BUYER BEWARE!

The RYA's Legal department outlines a few things to bear in mind when buying a second-hand boat. These general guidelines are not designed to cover every eventuality but seek to help to avoid the most common pitfalls. More in-depth information can be found in the publications and guidance notes mentioned at the end of the article. When buying a second-hand boat, from a private individual who is not selling in the course of business and when buying through a broker who is acting on behalf of a private individual not selling in the course of business, a buyer has very little security in terms of statutory protection. „Caveat emptor‟ applies i.e. „buyer beware‟; a buyer is thus expected to protect himself. It therefore pays to ask all relevant questions and ensure that all important issues are included within the written contract governing the transaction. Pre-contract negotiations will normally involve factors such as the price, the condition of the boat and its suitability for your needs. Loans may need to be organised and insurance quotes compared. Once you have found a boat that you like, you should aim to establish in your preliminary enquiries: a) b) c)

whether the seller has good title to the boat; whether there are any outstanding mortgages or liens; and whether or not the boat needs to comply with the Recreational Craft Directive.

If the boat is on the Part 1 Register you can contact the Registry and ask for a transcript of the boat. For a fee this will confirm that the person selling the boat was able to meet the title conditions imposed by the Registry required to register the vessel and whether there are any outstanding mortgages. The situation is more complicated if the boat is not on the Part 1 Register. The SSR is not a title or mortgage register. You cannot prove title or ensure that the boat is free from encumbrances if it is on the SSR or unregistered. You must decide for yourself, on the basis of your dealings with the seller and, if relevant, conversations with people at the yard, marina, or clubhouse, backed up by any documentary evidence, such as previous Bills of Sale, whether you have gathered sufficient evidence to be reasonably confident of the seller's claim to title.

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© Royal Yachting Association Updated: 21 February 2011

You may also find it useful to contact the main finance houses and ask if they have an interest in the boat. Their numbers can be found at the back of most sailing magazines. As from the 16th June 1998 every new recreational boat, with few exceptions, of between 2.5m and 24m length when first sold within the EU must be CE marked to show compliance with the EU Recreational Craft Directive. The Directive requires the Design category, plus the Manufacturer‟s Maximum Recommended Load and a CE symbol, to be marked on a builder‟s plate attached to the boat. Therefore, if you are buying a boat that was built on or after the 16th June 1998, you should check with the seller whether or not the boat complies with the RCD and if not, whether: a) It should have complied but didn‟t. If that is the case please contact the RYA Technical Department for further advice on 02380 604201. b) The boat did not need to comply because it was eligible for one of the exemptions under the terms of the Directive. If so, it should display an exemption label. The RCD only applies to boats built after 16th June 1998. If the second hand boat that you are thinking of buying is older than that then the RCD will not apply, provided it has been placed on the EEA market before 16/6/98. If you are buying a non EEA boat i.e. from the US check whether it has been in EEA waters before 16/6/98 and there is documentation to prove this. Having established these basic principles you would normally move on to negotiating terms, such as deposits, proving title, inventories, payment methods, surveys and sea trials, amongst others. A written form of agreement, such as the RYA Agreement for the Sale and Purchase of a Second-hand Boat, is the conventional way to finalise terms. Contracts can be made verbally, but often lead to argument about what has been agreed. We recommend that you do not pay the seller a deposit until the terms of the deal have been finalised. If you are spending a substantial sum of money it may be relevant to use a solicitor. This will be a decision for the individual buyer based on the conditions surrounding the deal. Boats are expensive and liable to deterioration and damage. 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 www.rya.org.uk

