Boat Co-Ownership Agreement form?

[VMaxhp]

Ok, I know there will be many who think this is a bad idea for some number of reasons. That said, I'm looking for a sample agreement between two (and only two) people for co-ownership of a boat. Does anyone have a draft or copy they could send my way? Why reinvent the wheel, huh?

Thanks!
Rick

 

[Bondo]

Re: Boat Co-Ownership Agreement form?

Ayuh,... Partnership ownership of boats between friends, usually leads to Less friends....

Try legalzoom or someplace like that for a blank document...

 

[cyclops2]

Re: Boat Co-Ownership Agreement form?

Bondo has it covered in a LOT of friendship cases. Boats are a dime a dozen.

FRIENDS ???? Do not risk the laughs for a lifetime over a piece of crap, compared to the possible loss of a friend.

Been there.

 

[H20Rat]

Re: Boat Co-Ownership Agreement form?

Ayuh,... Partnership ownership of boats between friends, usually leads to Less friends....

partner ownerships work about 1% of the time. (random figure I"m just making up, but probably not far off!) The other 99% end badly. Either loss of friends at best, worst is an expensive lawsuit.

 

[Philster]

Re: Boat Co-Ownership Agreement form?

OP asked for facts, not opinions. Why does the first response have to ignore the OP?

You should get the title in both your names or be co-signers on the loan. That eliminates that need for anything else.

So... if you have a boat, you either own it (title in hand) or finance it. You have both names on the title or you have both names on the loan.

PM me for further clarification without opinions you eluded to not wanting.

 

[Home Cookin']

Re: Boat Co-Ownership Agreement form?

I have found that sharing a boat is a great way to go. I have one I share with 7 people. I've shared with my sister, when we both had teen children using them. I have many friends who share boats just fine. They have easy going personalities; that's crucial. You have to be able to laugh about the problems, not grumble ("sorry I think I scratched your half of the boat").

There are a couple of items you need to address up front. I assume we're talking about your basic used recreational boat 16-21'. Nothing fancy.

You have to be able to accept "wear and tear". If you are anal about keeping the boat looking brand new, forget it. If you are the kind of person that bans children with grape juice and Cheetos, forget it. You have to accept his hitting the dock on the port side so he'll accept your hitting the dock on the starboard side. Are you going to cover it all the time, or never? Wash daily or annually? Wax? (suggestion: get a boat that's durable and made for the outdoors rather than a fragile sofa boat)

Decide who is allowed to operate it unattended--you get a boat so your children can learn to be boaters. that involves bumps. Your wives may be boaters--can they go out without one of you? Can you let a guest pull a tube while you hang out at the beach?

Agree to share the cost of repairs regardless of who was at the helm when it happened. We all make mistakes.

If holiday weekends are important, figure out who will use it when.

The two of you need to be the same about DIY repairs or taking it to the pros. The best thing about splitting is that half the cost of a pro to do something like a water pump or bottom paint is tolerable. Or another arrangement is to let one guy put in sweat equity. I know a number of people who let reliable friends use the boat for free b/c that guy takes care of it--but that's usually a different arrangement best for fishing boats or larger boats. Maybe one guy stores it at his house and gets a cut. Just agree up front but keep it simple.

Most important: an exit strategy. If one of you wants out, whether it's due to facing major repairs or you just want out, you need an agreement. The easiest is to agree that you will get an informal opinion of value from a certain boat mechanic/dealer, and live with it regardless, and one guy buys out the other at 50%. This would include getting a price for the boat with a blown motor. Agree to walk away friends.

Also, check the insurance requirements up front; it can be hard sometimes to insure a joint boat.

There's nothing wrong with not wanting to share your boat, and those types of people are better off not sharing, due to the risk of friendship. Same goes with a boat sale among friends; lots of guys here say NEVER but I see it work fine all the time, among boaters. if a friend called me one morning to say his boat broke down and he had planned a fishing trip that day with out of town friends, I'd be glad for him to take mine; I like to see it being used. Just takes the right personalities, and the right boat.

now, write your own agreement; never try to "make it legal" from some form on the internet. That's where lawyers make a lot of money--undoing bad legal work non-lawyers did on their own. Just make a list, sign and date it, and specify it is for non-commercial recreational purposes only. Don't do it if one of you is the kind of person who would sue over a couple grand--or less. You know the type.

