Short Sale

M

mstaglia

New Member
Apr 20, 2009
124
Boston
Boat Info
1998 310 Sundancer
Engines
350 Mag MPI
I made an offer on a 1998 31 Sundancer that is a short sale. The owner owes $55K and I offered $40K. The owner accepted the offer. We have been waiting 2 weeks for the bank to ok the sale before I have it surveyed. Should I be dealing with the owner or the bank? How long should it take??
Mike
 
If it is anything like the real estate short sales, it could take months before you hear any thing back from the bank. You have to deal with the owner until the bank takes it back.
 
Speak to a Maritime Lawyer. A mortgage on a boat, like a ship, creates a Maritime Lien automatically. These are significantly different from mechanics liens. I can give a long winded discussion on why and how they are different, but the important thing is that the maritime lien stays with the vessel. In your case if this isn't handled right, you could pay the present owner the 40k and he could pay his bank the 40k, and then after it is all done the bank could come back and seize the boat by either having it arrested, or by getting a ruling for a 'Type B Attachment'. They would then demand the remaining 15k be paid by anyone before the boat was released. A maritime lawyer can help you by drafting a document that the bank would have to execute confirming that all indebtedness of the vessel had been retired.

Henry
 
Henry, won't I be paying the bank, not the owner. I would not pay untill the bank releases the title to me without any liens at a passing of papers.
Mike
 
Paying the bank directly is a good start. The confusing thing is that maritime law considers the vessel to be the indebted party.
The law treats corporations in a similar way. A corporation can have debt with a bank and all the stockholders can sell their sock to someone else. While the corporation would then have new owners, it would still owe the debt to the bank.

Likewise, when you buy a boat you find yourself in the position of not only getting the boat, but also getting the responsibility of paying for any of the boats debts that remain at the time you take possession. This by the way is automatic.

In your case the seller will not have retired all of the indebtedness of the boat when you buy it. So that is why I say that a maritime attorney can help you create a purchase contract that would require the seller and bank to certify that any remaining indebtedness is retired.

This becomes more important if the boat has been federally documented. In that case there is no title document.
 
Henry, thanks for the advice. My sister in law lives in Rowley.
I was in the NG in Newburyport. I knew a Boyd in the Guard.
I boat out of Boston, on the Mystic River.
Mike
 
Huh. Short Sale. . .so he owes $55. . .you pay $40. . .what happens to the other $15? Is the owner expecting the bank to suck it up? Legally. . .the current owner is supposed to suck it up. This is why people don't want to be UPSIDE DOWN.

Heh. . .no wonder the current owner accepted the deal. Why would he care? He thinks the bank is going to suck it up. You probably could have offered him 12 Canadian nickels and he would have been ok with it.

Do you have any reason to believe that the bank is inclined to accept anything less than $55K?

(No offense intended to our Canadian Friends)
 
Last edited:
comsnark said:
Do you have any reason to believe that the bank is inclined to accept anything less than $55K?
....
Click to expand...

Sometimes they would rather get something, instead of nothing.:huh:
 
Chuck1 is right. A friend of mine went through a short sale last year and the bank did "suck it up". The bank doesn't want to be in the boat storage business and sometimes to them it's worth cutting their losses. This isn't true in every case but on occasion it pays.
 
comsnark said:
Huh. Short Sale. . .so he owes $55. . .you pay $40. . .what happens to the other $15?
Heh. . .no wonder the current owner accepted the deal. Why would he care? He thinks the bank is going to suck it up. You probably could have offered him 12 Canadian nickels and he would have been ok with it.
Click to expand...

He might care if the bank issued him a 1099 for the unpaid loan balance. Then is dealing with the IRS for the taxes on the income.
 
How did you come across the short sale??? Is there a listing of them?
 
Not that I ever want to agree with sbw1 but...

If you have dept forgiven (i.e. short sale, walked away from your credit cards, etc) you owe taxes on the amount forgiven... The IRS will hunt you down as the entity will disclose your name and/or issue a 1099.
 
What does BOE give you in product for minor cheap shots?
 
I just got a 60" plasma from BOE for my work last week.

But you've seen nothing yet... I have my boat out of the water getting painted... it's sitting next to a Tiara in the yard that has some delamination problems around the bow... I'll post pictures later.
 
Gary,
You are right about the CC & other forgiven debt, but I think the IRS has a rule in place until 2012 on forgiving tax liability on forgiven debt if it was on your primary home. I guess if they have lost their home there is noway they are going to be able to pay taxes on the forgiven debt. :huh:



Four Suns said:
Not that I ever want to agree with sbw1 but...

If you have dept forgiven (i.e. short sale, walked away from your credit cards, etc) you owe taxes on the amount forgiven... The IRS will hunt you down as the entity will disclose your name and/or issue a 1099.
Click to expand...
 
The Banks "suck it" up daily. They can/may pursue the PO for the deficiency balance. The bank will also pass clear title to the new owner and the banks can/may issue a 1099 to the PO for the deficiency balance.
 
Short sales are fairly common with boats as they are with houses, esp in this economic climate. The bank will take a loss just to get out of the homeowner/boatowner business - taxes, upkeep, slip fees, etc. They do not ALWAYS consent to a short sale, however. Happened to a marina-mate selling a 2001 340DA. He had an offer in hand for $7k less than he owed, he approached the bank and they told him go scratch. I have heard that, with a short sale, the difference btwn what is owed and the sale price is taxed as income for the buyer - if there is an exception made for short sale home buyers I doubt it would apply to a boat.
 
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