Click for Perko Click for Walker Click for Westport Click for Furuno Click for Cross

Is a non refundable deposit usually split with the broker?

Discussion in 'General Yachting Discussion' started by Matt46post, Jul 16, 2020.

You need to be registered and signed in to view this content.
  1. Matt46post

    Matt46post Senior Member

    Joined:
    Apr 27, 2015
    Messages:
    226
    Location:
    El dorado hills california
    Hi
    I am in situation where most likely I will be retaining a the deposit placed on my boat for a purchase contract , the broker informed Me that it common place that the owner of the boat and broker split the deposit, is this true ?
    best regards
    Matt
  2. Capt Ralph

    Capt Ralph Senior Member

    Joined:
    Sep 8, 2004
    Messages:
    13,439
    Location:
    Satsuma, FL
    Pending the failure of the sale.
    Pending local law. We are not lawyers here.

    Just like deposits on a house purchase, when the seller receives a deposit and continues in good faith to sell the property, then something unusual happens to stop the deal, the deposit may be forfeited.
    Something unusual does NOT include the failure of a survey or inspections.
    When I sold one property, the buyer could not get financing, I refunded my half of the deposit, the real estate agent kept his half.
    On another sale of another property, the purchaser came up with last minute concerns of city planning 3 days before closing. I kept half of the deposit and the realtor gave his half back. Oh, I was correct, Later the property value increased so much, I regretted selling it.

    So, What was your deal that fell apart? What does your good heart tell you to do?
  3. olderboater

    olderboater Senior Member

    Joined:
    Sep 2, 2013
    Messages:
    7,130
    Location:
    Fort Lauderdale
    What do your agreement with the broker and the purchase agreement say? This is a matter of contract law and would generally follow the contract.

    Beyond that you need to think about how much it cost you and how much time and effort it cost the broker and if you feel doing more than the contract says is appropriate.

    Here is typical wording which results in 50/50:

    Buyer and Seller agree that the Deposit will be applied first to payment of any unpaid costs or expenses that Buyer or Broker incurred against the Vessel and then divided fifty percent (50%) to the Seller and fifty percent (50%) to the Brokers
  4. RER

    RER Senior Member

    Joined:
    Jan 20, 2009
    Messages:
    1,584
    Location:
    Newport Beach CA
    You are in CA I assume. Also I am assuming your Buyer signed final acceptance but did not fund and close which is why his deposit will not be returned to him. A purchase contract typically will not spell out specifically how a deposit will be disbursed but you should re read yours. It’s supposed to first cover actual lost monies directly related to the Buyers failure to perform. If the Surveyor was not paid for example. In the case of the Broker that would be loss of his commission. In your case obviously you still have the boat. Long story short yes on the rare occasion that it happens it’s usually split between Seller and Broker.
  5. Matt46post

    Matt46post Senior Member

    Joined:
    Apr 27, 2015
    Messages:
    226
    Location:
    El dorado hills california
    Thank you all for the info
  6. NYCAP123

    NYCAP123 Senior Member

    Joined:
    Mar 14, 2008
    Messages:
    11,208
    Location:
    Long Island, NY
    Broker probably lost more than just his commission. It costs money to market.
  7. RER

    RER Senior Member

    Joined:
    Jan 20, 2009
    Messages:
    1,584
    Location:
    Newport Beach CA
    He’s also hopefully still going to sell the boat. There is no guarantee you will sell every boat you list, advertise, and show, and sometimes you have two or three deals fall apart before you sell a boat in which case you get nothing until you close. Splitting up a few dollars is an accommodation and better than nothing. Which is what a Broker often gets.
  8. JWY

    JWY Senior Member

    Joined:
    Feb 22, 2004
    Messages:
    1,567
    Location:
    Ft. Lauderdale
    I urge caution on keeping a Buyer's deposit. Yes, it is generally split with the broker. In my 25 years as a broker, 200 plus yacht sales, I have never kept a deposit. Yes, I and my owners have been entitled on a few occasions, but it's a terrible thing to do to a buyer unless it is extreme circumstances. I am working with a buyer now who lost his deposit money. Legally, he was at fault, but not ethically nor morally. And he hates the broker and owner. Understandably. Why create this for a lousy 10%. We all lose deals and should be able to walk away with the loss and still smile when we look in the mirror.

