trivia for thought. In France there are independent self employed minor governmental officials called a Notaire. People commonly know Notaires in respect to real estate transactions or inheritance issues. But they handle company law, contracts of all kinds, and assets. The best way to buy any asset is to use a Notaire for the transaction as it is guaranteed and secured AND IMPORTANTLY has the legal effect of a Judgement. It is fully enforceable with the effect of law... the Notaire's seal is absolute. The only down side of this for some is simply the Notaire will make sure the legally due taxation is paid. The contract made with a Notaire's services has the effect of law and judgement and is unassailable except if a very high standard of proof is made that the Notaire made a mistake wherein the mistake is covered and backed by all the Notaire in France. One does not need to go to court to enforce.

This is really hard for Americans to comprehend...

Now some explanation as to the tax issue... if the Notaire is handing the transaction for you personally you will be paying VAT and all transfer taxes if you own the boat personally... unless the the VAT had been previously paid wherein if the Notaire determines that you are home free... no tax authority will question the Notaire's determination as it is an unassailable judgement of law. If some offshore trust or company owns the boat the Notaire transaction is unassailable as to that fact and the correct taxes having been paid. So the commercial exemption is well founded. The French authorities tend not to question such matters once the paperwork is reviewed because the Notaire's seal is official. Only in the case of blatant / criminal disregard for the law in what you do can you get into trouble down the road.

Old thread but a current question.
Selling a boat in Grenada, buyer wants the deposit (about $20K) placed with escrow.
I'm in Canada, US based company is fine though.
Any suggestions ?

Thanks, yes we tried our bank, no joy.
Not going to an online unless someone can step up and provide a reference.

Let me make sure I'm on the same page;
The boat is in Grenada? Your in Canada?
Where is the buyer?
The buyer is making a purchase offer and wants his earnest deposit placed in escrow?

Any brokers involved?

Correct, buyer is in US. No brokers.

I know bank of Canada is in the Bahamas and the states, maybe Grenada.

Most documentation services can make arrangements for escrow accounts.

We have accounts at most CDN Banks that have offices down south. They not willing.