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Offer/ Deposit refundability

Discussion in 'General Yachting Discussion' started by JadePanama, Jul 29, 2020.

  1. JadePanama

    JadePanama New Member

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    Hey everyone

    We just made and had an offer accepted on a vessel. We have purchased others in the past, but I didnt pay as close attention as I am this time. I am about to wire the deposit money, but want to see if how I interpret the following is what is correct. Yes, I know to be sure talk to an attorney... But this is a pretty common thing that I am sure you all have encountered so just looking for a confirmation or risks I am missing.

    Here is the verbaige from contract:
    Survey Option; Acceptance of Vessel; Conditions of Survey. Buyer’s obligation to purchase is subject to Buyer’s satisfaction, in Buyer’s sole discretion, with a trial run and survey of the Vessel, if Buyer elects to have the Vessel surveyed. In such event: (a) Buyer will select the Surveyor and thereupon Surveyor and not Brokers, will be the sole party responsible for any errors or omissions with respect to such survey, notwithstanding the fact that Brokers may have provided information and assisted Buyer with hiring the Surveyor; (b) the survey shall be completed as soon as practicable after Execution; (c) all costs of the survey are the Buyer’s sole responsibility, including associated costs such as haul-out, dry dock charges, and subcontractors, for example; (d) Buyer and its surveyor will be solely responsible for the scope of the survey and the trial run with respect to determining conformity with the Buyer’s requirements; and (e) Buyer must deliver written notice of rejection or acceptance to Seller by no later than the BUYER ACCEPT/REJECT date. Buyer’s failure to timely accept/reject shall be construed as a rejection. Upon Buyer’s acceptance, and/or initiation of survey, Seller will not make any personal use of the Vessel pending Closing. If Buyer rejects the Vessel, after all expenses incurred on Buyer’s behalf have been paid: (i) the Agreement shall terminate; (ii) the parties and Brokers will be released from any further liability hereunder; and (iii) the Deposit shall be returned to Buyer. The trial run shall be at Seller’s sole risk and expense. Brokers shall not be responsible for the cost of correcting any items found to be deficient in the survey

    Additional Terms:
    Subject to: Financing by xxx, 2020; Trial Run by Aug xx, 2020; Marine Survey by Aug xx, 2020; Mechanical Inspection by Aug xx, 2020. Offer to purchase contingent on the following: 1. BUYERS visual and in-person inspection of VESSEL by August xx, 2020


    The way I have always understood this, is we as the buyers can at any point up until the BUYER ACCEPT/REJECT date decide to REJECT the purchase in writing and the deposit is fully returned to us. Am I correct on this? Seems very clear to me, but are there specific situations where this is not the case?

    Thanks everyone in advance. Its a lot of $$ to put down and certainly would not want to risk losing it if once we see it in person or after survey is not what we thought.

    Thanks
  2. 993RSR

    993RSR Senior Member

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    The way I have always understood this, is we as the buyers can at any point up until the BUYER ACCEPT/REJECT date decide to REJECT the purchase in writing and the deposit is fully returned to us. Am I correct on this?
    I have been a broker since 1977. Yes, reject the boat within the dates and deposit is returned the same way it was paid by wire.
  3. JadePanama

    JadePanama New Member

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    Thank you. I thought that was correct, but always like to hear outside opinion.
  4. 993RSR

    993RSR Senior Member

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    If it is a Florida broker/dealer you can access the DBPR website and check their license for complaints. If you see a long list of clients complaining about loosing deposits hold off on the wire :)
  5. Pascal

    Pascal Senior Member

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    I m no legal expert but I don’t think this is accurate

    if the contract includes

    personal inspection by date X
    Sea trial by date Y
    Survey (hull and machinery) by date Z

    if you don’t do the personal inspection by X, you can not just say “ I reject the vessel”. Same if you don’t get the survey done by Z, you will loose the option to reject.
  6. 993RSR

    993RSR Senior Member

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    You can reject the boat at any time before the accept/reject date, no cause needed and the deal is dead and your deposit returned. You can reject because of odor, rumor does not matter.
  7. JadePanama

    JadePanama New Member

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    We are going to do the personal inspection. I just wanted to confirm that if after that its not up to what we expect that we can reject and walk away. I was sure we could be it was good to have it validated. thx
  8. f3504x4ps

    f3504x4ps Member

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    I would always have a lawyer look over the contract prior to a deposit. Well worth the cost of the lawyer.
  9. JWY

    JWY Senior Member

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    Do NOT sign the Acceptance of Vessel until after you have received all written survey reports and oil analysis and have had time to study them. If the broker hands you an Acceptance of Vessel at the end of the survey, raise your antennae with big red flags waving. Regardless of contingencies or whatever the contract might say, once you sign the Acceptance of Vessel, you are at risk of forfeiting the deposit if you do not close on time.
  10. d_meister

    d_meister Senior Member

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    Sounds a little vague and open-ended to me.....
  11. RER

    RER Senior Member

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    Not really. Not when the entire contract is considered. It means boatyard, surveyor, mechanic, etc, pertaining to the buyer's inspections, contingencies, and due diligence. The seller's responsibilities for providing the boat, operator, and time to accommodate the process is typically spelled as well. But none of us has seen the entire contract in this case so all anyone can do is generalize and speculate.
  12. JWY

    JWY Senior Member

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    Here is an example of where it is appropriate: Boat gets hauled out for survey; zincs showing some wastage. Buyer says " she might not need zincs today, but she'll need new ones at some point, so let's put them on now and it will save me from hiring a diver later." Yard puts on new zincs, boat gets launched. Buyer decides not to buy the boat. Owner is stuck with a bill for zincs he didn't order. That was "expenses incurred on Buyer's behalf."
  13. RER

    RER Senior Member

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    I don't ever recommend a client spend money on a boat they haven't bought yet. They would have to do it over my very strong objections. Most yards that I use for survey haul & hold will allow a haul out credit if the buyer comes back in a reasonable amount of time for out of water work.
    I had a buyer who is an attorney that wanted to have mechanical work done on a boat before sea trial. The seller refused as he had already given a major mechanical allowance to the buyer. So the buyer said he'll pay for it. The seller said fine. I made him sign a document that said I told him not to do it. He signed it and he did it anyway, and he bought the boat too ...lol.
  14. JWY

    JWY Senior Member

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    Appreciate your clarification for others, but that's sort of a "duh." I should have been more specific, but that was the fastest, and I thought easiest example to give.