What is a successful Survey

[ozsailer]

Hello all,
over the years of buying and selling yachts I have used and seen used the term "upon a successful survey the purchase will proceed. I started to think about this phrase after an inspection of my current boat for sale by a prospective buyer.
The prospective purchasers signed an agreeement that they would purchase the boat upon a successful survey and placed a 10% deposit on this stipulation. I have done the same previously.
Today the boat was surveyed and passed as being seaworthy with only cosmetic issues. Both seller and prospective purchaser well aware of these and price negotiated on this. No other issues were identified which may affect the purchase price such as safety, engine or structural problems.
The prospective purchaser was informed by the surveyor at the time that all was in order taking into account the age of the boat and already identified cosmetic issues IE new windows required due to crazing and leaks. Having been advised that all was in order and all as expected the buyer has now advised he wishes to await the written report to decide if he wishes to proceed.
My question is, what constitutes a successful survey, are leaky windows or a creaky floor grounds for knocking back a boat. Luckily I am in a position where I do not have to sell but I still find it frustrating that the person will not commit to purchasing the boat despite putting down a deposit and obtaining what I consider a successful survey. They wish to obtain the actual written report and then make a decision from there.
I have bought several boats and on each occasion after a survey when advised by the surveyor that all was good would go ahead with the written report being tended later. If things were found at the time of thecsurvey that required replacing or repair I would negotiate that these things be done at the buyers expense prior to purchase. It was then my choice to proceed or decline the purchase.
I can find no legal definition of what constitutes a successful survey other than "Basically, it is a detailed inspection of a boat, hopefully done by a qualified, diligent, intelligent and honest surveyor, for the purpose of determining its current condition and seaworthiness. In particular, to determine if the vessel is safe to use in conditions for which it was designed, and what maintenance and repairs are required, or are likely to be required in the near future."
If this is correct then almost any defect could constitute a unsuccessful survey.
I would be most appreciative as to everyone's opinion or if someone is aware of a legal definition or if the words successful survey mean absolutely nothing.

Greg ans Sue
SV Sunshine

[jannw]

It's a little unclear, which is generally a bad thing with contracts. But here's a lawyer's take:

A successful survey is one which indicates that the boat was as described, and there are no significant underlying defects with the boat; such defects which may cause the boat to be unsafe for operation, unsuitable for insurance reasons, or which mean that the boat will not be suitable for the purchasers financing terms. It should be remembered that a "successful" written survey will often be required before financing is approved by a lender or before insurance is available, and thus this term may be a "knock on" term in this regard (making it a condition precedent).

Cosmetic or minor issues are and will be always present, and may be a term of negotiation, but should not be a reason to back out of a purchase otherwise agreed. A vendor is at their option able to take remedial action to fix any cosmetic issues at their own cost, effectively clearing the outstanding items on a survey, and removing any impediment to closing the sale.

Without a 3rd party reason to stop the sale (financing falls through etc.) I'd be surprised if an argument along these lines would not be persuasive in a court in order to compel a sale to complete (or for damages for contractual breach), providing the vendor made appropriate arrangements to repair any issues identified.

my 2c, as a lawyer, but this is not legal advice and you aren't my client.

If a purchaser backed down on me I'd sue them to complete, but my contract would also be a little better worded.

[jannw]

additionally, I'd argue that the term successful survey has the same meaning as "as described, and fit for purpose".

[Mirage Gecko]

Personally if I have paid or am to pay a surveyor I will not proceed to settlement until I get the report in writing and would expect most people would be the same. A couple of dozen spoken words during the survey does not come close to the many pages and photos of the written report.
I have only purchased four boats that required survey and made an offer based on a successful survey to MY satisfaction.The message from me to the surveyor is usually along the lines that you need to find something I have not so as to justify your fee and then if that happens I would renegotiate the price with the owner accordingly.
Same principal on houses here in Australia and I have more experience on them as we are now in our 14th.Use the same process make an offer get the survey/inspections title checks etc done to your satisfaction then renegotiate,walk away or buy it.
As for sueing the potential buyer well I am certainly glad I live in this country.
Chris

[jannw]

Hey, Chris,

I'm Australian ... you better not buy a boat from me ;-).

Seriously, though, if I sold a boat which had already been viewed, but was subject to survey, which was as described and fit for purpose, and I as the vendor offered to remedy any minor issues identified in the survey at my own cost, and the buyer still decided to back down anyway, yes, I'd sue to either complete or for damages.

To be fair, though, my contract of sale would be pretty clear that this was the case. I guess this is why vendors require deposits ... so if someone jerks them around they keep the deposit, and then the flaky buyer has to sue for the return of the deposit.

[Mirage Gecko]

Greg
It could be your buyer is simply a bit gun shy of the surveyor or surveyors in general.
I sold a house a few years back and was present when the building and pest inspection took place.The inspectors verbally said to me as they walked out that all was good and nothing would be written up as they found no problems. Late the next day the buyer advised they had a list of items on the written report that although only cosmetic they required doing .From memory about 4K on a 400K deal if I did the work.These people had been through the house four times and knew the house well worts and all and the price negotiated reflected that.They started to play hardball and I hate to be played so I crashed the deal and sold it later to another buyer.
Chris

[oceannavigator]

Very simple.If the buyer decides the survey is not a red flag, it is a successful survey.

The *buyer* decides if the survey is successful or not.

It is all a very cut and dry process. Buyer puts down deposit, hauls boat for survey, then closes if happy with the survey, or adjusts price based on defects, then closes.

JannW wouldn't have a leg to stand on suing a prospective buyer that decided not to buy after survey. You cannot buck hundreds of years of maritime law precedent.

No different than putting a house under offer and walking after appraisal. Any number of things can derail a sale before closing. Survey, terms, failure to meet at a final price, etc. It is the broker's job to keep things running smoothly. Nothing is sold until money changes hands.

[a64pilot]

FWIW the boat I just bought I was ready to buy right away, but was advised by my broker to wait until I got the written report. And you know what, even though I went right along with the surveyor, there were a couple of things in the written report that were a surprise to me, and even one to him. Mast step corrosion for example. You couldn't see it, it's on the backside of the step that can't be seen, but take a camera and stick it where you can't see and take a picture. Once put on a computer screen, you can see the corrosion.
Good luck suing someone to complete the sale, I can assure you no boat is seaworthy if placed under a high enough power magnifying glass, as an A&P mechanic I can ground any aircraft out there, I am sure the same is true of a boat or any complex machine. My take an most others I'm sure is that a repaired item is not the same value as a like new item, so depending on what we find, fixing it may not be an option. Wet deck core for example.

[uncledom]

If your buyers are financing, the bank must have the written survey report. It might not be your buyers holding up the process but simply the speed of all the others invovled. I know every time I had a question it went from me to my broker to your broker to you to your broker to my broker to me. Now get a bank and an insurance company involved. It's like having your sails up and no wind, sit back, have a snack, and relax.

[Factor]

All this demonstrates the importance of using something more precise than "successful survey" in the contract.

[BandB]

I would as a purchaser wait for the written survey. It does two things for me. It lists all found items so I'm not trusting to a brief exchange of words. Second, it now gives me some recourse against the surveyor in the event of an additional issue. His name is now on the line.

As a practical manner, when worded as your contract was then successful is in the mind of the beholder. And until the two minds meet there is no final accord. Could you sue if he backs away? Yes. Could you win that suit after spending a lot of money? Perhaps. Could you collect? Perhaps. But even if you do intend to sue you still have an obligation to mitigate damages by searching for another buyer.

One thing that can be done is the initial offer outline more clearly what is successful. Still there's room for disagreement. Most buyers are looking to move forward and not for reasons not to. A few though aren't firm in their commitment and might let the least thing back them away. Then there are those going in fully intending to negotiate you further down. Some less than scrupulous brokers and friends advise them you can still back out if you don't like the survey or you'll be able to talk him down more. But still most don't spend the money on a survey if they aren't committed and wanting it.

So I see wanting it in writing as no issue. I want everything in writing related to such an expenditure. Now what happens next is to be determined.

One way of shifting the control slightly is requiring a deposit which is non refundable except for defined survey findings. Then the burden of litigation if he wanted the money back would fall on him.

But as in any contracts, the best contract details the specifics. It might read, Successful survey is defined as any survey not finding structural problems, problems with the engines, or electronic problems with repair costs in excess of $10,000. Cosmetic issues will not deem a survey unsuccessful, nor will the following items disclosed and listed in advance (list canvas, paint, sail issued discussed). This just makes the understanding going in clear.

[sailorboy1]

Originally Posted by oceannavigator

Very simple.If the buyer decides the survey is not a red flag, it is a successful survey.

The *buyer* decides if the survey is successful or not.

I agree with this. The buyer is paying for the survey and only they can decide what a "successful" one is. I don't even see how it could be possible to list everything to be otherwise covered to define something acceptable etc.

Kind of like trying to agree on the term "based on a responsible person".

[GordMay]

If “successful” is in the mind of the beholder (buyer), and hence the offer to purchase cannot be enforced; what happens to the deposit?

[denverd0n]

Originally Posted by oceannavigator

The *buyer* decides if the survey is successful or not.

The OP would appear to be in Australia. Maybe the rules are different there. But here in the U.S., it is as ocenannavigator says. The buyer gets to decide what "successful" means. Although, all of the purchase contracts that I've seen here have words more like "a survey that is acceptable to the buyer." That, of course, makes it a lot more clear that it is entirely up to the buyer.

And, of course (at least, again, here in the U.S.), if the buyer doesn't like anything about the survey then he gets his deposit back.

[a64pilot]

Originally Posted by GordMay

If “successful” is in the mind of the beholder (buyer), and hence the offer to purchase cannot be enforced; what happens to the deposit?

Purchaser keeps it. Where is the purchaser at fault?
First boat I almost bought had "problems" we found in the survey, I walked, there was no talk about suing me or me losing my deposit or anything else. After all I was out about a grand for the survey attempt and for pulling the boat. It's not like I didn't lose in the deal as well. I mean if we are into to suing people I guess I should have sued him for his boat failing survey?

As you can probably tell, the whole suing thing irritates me.