Most brokers and dealers require a 10% cash payment on a new boat but a nominal deposit is enough to get the dealer to write a contract. Often, the deposit is placed in an escrow account, but this is less common with private party sales.
The seller may have a right to keep all or a portion of the deposit if the buyer backs out of the deal without cause. As a buyer, you should include as many contingencies as necessary to protect your interests, including satisfactory survey and sea trial, clear title, and ability to obtain financing and insurance. On new boats, a written delivery date is crucial.
Trade-Ins
Dealers are often willing to apply the value of trade-in boats against the cost of a new boat, but be aware that you will probably not get top dollar on the price, since dealers stick close to the maxim “buy low, sell high.” In addition, dealers may scrutinize your old boat far more critically than a private buyer, since part of their profit margin will be based on how easy a trade-in boat is to sell.
With this in mind, have your boat in top condition when you bring it to the dealer.
In some states, a benefit of a trade-in arrangement is that you pay sales tax only on the price of the new boat, less the amount of the trade-in. Check with your state’s boat registration agency.
Transferring Ownership
You’ve found the boat of your dreams, the price is right and you’ve paid the seller, so the boat is yours free and clear — or is it? Well, it isn’t until the seller signs over the title or provides other legal proof of ownership. Other documents that help confirm ownership are insurance policies and boat registration cards. Crosscheck the boat’s Hull Identification Number (HIN) against the numbers listed on the seller’s records to make sure it’s the same boat.
Vessel documentation is a national form of registration. To be documented, a boat must measure at least five net tons — most boats over 27 feet long will meet this criteria — and must be owned by a U.S. citizen. If the boat you want is documented, ask the seller to complete a U.S. Coast Guard Bill of Sale (CG- 1340), a copy of which must be submitted with an application for Documentation (CG-1258).
A nationwide Vessel Identification System (VIS) is in the works, but at present there is no national clearinghouse for state title and boat registration information. This makes it difficult to track boats that cross state lines when owners move or when thieves "launder" stolen boats from another state.
Manufacturer’s Statement of Origin
The Manufacturer’s Statement (or Certificate) of Origin (MSO or MCO) that comes with each new boat contains the boat’s HIN and engine serial number(s). It shows when the boat was built and transferred to the retail dealer for resale purposes. You will need the MSO when you register or document your new boat. If the boat is financed with a loan, the MSO will be transferred to the lender, otherwise it will be included in the boat’s papers given to you at the time of purchase.
You or your loan company should receive the MSO when you take delivery. If not, contact the boat manufacturer at once. Without the MSO you may be unable to register the boat and may have trouble meeting insurance requirements.
Boat Checklist for Buyers and Sellers
Evaluating a boat’s condition before purchase makes it easier for the prospective owner to say “good buy” or “good bye” to a deal. Likewise, an objective eye for problems that need to be corrected makes it easier to prepare a boat for sale.
Use this checklist to make a preliminary evaluation. We suggest using a scale of 1 to 5, where 1 = poor and 5 = excellent. Take a good hard look at what shape the boat is in. Is it clean? Are there signs of rust, hull blisters, peeling paint or varnish, previous repairs, cracks or corrosion? Don’t forget to check operating gear like winches, steering systems, running and standing rigging on sailboats, lights, head and galley equipment, electronic
Related articles