(if you're talking about a $30,000+ deal, get a good agreement from a lawyer in your state. Not another state; your state.)

 

[hog88]

Re: Boat Co-Ownership Agreement form?

One phrase that will always stick with me. "There can be but only one Captain"!!

 

[sasto]

Re: Boat Co-Ownership Agreement form?

Bubba gave some good advice, from one that has been there and done that!

I use other folks boats frequently. The agreement I have with them. If I break something, I fix it. Normal wear and tear....they pay for it and I fix it.


In a joint agreement? I would fix what I break. We both would fix the normal wear and tear parts.

Good Luck!

 

[H20Rat]

Re: Boat Co-Ownership Agreement form?

Also, check the insurance requirements up front; it can be hard sometimes to insure a joint boat.

There's nothing wrong with not wanting to share your boat, and those types of people are better off not sharing, due to the risk of friendship. Same goes with a boat sale among friends; lots of guys here say NEVER but I see it work fine all the time, among boaters. if a friend called me one morning to say his boat broke down and he had planned a fishing trip that day with out of town friends, I'd be glad for him to take mine; I like to see it being used. Just takes the right personalities, and the right boat.

That is probably one of the toughest to do correctly. If you screw up the insurance aspect of it, ANYTHING the other party does can come back to haunt you for the rest of your life. Lots of boat partnerships have a LLC behind them for a reason, liability protection/insurance is the driving force for that.

I agree with you on sharing... I've got a couple friends that I would have absolutely no issues with letting them take my boat out. That isn't a partnership though. A partnership means that your friend can tell you that you aren't using the boat for the trip you planned, because he already had something scheduled for this weekend.

If you aren't sharing EVERYTHING 50/50, someone is going to end up mad. Either the person that uses it more, but feels they have to contribute everything to the maintenance, or the person who barely uses it, but feels they have to pay too much for the little use they get.

 

[Silvertip]

Re: Boat Co-Ownership Agreement form?

I feel the hardest thing to deal with is when it is your turn to use the boat and you are ready to go and something is dreadfully wrong. It screws up the outing and a phone call to the partner reveals nothing was wrong when he/she parked it. Of course the partners kid used the boat and didn't mention that he ran aground, hit a rock, or whatever actually happened. While this arrangement can certainly work for some, it is potentially "very problematic" and no agreement, written or verbal is going to make it a problem free relationship. I personally would get very frustrated having to pop for repairs and wrench of a boat to fix things that consistently occur on a partners watch. That automatically implies the partner is not a responsible operator and "extremely unlucky" does not enter the picture. Yes -- stuff happens! But not consistently to the same person with a bit of common sense. Wear and tear is one thing. Downright abuse is quite another and some folks simply cannot equate the difference between the two. By the way -- the partner may very well be analyzing your situation in the same way.

 

[hog88]

Re: Boat Co-Ownership Agreement form?

To me if I wasn't ready for 100% ownership of a boat, I would look into a boat club before a partnership. A friend of mine has done this the last 2 or 3 years and has been happy with it.

 

[Andy'sDelight]

Re: Boat Co-Ownership Agreement form?

Look at it this way-If you find out your buddy sinks the boat how would you react? If it costs you thousands of unreimbursed money, how would you react? How would you react to showing up to the boat and there's no fuel in it? A mess in it? Scratches? Now, how would your friend react in kind? If the answer is negative for either of you, it's a bad idea.

 

[Home Cookin']

Re: Boat Co-Ownership Agreement form?

