Buying with Sea Trial escrow

pepeborja

New Member
Feb 14, 2014
9
Churchville PA
Boat Info
Sea Ray 190 BR
Engines
Merc 5.0
[FONT=Arial, Helvetica, sans-serif]I read somewhere that one process for buying a boat in the off season when a boat is on the hard and winterized is to agree on the selling price and set aside a Sea Trial escrow of say 10% to 20% of the deal. So a $50K boat would probably leave an escrow of $5K~$10K based on the results of the survey.[/FONT]
[FONT=Arial, Helvetica, sans-serif][/FONT]
[FONT=Arial, Helvetica, sans-serif]I guess the way it works is that when the boat is re-launched the Sea Trial takes place and if the boat has major issues the escrow is not disbursed leaving the escrow money free to remedy the problems for the buyer. In essence the escrow is backing up the seller's word that the boat is as cherry as it was described.[/FONT]

Is that something that is done common place?

Thanks

JB
 
I guess it could be done, but as buyer if you went with a non-conditional sale with an escrow, you would need to be very certain that the escrow would cover the issues and with boats the issues could be as much as the value of the boat (needing a 100% escrow, which you would never get). A couple of bad engines could easily cost near the selling price of a used boat. So it would be very risky gamble as a buyer. Also, after sea trial you could get into a very ugly legal battle over what was necessary and what was not and how much of the escrow should be given to the seller (assuming the repairs were less than escrowed funds). In my view, as buyer, keep your money in your wallet until all the issues are addressed to your satisfaction. As a boat buyer, you have the leverage position. Boats are easy to buy and very hard to sell. Why give up that leverage in a deal?
 
JB,
Having been both a buyer and a seller, I don't think I would ever try to get into this "escrow" position. I can't imagine banks would either. The only one I see making out would be the lawyers.

I guess that is an obstacle in buying boats "off season." This is one reason I have held off pulling mine out. I winterized everything but the engines the other night, and am leaving it in as long as the weather holds out, in case someone, or me wants a ride. Luckily, the valves installed make re-winterization simple. Our Yacht Club does a lighted boat parade 1st week of December, and may do the parade, if she's still in.
 
This is exactly what I did when I purchased this boat. Went to look at it in January. 20* day. Made a cash-payer offer. A bit of haggling and we agreed on a price and a 10% deposit was wired to the dealer's escrow account (Brewer Yacht Sales, a very reputable dealer group) on Jan 25th and there it sat until seatrial and survey on March 29th. The contract MUST state that closing is contingent upon successful seatrial and survey that meets the buyer's expectations. There are several provisions that are put in that contract that allow for re-negotiation of the price or allow you to walk away without surrendering your deposit.

After the seatrial and survey was completed to my satisfaction we closed on the boat a few days later.

It can be and is done.
 
I dont have experience on this either way, but I thought the escrow was to show the buyer's good faith in making the purchase and to put the boat "on hold" under contract. In other words, if the buyer doesn't want to go through the expense of re-winterization / wrapping etc, they put a depoist in escrow as good faith until the earliest time a sea-trial is possible the next season.
 
I would not close until the sea trial and survey are done. I would write a contingent contract as RONDDS outlined.
 
I bought a boat this time of the year from a Sea Ray dealer... They wanted the boat sold, so we did the survey and dropped the boat in the water for a sea trail. The dealer re-winterized it and stored the boat for us to pick up in the spring. The dealer waxed and painted the bottom as part of the contract.

If I were the seller, I would pay to drop the boat in for your sea trial if that would sell the boat. If I were you, I would ask the seller to pay to have it winterized and strunk wrapped after your sea trail. The seller would probably rather have the boat sold now than waiting for spring. If you do it this way, you may be able to get a better price...
 
Being a Canadian and in a different legal system and far less litigious, take my comments with some caution, but......
there is a big difference between an escrow and a deposit. If you go this route be sure whatever your paper work is, that you have the right legal terms and conditions. My non-lawyer understanding is that if you have an escrow it means that the deal is firm, and you are holding back a limited amount of funds to cover some aspect of contractual obligations on the part of the seller. If those obligations are capped by the amount in escrow, then that is your buffer on undisclosed "issues". A deposit conditional on satisfactory sea trial (at your discretion) is an entirely different situation.

And that's as close to playing US lawyer as I will ever want to be. Before you place a bet on a boat with a legal backstop that you think will protect you, you should get a real US lawyer with some boat bying experience advise you.
 
This is exactly what I did when I purchased this boat. Went to look at it in January. 20* day. Made a cash-payer offer. A bit of haggling and we agreed on a price and a 10% deposit was wired to the dealer's escrow account (Brewer Yacht Sales, a very reputable dealer group) on Jan 25th and there it sat until seatrial and survey on March 29th. The contract MUST state that closing is contingent upon successful seatrial and survey that meets the buyer's expectations. There are several provisions that are put in that contract that allow for re-negotiation of the price or allow you to walk away without surrendering your deposit.

After the seatrial and survey was completed to my satisfaction we closed on the boat a few days later.

It can be and is done.
No gambling that way.
 
Creekwood
Good point. But all this is spelled out in the contract. The account my 10% was wired to was an actual escrow account. But regardless of what the account is called, if the contract states that that money being held is contingent upon a) b) and c) you'll be safe.
 

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