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Old 01-31-2006, 08:44 PM   #1
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Default Good Faith Deposit?

A few quick questions before I write the deposit check.

What is the normal procedure for the deposit check when purchasing a vessel? Is a deposit check normally sent as good faith money along with the offer to be held in escrow by the brokers company before the offer is accepted or rejected or should the offer be accepted before the check is written? After the check has been written, can the seller still accept offers on the vessel or does the deposit remove the vessel from listing? How much time should the seller have before making his decision on the offer?

Once the offer is accepted and if the survey turns out fine but the sea trials won't be held for several more months but we have closed, should the full amount of the money join the desposit in escrow until such time that the sea trial is completed and to our satisfaction OR should we push the closing off until the sea trial is complete?

Any guidance on this matter would be greatly appreciated!

Bajamas
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Old 01-31-2006, 10:12 PM   #2
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Hi Bajamas

Can't see on your profile where you are located and suspect local laws will vary on this one.

Let us know where you are.

JOHN
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Old 02-01-2006, 12:45 AM   #3
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I am currently living in the Poconos of PA but I am looking to purchase a boat that is located in Maine.

I just received word from the broker regarding these questions and he said that the deposit will go into escrow with the broker and that the seller will not accept any further offers until he has responded to mine. I also asked if a certified check would be acceptable but he said it was not and a wire transfer was required.

Normal?

What type of security is there with a Wire Transfer?

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Old 02-01-2006, 04:14 AM   #4
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I'm not a lawyer, so this is based upon knowledge from making lots of real estate offers, and two boat purchases - where everything was on the up and up and there wasn't a whisper of a problem.

I assume that the broker wants the wire transfer because it's faster than a check. Not really true since you can overnight a certified check, which is the fastest a wire transfer will get there, but....

If the broker is a "real" broker, i.e., he's got an office and phone number under business name, etc., and his bank account is in the company name, pretty good. Your bank has a record of the transfer, so as long as the bank account it's going to is a legitimate business account, it's as secure (perhaps more so) than a check.

The advantage of a check might be that if you make it out to a company and the fellow cashes it and the company doesn't exist, you might be able to get the police to chase him for fraud. But this is all speculative and looking for more trouble than might be necessary. If you don't trust him, you shouldn't be making the offer through him.

And as far as your first question - you make deposit as a "good faith" assurance that you will go through with the purchase if the seller accepts your offer. Otherwise you could make ten offers and pick which one of the acceptances you REALLY want after all while the other boats are off the market for the time it takes for the "losing" sellers to be notified that you weren't serious. There's usually a time lag of a few weeks before purchase money changes hands, and the seller is entitled to reassurance that the sale has a good chance of going through before taking the boat off the market. Keeps everybody honest.
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Old 02-01-2006, 04:21 AM   #5
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Hi, It is worthwhile to make sure the deposit is fully refundable in the event the vessel proves to be unseaworthy and this should be noted on the 'Offer to Purchase', prior to the cheque being handed over. In OZ we would also normally pay the deposit on the condition that suitable finance is found within a specified period. Best of luck..DF
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Old 02-02-2006, 11:49 AM   #6
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This thread couldn't have started at a better time...i'm in a nearly identicle situation, early in the stages of a possible purchase.

I too face the same situation as Bajamas. one point that we both share, that it seems, no one responded to, is the fact that Bajamas and i are curious about sea trials...& that in certain parts of the country, they can't really be done right now. yet boats are for sale and obviously get bought in "the off season" in the north. how so in the cold regions?...this is going to be my first major boat purchase... so, aside from the whole 'purchase agreement/deposit' aspect...which i am also just understanding...what about that sea trial if you close in february? is that a "trust the survey, trust your gut and make sure your insurance covers the cost of the boat" type of thing?

curious.

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Old 02-02-2006, 06:39 PM   #7
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When we sold sv Watermelon the sea trial came before the survey. When we bought mv Watermelon the sea trial was part of the survey. You shouldn't skip the sea trial, whether a new or old boat.

Your insurance isn't going to protect you from defects or hidden damage. And trust is better left at home. Even the most trustworthy seller might not know of a particular defect (broken prop strut, for example), which only shows up during the survey or sea trial.

Sea cocks that need replacing. Serious electrolysis due to failure to regularly replace sacrificial anodes. Lots of stuff.

If the seller balks at putting off the sale until a proper sea trial can be done should worry you. He might desperately need the money tied up in the boat, or he might know that the boat is going to show serious problems in the sea trial. I wouldn't agree to purchase it until a sea trial, but perhaps you have a good surveyor who can advise you differently.
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Old 02-02-2006, 07:42 PM   #8
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Quite apart from the obvious necessity to establish the structural integrity of the craft, a sea trial is also necessary to give you an understanding of how the boat sails and copes with the weather. Only once did I buy a boat without first sailing it. It was a trimaran that I subsequently restored only to later discover that it sailed like a block of flats.
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Old 02-02-2006, 09:07 PM   #9
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Before we wired our deposit money to the broker, I asked him several questions that I didn't understand, the Sea Trial being one of them. He said that we could "Close" on the boat within weeks after the survey and the rest of the money could also be held in escrow pending the sea trial which wouldn't be done until May.

That sounded fair to my wife and I so we wired the deposit yesterday.

We should know today whether our offer was accepted. And we're off!

Now I guess we have to figure out how to sail the damned thing!!

Bajamas
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