Usage between survey and closing - what's is normal?

[marty9876]

When purchasing a boat, what is the typical allowed usage of the boat between survey and closing? If a boat is in charter service, does his change what is typical or does it matter?

I'm purchasing a boat which happens to be in charter with charters scheduled the week between survey and closing. I'm worried the insurance companies might not go for this as if there was damage during that week, and it was not found until winter haul out, how would the insurance companies know when the damage occurred (under whose ownership).

Maybe I'm over thinking all this.

[Lake-Effect]

Originally Posted by marty9876

When purchasing a boat, what is the typical allowed usage of the boat between survey and closing? If a boat is in charter service, does his change what is typical or does it matter?

I'm purchasing a boat which happens to be in charter with charters scheduled the week between survey and closing. I'm worried the insurance companies might not go for this as if there was damage during that week, and it was not found until winter haul out, how would the insurance companies know when the damage occurred (under whose ownership).

Maybe I'm over thinking all this.

For me the allowable interval use would be zero. But it's all in what you negotiate. I assume that because the boat is in active charter right up to the close, you're getting a pretty good deal in exchange for the elevated risk.

[savoir]

You are entitled to demand that the charter company fix anything that breaks during that time . . . . . or you could insist on a price reduction equal to the repair cost.

They are bound to present you with a boat identical to the one that was inspected.

[zeehag]

make sure it is in the contract, in writing, whatever you decide. personally i would forego and find something less active.
oh i did that..

[Dave22q]

I'm with the zero tolerance folks on this. If the seller did not inform you at the time you made and they accepted your offer I would modify my offer to be contingent on my surveyor's re-inspection at their expense. There is no reason for a buyer to assume the risks that a charter company routinely takes.

[Dulcesuenos]

Once you sign the letter of acceptance you own it no matter what. The broker will typically require you to sign it within 24-48 hours of the survey. If you don't it goes back up for sale. You could ask that money be put into escrow to cover any damages done by the charters, I doubt they will go for it. Or you could ask that that you do not sign the acceptance until after the last charter and you have the chance to run everything one last time, and dive the boat to inspect for new damage.
I'm interested to hear what happens, please keep us posted

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[SaltyMonkey]

Zero
Downpayment lock everything.
Survey
Negotiation and repairs
Close

[Dave22q]

Reschedule your survey and tell them that if the survey is successful the boat and you make an offer it will be contingent on the boat not being used before acceptance or closing. You are not in the charter business so should not assume the risks of somebody who is.

[marty9876]

Thanks for all the input, I'm pretty sure the simplest and most logical solution is to push the survey out until after the charters and block off the boat from usage for the survey to close period. From a personal perspective, I'm trying to push for quicker closing due to trying to get some usage out of the boat this year as the season is windi down quickly.

I knew about the charters at time of offer. Made the buyers acceptance/as is date the same as closing date. I don't want to pay to haul the boat the 2nd time which might be irrelevant anyways from the insurance companies perspective. Boat is planned to remaining in charter service which, along with being a first time buyer, I didn't get too keyed up on things. I think It all comes down to what the charter rider on the insurance policy really means.

Boat is in Lake Superior, diving the boat is problematic due to water temps.

[S/V Illusion]

Sounds like some people are paranoid about this scenario which is essentially the same as when buying a house in which people live between inspection and closing. Stuff happens...

Down payments and 'letters of acceptance' are not conveyances. You don't own anything until the actual closing. Neither are you in any position to dictate terms of use prior to closing.

It's up to you to figure out what level of due diligence you are comfortable with in the interim between offer and closing. About the only option you have is to negotiate a 'hold-back' amount with the seller to cover any needed repairs discovered before closing. After that, you own it.

[rwidman]

I'm going with the "Zero" folks. A boat being chartered (rented) by someone who may or may be competent to operate it is far different from a house where the current owners stay in the house between the inspection and the closing. It's far less likely that something bad will happen to the house and it's far easier to see if something bad happened.

[boatman61]

If the boats with someone like Moorings they will have decommissioned it..

[jrbogie]

Originally Posted by marty9876

When purchasing a boat, what is the typical allowed usage of the boat between survey and closing? If a boat is in charter service, does his change what is typical or does it matter?

I'm purchasing a boat which happens to be in charter with charters scheduled the week between survey and closing. I'm worried the insurance companies might not go for this as if there was damage during that week, and it was not found until winter haul out, how would the insurance companies know when the damage occurred (under whose ownership).

Maybe I'm over thinking all this.

couple things. first, the boat belongs to the present owner until closing when it then becomes yours. unless you've stipulated in the offer that the boat is not to be used after the survey and he has accepted the stipulation then your concern is of no concern of his.

second, insurers rely on the honesty of a claimant to a degree and the only thing protecting them are insurance fraud laws. if you as a new owner were to file a claim for damages that happened before your policy effective date and falsely claiming that it happened after that date then you've committed a fraud. insurers can never really know who is responsible for damage. it's part of the risk they assume for which you pay the premium you pay.

that said, schedule the survey to be done after the scheduled charters.

[valhalla360]

If the deal as made knowing that the charter was planned and you didn't challenge it...kind of hard to say it can't happen now. Until the sale is finalized, it's not your boat and they can do with it as they please.

It would be worth conducting a final inspection and a quick sea trial before signing the final paperwork but after the charter. Go to a local dive shop and rent a wetsuit if you are concerned about a grounding.

Next time, add language about use after the survey in the sales agreement if you are concerned. Too many people don't realize, it's perfectly all right to modify standard sales agreements.

[sailorboy1]

Seems to me unless there was something in a contract that states otherwise that an owner of a boat (or anything else) can do anything they want to do while they own it.