Questions about Owner financing from a buyer's perspective

[Albert V.]

Im currently invested in an old sailboat and have questions about the "owner financing" proceedure. The person im buying from is kinda shadey annnot really co-operative...i have asked around here however,short of asking a broker,not been able to get any useful info...thnx.

[stormalong]

Originally Posted by Albert V.

Im currently invested in an old sailboat and have questions about the "owner financing" proceedure. The person im buying from is kinda shadey annnot really co-operative...i have asked around here however,short of asking a broker,not been able to get any useful info...thnx.

Buying with seller financing is less risky than selling that way.

You should have a very carefully worded agreement and keep careful records of each payment. A good way to do the payments is to deposit money directly to the sellers bank account. That way there is a clear record of payments and no one can claim that payments were not made.

With banks not wanting to finance older boats sellers have a difficult time and I would understand why the seller may seem anxious.

Someone in my marina sold a boat that way and the buyer just stopped making payments. The local sheriff would not repo the boat even though the seller got a judgement against the buyer. The seller had to do a "midnight repo" by trespassing on the buyers private property.

[Albert V.]

I have no written agreement,he hasnt even given me a final asking price,just a figue that rounds up ir down. I did nit have the money fir the deposit he wanted and he us the ine who solicited me to buy into the boat on vrry short notice. So far ive paid him,by check-with notes on the check what each payment was exactly for-1 payment short of the deposit amount,at the end of the month,the last $500 payment will complete the $2000 deposit amount. In addition i have been paying the slip fees and an amount for the least amount he could insure the boat for...so,i dont know what kind of documentation-contract i should have drawn up and what that documentation should say...is far as im cincerned,without title-its not my boat. I knew the boat and guy before i jumped into this and currently,im on the same dock slip as him. There are more details however,i just need to make sure (which he alresdy lied to the guy he is buying a boat from,saying he signed it over to me),that he isnt going to pull something. And i need to get a real vslue of the boat which i do not think is what the round about figue he said it is considering the age of the boat,the condition of the exterior&hull,i really dont know about rigging and the fact that he was in the process if installing another (used inboard) and stopped because,i guess he bougt into another boat and then took the outboard that was the auxilary propultion....from what ive researched,a survey would cost about $600 fir this 66'Luder 33ft boat...i think he would have had to fire sell it if i didnt buy into it...which i did hastely because,well it was better then the crappy over priced apt i was living in and i wanted a sailboat of my own...apologies for the ranbling.

[stormalong]

Well you apparently already bought into this deal with no formal agreement. Good luck.

[SilentOption]

The best advice you will get here based on your detailed tale is to assume the money you have given away is gone and stop spending more on this deal. There is no way this has a happy ending.

[Albert V.]

Ummm,ok...well,that doesnt answer my question on an owner's financing document...there is absolutely no way that im going to just"walk away" from the money i have already given this person.

[SilentOption]

The only way owner financing can work is with a rock solid agreement spelling out every detail before $1 changes hands. If the other party involved is shady and uncooperative as you state then I think everyone would question the deal to begin with. Specifically what useful info are you in search of?
Stop giving the other person money until you have an agreement to include how insurance will be handled. If uncooperative guy is the owner of record then insurance will almost certainly have to be procured by him with you as an additional insured. If you don't plan to insure ignore that. Just saying there is nothing to really know other than owner financing for boats is not that common due to the obvious risk involved.

[Albert V.]

I will consult a lawer to have him draw up an agreement,which will include the amount thst i have paid,by check which every check i have paid him has been noted exactly in the check what that amount is for...im huessing that agreement would then need to be notorized...on that,im going on common sense (which i guess seems not that good considering my situation),i was just looking here fir someone tgat may have knowledge in how this process eorks and what said document would entail...and if tgat document wold need to be noterized (i woukd assume),to codify it as legal-etc,thnx.

[belizesailor]

Originally Posted by stormalong

Well you apparently already bought into this deal with no formal agreement. Good luck.

+1. Very bad idea for both buyer and seller with no written agreement.

I owner financed a boat once just to grease the skids on the sale, but that was with proper legal fillings. Without such fillings owner cannot prove the lien and is SOL on effective legal action.

The risk to seller is that a boat is a very mobile asset. International repos are messy and expensive.

There are companies who specialize in repo'ing boats, but total cost could easily exceed value of an inexpensive boat.

Risk to buyer with no written agreement is that the rules of the deal are not clearly defined and a shady seller could become a serious PITA.

[john61ct]

Where are you (all) located?

Get a boat-experienced lawyer for sure.

You say you won't walk away, but if he wants to shaft you at this point you have no leverage

until you get a proper contract in place dot all I's cross all the T's

don't throw good money after bad, spdnd it only on the contract to start.

[Seasic]

Hey Albert,

The advice you are being given is correct in my opinion, I recently purchased a boat the same way, although there was some shady stuff with the survey (another story) the purchase went exactly as outlined in a broker purchase agreement along with a promissory note, spelled out was the purchase price, payments, slip fees, insurance, I took immediate possession but did not sail the boat until I had a proficiency sign off by USCGC and was added to the sellers insurance as a user, I paid the boat off early in 5 month at which time I was handed the title and transferred slip at the same time, I had also acquired my own insurance prior to final payment (which required the survey for value and the purchase agreement) even tho I believe I did everything correctly and it went smooth there can always be situations where it doesn't. Both sides need to protect themselves, promissory notes can be downloaded off the internet and tailored to your need, they are ment to be a short to the point agreement (promise between persons)

I wouldn't say walk away but I would not pay another dime without at minimum a promissory note spelling out the things I mentioned above.

Good luck

Roy

[SV Sailfish]

Originally Posted by Albert V.

Ummm,ok...well,that doesnt answer my question on an owner's financing document...there is absolutely no way that im going to just"walk away" from the money i have already given this person.

1. The seller never set a firm sale price.
2. You have no written contract.
3. You have paid a partial down payment on a boat with no final sale price.
4. You are paying the slip fees.
5, I would tell you that you are probably screwed, but based on your previous responses, you would not believe me.

You did ask for advise on this forum correct? You got it, but do not want to hear it. So... good luck buddy! Really... good luck!

PS: We see newbies posting on this forum all the time with very similar stories and requests to yours. Most, after asking for input, do not listen to it and get screwed, so once again I say... good luck.

[Rivatar]

move in today. take possession.

[Montanan]

As the buyer you will desire a written purchase agreement, obtain a bill of sale by which you can arrange for titling of the vessel in your name, and a loan agreement which specifies the loan balance, date, interest rate and method and the amount of payments to be made, when they are due and how they are to be paid, example, into which specific account they would be deposited and from which financial institution you can obtain a receipt of deposit for your records.
The owner that provides the financing can file a lien on the boat with the agency that has titled the vessel.