"ANYTHING the other party does can come back to haunt you for the rest of your life"

This is not true. The owner of boat, car, whatever is not liable to others for the torts (negligence or other wrongful acts) done by a third party, just because he is an owner. He has to contribute in a material way to the tort (eg hide a dangerous defect you know about; hand over the keys when he's stinking drunk). I think you are confusing the fact that you can buy insurance to cover the torts of a third party (like insuring your children as drivers on your auto policy) but that is a matter of contract, not liability, and your insurance can cover things you would not be personally liable for.

there are rules peculiar to admirality involving pledging the vessel to limit liability but that as a practical matter doesn't come into play here.

That being said, the boat I have with 6 others is in the name of a stock corporation but there are other reasons for that in my situation.

As for uneven use: invariably one person will use it more than another. You have to understand up front that it will be AVAILABLE evenly, and if someone doesn't use it due to conflict, rained out, etc. too bad. Few people use their boats as much as they'd like or as much as they thought they would when they bought it--which right there is a good reason to share.

Which brings me around to Silvertip's very valid comment: yes the potential for problems is great. He aptly describes a very real situation. this is why you have to be matched up with the other user, as far as responsibility, skills, etc. and the level of care you give the boat. The difference between hard use and abuse can be different things to different people (baring the extreme), and it is a major issue with my group. Our boat also gets extremely hard use as a work boat and it shows. it's ugly. But we are all on board with it, because that is the purpose of the boat. But an examlpe--the endless debate here about beaching a boat, keel guards, etc. You just have to be matched up, that's all. And start with a boat with scratches!

 

[lncoop]

Re: Boat Co-Ownership Agreement form?

You might also consider setting up an escrow account to cover repairs, maintenance, insurance, registration, etc. A multiple signature requirement for any expenditures would help prevent misunderstandings and/or fraud, and recurring expenses like insurance could be configured to draft automatically so no one person is responsible for them (or responsible for forgetting them).

 

[Captain Caveman]

Re: Boat Co-Ownership Agreement form?

I co-own a cabin with two other parties (we all have our own boats). We all pay monthly into an bank account to cover property taxes, insurance, utilities, and a maintenance fund. I was initially concerned about how to schedule usage but it's never been a problem. We just email and let each other know when we'll be there. Since I go there the most, if someone else is contemplating a similar week/weekend I back off since I know that I've gotten my share of usage. We have a handshake agreement on an exit strategy, which is now being employed because one of the parties wants their money.

This all works because the personalities are right. I would never do this with casual friends. With even good friends you often need to be extra nice to make it all work, but the important part is making it work. It can happen and you can do it with a boat. The only problem that I see is the increased need for a big maintenance fund. Boats cost a ton of money to maintain, and the more they are used, the higher frequency of damage. Definitely outline who pays what and why, then enjoy.

 

[roscoe]

Re: Boat Co-Ownership Agreement form?

Exit strategy must also address divorce or death of either party.


For instance, your buddy dies, leaves his estate to his children. Now his 4 kids are your partners.


Or, your buddy gets divorced, now his ex and her new boy-toy are your partners as well.

This can be dealt with pretty easily, but needs to be in writing. Puts an end to a situation rather quickly as long as you have it in writing.

 

[Home Cookin']

Re: Boat Co-Ownership Agreement form?

good point. an angry ex-wife will insist her half is worth millions. Your agreement up front to live with Joe the Mechanic's drive-by appraisal helps protect everyone. It will help, too, if there is a bankruptcy.

But again, we aren't writing up a joint venture agreement with buy/sell kick-outs for a yacht. We haven't talked about non-assignment clauses or encumbrances. Sometimes the kitchen table agreement is better--even though that's contrary to good legal advice. It's all about the circumstances.

 

[VMaxhp]

Re: Boat Co-Ownership Agreement form?

Thanks all for your input. It's a 2002 Crownline 202 BR at $16k. There will be no financing. Great points from all. Some of the items the other buyer and I have already talked about:
1. Every other week from Tuesday to Tuesday. This will cover 3 day weekends and we'll look at a calendar to ensure fair distribution of the holiday weekends.
2. Wash/clean boat before return
3. Fill gas tank before return (that way, we each pay for our own gas)
4. No loaning of boat during your interval. