escrow for a new to us boat???

[JusDreaming]

Atlantic Boat Documentation is the link for the company we used. They were very professional and easy to deal with

[JusDreaming]

Originally Posted by worldkiss

We're buying a cat in the Annapolis area for cash. It needs the expired documentation updated and transferred. Any recommendations for escrow, title search and transfer? thanks

Atlantic Boat Documentation is the company we used.Very nice folks and easy to deal with

[Pblais]

You can get a title history from the USCG. I think there is a $25 fee. Call them on the phone. They have expanded the customer service functions a bit and do take phone calls and are helpful. All the forms are on the web site and you can call them with questions too.

It is still possible someone could throw up a lien you think the deal is settled but at least you can know as of a certain date it was or was not clean. A problem with the title would be a good point to freeze the deal until it is cleared by the owner. You may need it returned to documentation before you can transfer it. That would be a good question to ask.

The transfer with a rename is about $95 with a notarized copy of the bill of sale and the original documentation paper. You have to have a original documentation paper to file the bill of sale. With a notarized bill of sale you can mail the whole works in to West Virginia and get your own documentation form and you hold the title from then on.

[Pblais]

You can get a title history from the USCG. I think there is a $25 fee. Call them on the phone. They have expanded the customer service functions a bit and do take phone calls and are helpful. All the forms are on the web site and you can call them with questions too.

It is still possible someone could throw up a lien you think the deal is settled but at least you can know as of a certain date it was or was not clean. A problem with the title would be a good point to freeze the deal until it is cleared by the owner. You may need it returned to documentation before you can transfer it. That would be a good question to ask.

The transfer with a rename is about $95 with a notarized copy of the bill of sale and the original documentation paper. You have to have a original documentation paper to file the bill of sale. With a notarized bill of sale you can mail the whole works in to West Virginia and get your own documentation form and you hold the title from then on.

[TaoJones]

Originally Posted by coot

On signing the purchase contract, I gave a deposit in the form of a check made out to the broker's escrow account. The contract gave a certain amount of time for various contingencies (e.g. survey, funding). If I failed to follow through with the purchase (or refuse it on a contingency term) in the specified time, the broker was authorized to break the escrow and give the deposit to the seller. The seller could then start again with somebody else. If the seller failed to complete the sale, the money in escrow would return to me.

This may be your understanding of what would have happened, coot, but my understanding (and experience) differ. That is, if you as the buyer had actually defaulted, and thereby forfeited your 10% deposit, I promise you that the brokerage would not ". . . break the escrow and give the deposit to the seller."

It is not a coincidence that brokerages charge a 10% commission on a yacht sale and that they expect a 10% deposit check to accompany the contract offer. In the event of a default on the buyer's part, thus halting completion of a sale that would have been consummated but for the buyer's default, the broker or brokers involved (actually, the brokerage(s) they work for) are entitled to receive the commission they would otherwise have gotten upon closing.

If a seller thinks he will end up with 10% of the agreed sale price AND the vessel, he is sadly mistaken. He may feel he is entitled to something for his time and the aggravation caused by the defaulting buyer, but the contract will state that forfeiture of the deposit ends the buyer's liability. If the seller feels entitled to some or all of the forfeited funds, he will have to pursue his claim with the brokerage(s) involved, and a court will only be interested in what the contract spells out. As most brokerage contracts have been prepared by counsel the brokerage retained specifically for that purpose, the seller will be wasting his time and money trying to get even a nickel out of the escrowed funds.

In the event of a default by the seller, the buyer may believe he has cause to sue for specific performance, but many contracts (perhaps all or most) will include a clause that binds the buyer and seller to arbitration. Generally, a seller's default simply ends the process and the parties go their seperate ways. The seller's default, though, does open him up to a claim by the participating broker or brokers, but as the seller has no cash held in escrow, the broker(s) claim would require litigation (unless the seller can be persuaded to settle). In practice, default by the seller is rare.

My experience and understanding dovetails almost exactly with that of Dan (Ex-Calif) as he stated it in his post #13, above. I very much prefer private sales (no brokers), wherein I submit my offer to the seller on a contract of my own creation (admittedly based on a contract of one of the bigger brokers), because I can be assured that my contract will protect my interests.

I agree with Dan, as well, that a 10% deposit is unnecessary. In my view, it only became SOP in yacht sales because of the brokers' interests (as stated earlier), and otherwise is illogical.

I can bind an offer on a $million+ house in California with a token earnest money check of, say, $5000. Why, then, does it take a $10,000 check to demonstrate my good faith when it comes to buying a $100,000 yacht?

TaoJones

[GordMay]

ESCROW DEPOSITS:

Read & understand the proposed Purchase Agreement.

Excerpted from a couple of Purchase & Sales Agreements, as prepared by Boat brokers.

(1)
“... In event said is not consummated by reason of inability or unwillingness of PURCHASER to provide payment or otherwise complete terms of this PURCHASE AGREEMENT, deposit shall be retained by BROKER as liquidated damages and divided evenly between BROKER and SELLER provided, however, BROKER.S portion shall not exceed commission he would have received had sale been completed ...”

