Your boat is cleaned up and ready for sale. You have been loyal to your favorite yacht broker and signed an exclusive listing with them to find a suitable buyer. Then you waited. Your broker has been showing your boat to a few potential buyers and all of a sudden when you least expect it your broker contacts you with an offer to purchase.
Let’s discuss the process of the sale from this point. Your broker will present you with an offer and it should be on a proper offer form and not just a verbal offer, an e-mail offer or a simple paragraph and price. A proper offer form should include; who is the buying party, the description of the vessel, the price being offered, what the initial deposit is, any contingencies to the offer, and have a duration period of time specified for a reply. Proper offers should also include details of when the contingencies will be removed or satisfied and when and how final payment will be made. In addition understandable statements should be included to deal with the operation of the boat and what will occur if either of the parties fails in their promises according to the offer to purchase agreement.
You will be given an opportunity to accept the offer or make a counter offer to the prospective buyers. They in turn can accept, reject or make another counter offer.
Once an agreement has been reached, the time period for accepting the vessel and dealing with the contingencies begins. The buyer’s initial deposit should, by this time, be deposited and cleared into the selling broker’s trust account. This bank trust account is a separate account controlled by each broker but has very strict State prohibitions on any co-mingling or use by the broker other than those outlined in the purchase agreement. Standard contingencies include financing, sea trial and survey. The financing contingency should be dealt with first before any of the others are performed. This may include the buyer securing an approval for a boat loan or accumulating the necessary funds. The sea trial is usually performed next because it does not incur any expense on the part of the buyer and it will be obvious if there are problems with the boat. Naturally, as a seller you will want to be very sure your boat will perform as is was designed to during a sea trial. If the sea trial is satisfactory, the survey will begin and usually include hauling the boat out of the water at a local boatyard in order to have the bottom and props inspected. The charges for the surveyor and the boatyard haul out are usually paid for by the potential buyer. These inspections may result in problems being found that may cause the buyer to cancel the purchase at this time and have his deposit returned or the buyer may request a repair be made by the seller or a repair concession to the purchase price be accepted by the seller to offset the problem issue. This request for a concession may open up some negotiations between the buyer and seller, but does not void the initial purchase agreement and therefore does not open up the listing for another potential buyer unless the active buyer determines that he will not accept the boat and cancels the purchase. Your professional Yacht Broker will guide you through some of these tricky aspects of a sale and purchase.
Once all the contingencies have been satisfied and the vessel has been accepted by the buyer, final payment will need to be made according to the time line of the purchase agreement. These funds may be coming directly from the buyer or from a loan company they have worked with for financing. Either way, the balance of the funds will be deposited into the selling broker’s trust account and closing statements for the buyer and the seller will be prepared and agreed to. Sometime before this all happens or at this time your broker will have you sign the release of ownership or Coast Guard Bill of Sale so the transfer of ownership can occur. The selling broker will then disburse the funds held to the parties indicated on the closing statements. Normally this will include the proceeds to the seller of the boat and the commissions due to the brokers involved in the purchase. There may also be payments to vendors and possibly the state board of equalization for any sales taxes collected in the purchase.
So there you have it, step by step, a well orchestrated set of events for the sale and purchase of a vessel in California. Having a professional yacht broker and following their advice will go a long way to making the sale of your boat a pleasurable experience.