Second Hand Sailing

If you’re thinking about buying a second hand boat, but finding yourself all at sea when it comes to the finer details, we’ve crewed up with the RYA, the leading national body for all forms of boating, to bring you The Guide to Buying a Preloved Boat.

“Buying a second hand boat can be a pretty big investment, yet, despite the expense, the legal side of buying a boat can be as simple as buying a newspaper!” says Mandy Peter, RYA Legal Advisor. “With that in mind it makes sense to undertake a few basic checks before parting with your money and actually committing to buy.”

If you’re thinking of buying a second hand boat then there is a normal running order of events that are useful to abide by to ensure your purchase goes as smoothly as possible, Mandy explains.

The following advice is based on the RYA agreement for the sale and purchase of a second hand boat.

• See the boat and make an offer; subject to contract and survey

You’ve found your dream boat but it would be wise with an investment of this size to proceed with a cautious approach (unless both boat and seller are well known to you), ensuring you avoid any potentially expensive shortcuts and minimise the risks.

• Consider how best to protect your purchase monies; if buying through a broker make enquiries of its use of a client account

If you are buying through a broker then the adage ‘Buyer Beware’ is still a principle that applies. You should check that, if using a broker, they are operating a properly administered designated client account - an account in which client monies are held by a company, which should be completely separate from the company’s current account.

• Pay a deposit and receive a receipt and signed SaleAgreement in return (which should include a signed inventory of the boat’s machinery, equipment and gear to be included in the sale), agree dates for completion

It’s at this stage that you should receive a Sale & Purchase Agreement from the seller which carries the legal implication that he has the right to sell and that the boat you are buying is free of any encumbrances, charges, outstanding debts or contracts and so forth.

Have you agreed with the seller what the deposit is going to be?  Usually the deposit is around 10% of the price, but you could offer a lesser sum and amend the contract accordingly.

• Ask for evidence of ownership

Evidence of ownership documents include: Bill(s) of Sale, Registration Certificate, CE Certificate, if the boat was built after June 1998 and VAT invoice (if available).

• Ask whether there is marine finance on the boat and, if so, establish arrangements for discharge prior to completion

If there is marine finance you will want confirmation that the purchase monies are sufficient to redeem that mortgage. You may therefore wish to see, in writing, from the Finance House, a redemption statement. It would be prudent for you to liaise with the seller and the Finance House to ensure that the necessary arrangements are in place to redeem the mortgage.

• Ask for confirmation of Recreational Craft Directive compliance or exemption and VAT status of the boat

When importing a boat from overseas most people are aware that you will have to pay VAT and import duty but many are not aware of the requirement for the boat to comply with the Recreational Craft Directive (RCD).  The RCD requires ensures that craft placed on the market within the EEA comply with essential safety requirements and are CE marked.

Any boat that comes within the compliance directive must have appropriate accompanying documentation including; Technical File and Owner’s Manual which must include a written Declaration of Conformity.

Lack of awareness of this requirement could prove to be extremely costly so beware!

• Survey and Sea trial

Once satisfied with the documentation a sea trial is recommended to see if you like how she handles, and if you don’t you can still withdraw from the sale.

A survey is considered essential by most purchasers’ to check whether the boat and its engine/equipment are sound and seaworthy. Although the boat may appear in excellent condition, a survey is a sensible precaution. Be aware that usually all expenses involved in a survey, including yard fees and preparing the boat for survey, are met by the buyer.

Once the survey and engineers report have been received the buyer usually has a period of time to decide what to do next.

• Negotiate work to rectify material defects, agree adjusted price if necessary

If there are no material defects the buyer is obliged to go ahead with the agreement.  However, if defects are found the buyer has the option of, withdrawing, renegotiating the price or requesting the seller to rectify the problems at his expense prior to completion of the contract.

• Ask to see all equipment and gear which is not currently on the boat but which is included in the inventory prior to handing over the balance of the purchase price

Clearly you will want to see everything you are planning on buying and to ensure it is and does exactly what it should.

• Arrange insurance prior to handing over balance cheque

Although it is not compulsory for pleasure craft to have insurance in this country it would be foolish not to have comprehensive cover.  Boat insurance is however pretty complex so it would be worth finding an insurance underwriter to help you with this.

If your second-hand boat is up to 20 years old then it will probably not need to be surveyed to get your insurance, but for older boats a survey is usually required and any recommendations to be implemented before full cover is given.

• On hand over of the balance make sure you receive Bill of Sale, previous Bills of Sale if possible, Certificate of Registration from previous owners relinquishing further interest in the boat, Builder’s Certificate, Original/copy (receipted) VAT invoice, RCD compliance and all other relevant documentation

Although the law does not prescribe the documentation that should follow a boat sale, documentation is required to comply with certain legal requirements such as the Recreational Craft Directive and the boat’s VAT status.  However, if the seller is unable to produce documentation the buyer is entitled to withdraw from the sale.

“This list is by no means exhaustive but is a good guide for starters”, Mandy concludes.

Further information

Pick up a copy of the RYA’s book, ‘Buying a Second-hand Boat, The legal aspects’, or RYA members can find a whole host of further information on the RYA website www.rya.org.uk

The RYA also offers members a Saleand Purchase Pack which contains all the essential information on buying and selling your boat.  You can download a copy from the RYA website or call the legal team on 0844 556 9519 or email legal@rya.org.uk

The RYA is the national body for all forms of boating, including dinghy and yacht racing, motor and sail cruising, RIBs and sports boats, powerboat racing, windsurfing, inland cruising and narrowboats, and personal watercraft.