Did you know that in UK law, there is no standard process when it comes to buying a boat? In theory, all you need is a verbal agreement, an exchange of money to take place, and voila! Transaction complete. Time to enjoy your new boat. Sounds simple, right?
Let’s say, for example, you purchase a boat, and it gets damaged before it gets to you. Or, your buyer doesn’t make the payments they verbally agreed to on time — or worse, not at all. Then what happens?
While avoiding legal representation might sound like an easier route to boat ownership, it’s far more likely to cause you problems further down the line. With no paper or email trail confirming your terms and conditions, outlining the stated price, or even detailing what the sale includes, comes significant risks. This type of informal agreement leaves room for misinterpretation, misunderstanding, and more.
No matter how much or little money is at stake, or how much you trust the other party involved, you must ensure you’re on the same page.
A sale and purchase agreement (SPA) can help.
What is a Sale and Purchase Agreement (SPA)?
A sale and purchase agreement (SPA) is a legally binding document that details the agreed-upon wishes of both the buyer and seller. This includes the agreed price, what the sale includes, and several key details that ensure safety and transparency for both parties. Both the buyer and seller must sign and date the document.
Typically seen in real estate transactions, buyers and sellers can use these written agreements in multiple areas, including when buying a boat.
Why do you need a SPA when buying or selling a boat?
Whether you’re looking to buy a boat from a private seller, or sell your used vessel to a private buyer, you’ll want to ensure you’re getting a good deal. This will involve making some negotiations. If you are parting with an expensive boat or a large sum of money, you may need to get a lawyer involved.
Here are three crucial things you must include in your SPA.
- All essential information
Firstly, it must include the names and details of all parties involved, including legal representation where necessary, as well as the cost of the vessel and the date of completion. The sale and purchase agreement will also detail the vessel’s ownership; ensuring the boat is owned solely by the seller, and free from any debt.
2. Survey details
Next, it should outline the agreements you have you made for the survey. Detail who is paying for the lift out and return to the water. If blacking or antifoul is removed during the survey, who puts this right and when? Most surveys identify the required remedial work, and buyers will expect to negotiate further on price. Importantly, if you cannot reach an agreement, what are the terms to keep or return any deposit?
3. The cost and payment plan
Does the buyer intend to make a deposit? When and on what basis can the buyer return the vessel? And, when can the vendor keep it? Will the buyer make the purchase outright or is marine finance involved? This must be included in the agreement for clarity.
4. Remedies for default
An Event of Default is a pre-defined event or circumstance that enables buyers and sellers to terminate their agreement if a.) they are the not defaulting party and b.) the other party has not met the agreed-upon requirements, i.e. the buyer does not make the payments on time, or the seller does not deliver on the agreed-upon terms.
Please note this blog post is for information purposes only. Please consult a legal professional for any legal advice.
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