Our experienced brokers have put together a guide to help you navigate the buying process. Read below to find out what to expect, step-by-step, during a boat purchase.
Purchase and Sale Agreement
Eventually, through trial and error, and by viewing many different boats, you'll find what you are looking for. Make an offer, but do it formally. We use a standardized contract called “Purchase and Sale Agreement”. The most important elements in the “Purchase and Sale Agreement” are:
- Deposit: The 10% deposit is due at presentation of the offer. We keep this deposit in our escrow account, and your money is 100% safe with us. Your deposit can be made by check or a wire transfer.
- Acceptance: Normally the acceptance of offer is a day or two from the date of offer, unless there are communication problem involved (overseas owners, holidays).
- Conditions: Usually the sale of a boat involves a marine survey, sea trial and personal inspection. Financing can be a contingency as well, but we recommend buyers to have their loan approval prior to making an offer.
- Acceptance-Rejection Date: This date is the last possible date by which the buyer must accept or reject the vessel - done in writing.
- Closing Date: The date by which the buyer must pay for the boat and title will be transferred to the buyer.
When discussing your initial offer price with your Broker, you can take in consideration the option to purchase the boat in “AS IS” condition. This might result in a lower sales price and or a quicker closing. A more common option is for the boat to go through a comprehensive phase out from the charter base. Following execution of the Purchase and Sale Agreement by the Buyer, we present the offer to the Seller. In most cases, the Seller makes a counter-offer, suggesting a price somewhere between the original asking price and the offer. This may take a few days, and is done verbally. Once the price is agreeable, the buyer and seller will have a written agreement stating the terms and final price. Now you officially have the boat “Under Offer”.
Marine Survey and Sea Trial
The next step is for you to schedule the marine survey and sea-trial. These usually occur on the same day. The buyer pays for the survey and haul-out, and the seller supplies the captain for the sea-trial.
- Marine Survey: The marine survey is an extremely important part of the boat purchasing process, thus the need to choose carefully when selecting a surveyor. We can provide you a list of several (see our boat buyer services page), but we cannot commit ourselves to recommending just one. A member of the National Association of Marine Surveyors (NAMS) or the Society of Marine Surveyors (SAMS) is recommended. You can also interview I email I call a few surveyors or ask an insurance agent whom they recommend. You will need a survey as a prerequisite to securing insurance coverage as well as financing (if applicable).
- Sea trial: The purpose of the sea trial is to demonstrate that the boat's parts operate under stress, and it gives you a good chance to take a good look at the sails. A sea trial usually lasts a couple hours, and some surveyors charge extra to go along on one.
Acceptance/Rejection of vessel
Following your review of the results of the survey and sea trial, you must accept/reject the vessel.
Some recommendations: Here is where our process differs from a standard brokerage deal. If there are issues reported in the survey that were not apparent when you made the offer, which you think should be addressed prior to closing, you will work with your Broker to put together a Conditional Acceptance of Vessel (CAOV).
This CAOV will include a list of the boats faults as found by the surveyor, and then include the actions the base’s phase out team will take for each item. When you do this, however, remember that you are not necessarily entitled to replacement with new items, simply items that will work or were similar to the items not in working order.
Once the Buyer/Seller/Base Phase out Team all agree to terms you are now officially “Under Contract”.
From here the work will commence, which normally takes around 6-8 weeks depending on the base’s current workload. Once the work has been completed you or your surveyor will complete a follow up inspection to verify the terms of the CAOV were addressed satisfactorily. Some surveyors include this follow up inspection fee in their initial charge while others do not, so be sure to ask your surveyor.
Acceptance of vessel and then failure to close can result in forfeiture of your deposit so be sure to remember that failure to "Reject" is considered an Acceptance of Vessel.
Documentation
Now it's time to close the transaction. The first step is to hire a good documentation agent (preferably someone we have had experience with). They will check the boat for clear title, prepare necessary transfer of ownership documents, and register or federally document the vessel. This is an important step in the buying process as bureaucracies and origins of the vessel become more complicated every day. Be sure to let us know if a loan will be involved in the purchase as soon as possible as the lenders often have their own documentation services. They will need to know how you want to take ownership.
- Exact name of Buyer - will there be a spouse or partner named on the documents?
- Will you incorporate?
- What Address?
- New Boat Name?
Remember foreign built boats are often subject to US duty fees (1.5%) when US owners enter the boat into US waters. Check the laws of your country of origin or discuss with your documentation service.
Sales Tax
The Florida Department of Revenue requires the following.
Closing on boats located in Florida requires the collection of a 6% sales tax (capped at $18,000) unless a valid Affidavit for Exemption is executed by the Seller and the Purchaser and the boat is removed from Florida waters within 90 days. We recommend reading the Florida statue of sales Tax if you don't plan on paying the tax.
Boats closing outside the state of Florida are not subject to Florida sales tax. However, a Tax Affidavit signed and notarized by the Dealer (The Moorings Yacht Brokerage) and the Purchaser, which states the boat is not located in Florida will be required at the time of closing, as well as copies of a valid photo ID or Passport of the purchaser.
Closing
You have finally arrived at closing. Most of the closings these days are not “sit down” affairs. Generally, the documentation and proof of ownership is gathered and the buyer makes payment via wire transfer to our escrow account. Remember these funds must be "cleared" into our account prior to closing. Wires sometimes are held up for 2 or more days particularly from overseas so we recommend doing this a week prior to closing. When the funds are cleared, phase out work complete, documentation/registration/insurance in order you will sign the “Acceptance of Vessel” & “Acceptance and Release”. When and only when all these elements are in place, the money will be transferred to the seller and the Running Papers sent to the buyer.
Congratulations! You are now a boat owner!
More questions? Visit our Brokerage FAQs, or give us a call.