Complications

The Ericson 30 was offered for sale. But the seller didn’t have the pink slip. In fact, he did not own the boat. He leased it. The boat had been donated a year earlier to the Pacific Coast Sailing Foundation in Long Beach. The Foundation operates the United States Sailing Center, which is partly financed through the sale of donation boats.

The Foundation “sold” him the boat in a two-year lease with purchase option deal for $7,500, plus an additional $250 fee. He paid most of the money up front as payment for a 23-month lease. The balance was due in the 24th month (July 2006) to exercise the purchase option. Otherwise the boat would revert back to the Foundation, which held the title.

The seller was taking a $2,000 loss, not counting the cost of the new outboard, a new inflatable dinghy, the so-far unsuccessful repairs to the inboard and any other money he had put into it. The deal being offered was to give the seller $4,000 cash and agree to pay the $1,500 balance due to the Foundation the following summer to gain title. The seller said the Foundation had agreed to transfer the lease-purchase agreement to his buyer.

It made me a little nervous, yet it seemed simple enough and it should be easy to verify that the transfer would happen before I paid off the seller.

Being an experienced boat buyer and boat owner, I knew the steps to take. Put the terms of purchase in writing and make sure the details are clearly understood by seller and buyer, especially the details about how the purchase can be aborted and the deposit refunded if the boat doesn't measure up.

If you buy a boat from a reputable broker, the sales person will walk you through these steps. It's a little different buying from an individual.

However, after spending several hours together on the boat at the dock and then going to the seller's house to view more paperwork and write up the deal, it was clear that I was dealing with a honorable person and I felt quite comfortable making an agreement with him.

There are two major turning points in a boat purchase. The first is the "sea trial" and the second is the "survey". The sea trial is a chance to make sure that everything works as claimed and that the boat performs as it should. A buyer can decline the purchase if the boat doesn't meet expectations. The seller foots the bill for the sea trial, which should only be the cost of fuel involved. On a sailboat that should be trivial.

The buyer pays the costs of going forward with the next step in the purchase. The boat should be surveyed (inspected) by a professionally-accredited marine surveyor specializing in that type of vessel. For sailboats like the Ericson 30, the typical price in the fall of 2005 was $15 per foot. Generally such a survey does not address engine condition. For that a separate engine survey, usually by another expert, is required. In my case, I knew the engine didn't work and I thought I knew enough about engines to fix it, so I didn't bother with an engine survey.

The boat needs to be hauled out of the water for a proper survey to be made, which means taking it to a boat yard and paying the requiste fee.

The assumption is that the boat will need new bottom paint and most yards will offer to absorb the haul-out charges if the new buyer hires the yard to refinish the bottom once the survey is finished. Of course, it knows that there likely also will be a series of repairs made to fix what the surveyor finds wrong with the boat. The costs of those repairs, especially serious and unexpected repairs, are often the subject of last-minute price negotiations between buyer and seller.

At a minimum, if the boat turns out to be a poor investment in the eyes of the surveyor, the buyer can walk away, but will still have to pay the haul-out charges and the surveyor's fee. A neophyte buying an old boat could end up paying out significant money with nothing to show for it. Chalk it up to education.

It's a lot cheaper to surf the internet and learn as much as possible about boats before walking the docks looking at "For Sale" signs.