(2)
“.. Should the boat be rejected by the Buyer or the purchase not be consummated by reason of contingencies set forth herein or by destruction of boat for any reason, including an act of God, the deposit shall be returned to the Buyer after all expenses incurred have been deducted and paid, and this agreement shall become null and void. The buyer and Seller agree that, should there be a dispute as to the responsibility for the failure of this transaction to be consummated, the Broker will act as an Escrow Agent only, and may, at his option, file an interpleader with any court of appropriate jurisdiction, and deposit said funds into the registry of the court. The Buyer and Seller further agree that, should the court determine the Buyer wrongfully prevented the transaction from closing, resulting in a forfeiture of the deposit, that the court shall direct payment to the Broker of one-half of said forfeited amount as provided herein. In the event that purchase is not consummated for any reason and the Broker receives a written demand for the release of the escrow funds, Broker shall notify the other party of said demand by sending written notice thereof by regular mail, postage paid, to the last known address as previously provided Broker. If the party to whom the Broker’s notice is sent has not responded to Broker disputing the release of the escrow funds as demanded within ten (10) days from the date of said notice, said failure shall be deemed an acceptance and approval for Broker to disburse the escrow funds in accordance with the demand and any claims against Broker for improper disbursement of the escrow funds shall be waived. In the event Broker disperses the escrow funds in accordance with the procedures set forth in the paragraph, then the party receiving said funds shall indemnify and hold Broker harmless for any and all claims, demands, actions, judgments, and costs arising out of or pertaining to the disbursement of the escrow funds ...”
“... In the case of a forfeited deposit, as liquidated damages, I/we agree to pay the Broker one-half of said amount after all expenses incurred by the Broker have been paid. Any funds due the Broker for storage, insurance, repairs or any other items accrued to the Seller’s account, shall be deducted from the net proceeds of funds to Seller ...”

[David_Old_Jersey]

Originally Posted by TaoJones

I agree with Dan, as well, that a 10% deposit is unnecessary. In my view, it only became SOP in yacht sales because of the brokers' interests (as stated earlier), and otherwise is illogical.

I can bind an offer on a $million+ house in California with a token earnest money check of, say, $5000. Why, then, does it take a $10,000 check to demonstrate my good faith when it comes to buying a $100,000 yacht?

TaoJones

I appreciate that being in the UK means that what happens here is not relevent to the US...........but I have also always struggled with the concept of a 10% deposit. For me a couple of hundred pounds is more than enough to sort the timewasters out, and refundable if the deal does not progress. (Buyer pays direct for any lift out / surveyor etc).

I have never bought a boat through a broker, but I nearly did once - gave a cheque for £500 as a deposit / sign of good faith / serious intentions.........sea trial with broker (no owner) resulted in major engine failure and sailing back into the Marina berth at 90mph (or felt like it!) - broker not me as skipper ...........money came back no deductions (in fact cheque not cashed - we do things quite relaxed in Jersey ).

Last boat I bought was private, I did the same with a £500 cheque and even sent a cheque for the balance by mail on the promise of the docs in the post - and the boat was accross the water in England (not Jersey).......a bit reckless on the face of it, but in practice not that bad.

Not sure if the UK has Escrow Agents, IME the concept of "Escrow" seems to be the preserve of Lawyers (and costs accordingly )......maybe a business opportunity for someone over here?

[hellosailor]

TaoJ-
"I can bind an offer on a $million+ house in California with a token earnest money check of, say, $5000. Why, then, does it take a $10,000 check to demonstrate my good faith when it comes to buying a $100,000 yacht?"
Maybe that's why the subprime mortgage market for boats hasn't collapsed the way the housing market has, eh?<G> Keeps the tire kickers out, too, but a smart broker will take whatever is in your hand or wallet for the moment, rather than send you away. IF he thinks you are a serious buyer.

David-
Escrow may often be handled by lawyers, but in the US AFAIK any bank can set up an "escrow account" for anyone, where the funds are deposited and then released according to written terms only. I wouldn't expect them to do that for a $100 escrow account between two strangers betting on the Kentucky Derby though, banks like to make something for their time.<G>
AFAIK anyone can be an escrow "agent" for other parties, but in the litigious US, who would want to get in that position in the first place!?

[hellosailor]

TaoJ-
"I can bind an offer on a $million+ house in California with a token earnest money check of, say, $5000. Why, then, does it take a $10,000 check to demonstrate my good faith when it comes to buying a $100,000 yacht?"
Maybe that's why the subprime mortgage market for boats hasn't collapsed the way the housing market has, eh?<G> Keeps the tire kickers out, too, but a smart broker will take whatever is in your hand or wallet for the moment, rather than send you away. IF he thinks you are a serious buyer.

David-
Escrow may often be handled by lawyers, but in the US AFAIK any bank can set up an "escrow account" for anyone, where the funds are deposited and then released according to written terms only. I wouldn't expect them to do that for a $100 escrow account between two strangers betting on the Kentucky Derby though, banks like to make something for their time.<G>
AFAIK anyone can be an escrow "agent" for other parties, but in the litigious US, who would want to get in that position in the first place!?

[TaoJones]

Perhaps I should fill in the picture, hellosailor. When I said that a $million+ house doesn't require a big check to accompany the contract offer, that's just the first small step in a lengthy process.

While the seller is considering the offer, there is no necessity for an escrow account. At that stage, I have demonstrated my interest in his property and the accompanying check is a token of my good faith. We are, at that point, still negotiating the selling price.

If the seller accepts the offer, or if he counters and further give-and-take ensues that leads to an acceptance, only then is it necessary to open an escrow account. It is only after the escrow account is opened, in fact, that the earnest money check is even cashed, and the amount of the check is applied to the down payment.

So although the earnest money check is quite small compared to the selling price, it does represent a sincere demonstration of good faith.

In a yacht transaction, if all of the negoitating has occurred before the submission of the written contract offer, then a check representing 10% of the agreed price is not out-of-line. But if you're still trying to come to terms on a pre-survey selling price, a 10% check for the price a buyer is hoping the seller will accept is just a guess. And, since you're really still negotiating, a token earnest money check, payable to the broker's escrow account, should be sufficient.

TaoJones