© Royal Yachting Association Updated: 21 February 2011

proceeds smoothly, has its terms renegotiated or is terminated. Surveyors that are affiliated to professional bodies are required to carry professional indemnity insurance, you should therefore ensure you instruct a surveyor that carries PI insurance. A good yacht broker can do a lot to help the prospective buyer, although it should be borne in mind that the broker is appointed by the seller, not the buyer. The RYA Guidance Note entitled „Buying and Selling through a Yacht Broker' includes a standard contract and addresses the more common issues raised by our members. Many problems stem from people not establishing a means of payment acceptable to all parties. Are you going to pay by bankers draft, cheque, electronic transfer, cash, in instalments or in one final payment? It helps clarify this issue early on, usually at the contract stage. Receipts - When giving money over, make sure you get a receipt. The Bill of Sale is the conventional form of receipt for the final payment. However, it is up to the buyer to assess the evidential value of the proffered Bill of Sale. On payment of the deposit you should get a receipt and be in possession of a contract. On completion of the sale you should have: a) A Bill of Sale from the seller to the buyer. b) If appropriate, Bills of Sale from previous owners, providing the chain of ownership. c) Builders Certificate (if available). d) Receipts for any part payments/deposits. e) VAT documentation to prove VAT Paid Status or VAT Exemption. f) If the boat needed to comply with the Recreational Craft Directive, then the buyer should check that the boat has: - a Builders plate and CE Mark on the boat; and - an owners‟ manual which should contain a Declaration of Conformity. If you are in any doubt as to what you need please contact the Technical Department on the number given below. The publications listed below can be obtained via the member‟s only section of the website or from the Legal Department. Bill of Sale for boats on the SSR

Free

Standard contracts:  Agreement for the sale of a second–hand boat

Free

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© Royal Yachting Association Updated: 21 February 2011



Agreement for syndicate ownership

Leaflets: „Buying and Selling through a Yacht Broker‟ which includes Appendices, Title Checking Books available from the RYA to purchase: The Yachtsman's Lawyer Buying a Second-hand Boat Buying a New Yacht

Free Free

Order code G9 Order code G21 Order code G10

When purchasing the above books there is a charge for postage

Useful numbers: UK Ship Register (RSS) The Registry publish a booklet called ”Registering British Ships in the UK” This gives general information on both the Part 1 and the SSR. For VAT queries: National Yacht Line HM Revenue & Customs Advice Centre

For enquiries relating to Part 1 or the SSR, requests for Bill of Sale, information on de-registration and registering a mortgage, copies of transcripts Tel: 02920 448800 Tel: 0845 723 1110 Tel: 0845 010 9000

Notice 8 (available from Customs or from their website) gives general information on the VAT rules.

Website address: http://www.hmce.gov.uk

The “UK Guide for Yachts” deals with the age related VAT exemption. This may apply to boats that were in use prior to 1/1/1985 and in EU waters on the 31/12/92.

If you wish to look at The UK Guide for Yachts go to VAT Notices and then click on Miscellaneous Leaflets/Notices

Yacht Brokers, Designers and Surveyors Association

List of surveyors Tel: 01730 710425

Then go to Forms and Publications (top right hand Notice 3 “Bringing your button) followed by Catalogue of belongings and private motor Publications vehicle to the UK from outside the Followed by VAT Notices EC” will be more relevant to boat You can then download Notice 3 owners who are thinking of and 8 buying a boat outside the EC.

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© Royal Yachting Association Updated: 21 February 2011

RYA Despatch Department

RYA publications Tel: 02380 604132

RYA Legal Department

For copies of aforementioned leaflets and general enquiries Tel: 02380 604223

RYA Technical Department

For queries relating to the Recreational Craft Directive Tel: 02380 604201

For more information kindly contact the RYA Legal Team on 0844 5569519 or [email protected]

Disclaimer: The RYA Legal Team provides generic legal advice for its members, affiliated clubs and RTCs. This leaflet represents the RYA’s interpretation of the law. It takes all reasonable care to ensure that the information contained in this leaflet is accurate. The RYA cannot accept responsibility for any errors or omissions contained in this leaflet, or for any loss caused or sustained by any person relying on it. Before taking any specific action based on the advice in this leaflet, members are advised to check the up to date position and take appropriate professional advice.

mep[Leaflets/Buying Privately/Buyer Beware]

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© Royal Yachting Association Updated: 21 February 2011