BUYING AND SELLING

It is a popular time of year for boat purchases, and so the Royal Yachting Association offers some useful recommendations for buying and selling boats.

Buying or selling a boat can be an exciting and daunting prospect for any recreational boater, whether purchasing your first boat or selling one that you have owned for years. There are a number of key factors that you should take into account.

Just like a house purchase, it is important not to get swept up in the romance of buying a boat and to instead look at the practical and financial implications.

Unlike buying a house, the law does not stipulate a process for the sale and purchase of boats. Although the process does not have to be complicated, there are a number of considerations and hurdles to pass.

When and how As we all witnessed during last year’s spring lockdown, the interest in getting afloat rose dramatically as the good weather increased. Advertising your boat pre-season or at the start of the boating season can be an advantageous time to begin selling your vessel.

If you are looking to buy a boat, keep an eye out for adverts in local newspapers, the yachting press, websites, Facebook groups, brokerages, local boatyards or word-of-mouth within the boating community.

When considering purchasing a boat, you must first decide which type best suits your requirements. These may range from sailboards to very large sailing or powered boats. The type and size of boat itself can make a considerable difference to the process and the price.

If you are selling your boat then choosing a fair and objective price can be a difficult task, and if you are a novice purchaser then how can you tell if you are getting an accurate price?

The secret to agreeing a fair price is research. Look at similar boats in the market and be honest with yourself about how much the boat is actually worth, what repairs may need to be done and, most importantly if buying, what you can afford. Whether you are the buyer or the seller, be prepared to negotiate and have a top and bottom figure in your mind.

The nitty-gritty The sale of second hand boats usually occurs between two private individuals and is often conducted via a broker, who acts as an agent for the seller.

VAT is not chargeable on the sale of second hand boats between private individuals, but VAT is charged to the seller for the services rendered by the broker. The broker will usually charge the seller a commission for these services.

Prior to entering into an agreement to buy a boat, the purchaser will wish to make sure that the seller does indeed own the boat and have the right to sell it. Also, they will wish to ensure that the boat is not subject to any mortgages, debts, charges etc.

If the boat is subject to a mortgage the RYA recommends that the purchaser have a three-way conversation between themselves, the seller and the lender. It is often the case that the purchaser will pay the proportion of the purchase monies that are outstanding on the mortgage, direct to the lenders. The lenders will more often than not hold all the title documentation for the boat, and upon redemption of the outstanding mortgage release the title documents direct to the seller/purchaser.

If you are purchasing a boat then it is vital to ask to see a copy of all title documentation so that you are confident that the seller does indeed own the boat, that the boat is VAT paid or exempt and is RCD compliant.

When selling a boat, make sure that you have your paperwork together. The main documents that you are likely to be asked for include evidence that the boat is VAT paid (such as the original invoice); registration documentation; evidence of RCD compliance (where applicable); service information for the engine, generator, sails, water heater; the Builder’s Certificate (not essential but helpful) and Bills of Sale; owner’s manual and further manuals for all the equipment on the boat and financial records and receipts for any large repair bills.

Whilst verbal agreements between parties are perfectly valid in law, they are notoriously difficult to prove, and any disagreement will come down to one party’s word against the other.

For this reason, the RYA strongly recommends that a written Sale and Purchase Agreement is used on all boat purchases.

If you are a RYA member then you can

Decide which type of boat best suits your needs

“As we all witnessed during last year’s spring lockdown, the interest in getting afloat rose dramatically as the good weather increased.”

This summer you could be relaxing in your new purchase

access the online RYA Sale and Purchase Pack, which includes a Sale and Purchase Agreement template with a step-by-step guide to buying and selling boats.

Practicalities The RYA also recommends that buyers have a survey carried out on a boat prior to agreeing the purchase, especially if the boat is second hand and being sold privately. In most cases, the only way to check the boat’s condition is to have a survey done, and the results will often determine whether a sale proceeds smoothly, has its terms renegotiated or is terminated.

There is no better way to know how a boat will react when in the water than by conducting a sea trial. This is something that the RYA recommends, and if both parties involved agree then this should clear any doubt from the buyer’s mind. If purchasing a boat, you may want to also consider boat insurance. Although it is not compulsory in the UK, you may, however, at the very least take out third party liability insurance.

Dealing with Brexit Whilst it is too early to expect any legislative changes impacting the sale and purchase of boats in the EU as a result of Brexit, UK buyers/sellers are advised to ensure they include an English and Welsh (if relevant Scottish) law and jurisdiction clauses within their Sale and Purchase Agreement. Parties should be mindful that Brexit may impact on the VAT and RCD status of the vessel.

You can find out more about buying and selling boats by visiting the Legal hub pages of the RYA website: rya.org.uk.

If you are a member of the RYA and have a question regarding selling or buying a boat, please get in touch with the RYA Legal team by calling: 023 8060 4223 or email: legal@rya.org.uk.

The RYA recommends a sea trial before buying a boat

The RYA covers all forms of boating, including dinghy and yacht racing, motor and sail cruising, RIBs and sports boats, windsurfing, inland cruising and narrowboats and personal watercraft.