    Judy
  9. NYCAP123

    NYCAP123 Senior Member

    Joined:
    Mar 14, 2008
    Messages:
    11,208
    Location:
    Long Island, NY
    There is also mitigation and unjust enrichment to consider. If you keep a deposit and then sell the boat for the same price there could be a claim made for return of the deposit. Messy for all. I agree with Judy that it's probably better to just return it and move on
  10. olderboater

    olderboater Senior Member

    Joined:
    Sep 2, 2013
    Messages:
    7,130
    Location:
    Fort Lauderdale
    Judy makes a very good point and knowing the circumstances would be important. In today's environment, I can think of many reasons to not follow through with a purchase that would not, in my opinion, justify keeping a deposit. We're living in extreme times at the moment. Even the legal right to keep the deposit might be in doubt due to force majeure, especially if in any way due to Covid 19. Only you and the broker know the circumstances.
  11. RER

    RER Senior Member

    Joined:
    Jan 20, 2009
    Messages:
    1,584
    Location:
    Newport Beach CA
    As I said it is rare ...very rare, to have a Buyer lose a deposit due to a material breach of the purchase agreement. In fact I've seen more cases of Broker's unlawfully trying to keep a Buyer's deposit which in those cases they eventually cough it up and return it. Almost all purchase contracts in FL and CA contain an arbitration clause for disputes. So there is independent oversight and it's not necessarily as simple as invoking the contract clause. As with all business transactions it's best to be careful and know what you are doing before you do it.
  12. olderboater

    olderboater Senior Member

    Joined:
    Sep 2, 2013
    Messages:
    7,130
    Location:
    Fort Lauderdale
    And to consider extenuating circumstances.
  13. 993RSR

    993RSR Senior Member

    Joined:
    Jan 15, 2004
    Messages:
    518
    Location:
    Annapolis/ Palm Harbor
    The purchase agreements I am familiar with state that once the buyer formally "accepts" the vessel they are committed to close or loose the deposit. The boat and seller can be damaged by the buyers non performance depending on the specific circumstances when a boat goes from sale pending back to active creates a stigma.
    Just so happens I had this great idea to replace my racing sailboat 2 months ago. Contracted, surveyed, accepted then found out what a nightmare it is to get the boat out of another country. I walked from the deal and for forfeited my deposit.
  14. 993RSR

    993RSR Senior Member

    Joined:
    Jan 15, 2004
    Messages:
    518
    Location:
    Annapolis/ Palm Harbor
    oh yea and yes seller and broker split the deposit according to the agreement but have the right to adjust the % if they elect
  15. JWY

    JWY Senior Member

    Joined:
    Feb 22, 2004
    Messages:
    1,567
    Location:
    Ft. Lauderdale
    993: Did they advise you of the difficulties ahead of time? Did you think this was fair? Bet you're pis*ed about it. And what did the owner and broker gain? And what did they really lose? And was it worth it?
  16. Danvilletim

    Danvilletim Senior Member

    Joined:
    Oct 30, 2011
    Messages:
    794
    Location:
    isleton, ca
    JWY. If you aren’t willing to back the contract you ask your contract to sign you should reconsider your obligations.
  17. mapism

    mapism Senior Member

    Joined:
    Aug 9, 2008
    Messages:
    2,167
    Location:
    Sardinia
    It seems to me that JWY is well aware of all legal obligations, and just pointed out other (i.e. ethical and moral) considerations.
    Which you are free to ignore obviously, but that doesn't make you more professional than anyone else who doesn't.
    BTW, it's easy to guess that whenever JWY refunded a deposit that could legally be kept, the decision was taken jointly with the seller.
    And if so, your point is completely irrelevant.
  18. 993RSR

    993RSR Senior Member

    Joined:
    Jan 15, 2004
    Messages:
    518
    Location:
    Annapolis/ Palm Harbor
    It was not the responsibility of the broker or seller to coach me on the process. I signed a contract, accepted the boat then backed out of the deal. The agreement speaks for itself. My decision, my poor planning.
  19. olderboater

    olderboater Senior Member

    Joined:
    Sep 2, 2013
    Messages:
    7,130
    Location:
    Fort Lauderdale
    It's obvious you're for getting every penny you possibly can legally without consideration of morality or ethics, but fortunately there are others who feel differently. During this current pandemic there are many circumstances not anticipated when contracts were developed. I think sometimes there are extenuating circumstances that merit special consideration and I'm very glad there are others like Judy who see it the same way. What if there's a major illness in a family? Or a tornado destroys a business? Thankfully, during the pandemic there have been a lot of landlords willing to not hold tenants strictly to the terms of their leases and work with them.

    I think your post was insulting toward Judy and reflected more on yourself than on her.
  20. NYCAP123

    NYCAP123 Senior Member

    Joined:
    Mar 14, 2008
    Messages:
    11,208
    Location:
    Long Island, NY
    Ditto. Maybe it's the old hippie in me, but I never enjoyed money with any kind of taint on it, plus I never earned so much money as since I stopped worrying about every dollar I could make. Maybe it's a Kismet thing. I still remember driving 2 hours to a boat after being set up by the dealer to give the new owners a lesson. We spent a couple hours going over the boat, but then I found an issue that stopped things cold. We couldn't leave the dock. The owner wanted to pay, but I said no. That lead to 10 years working for him, and he took very good care of me the entire time..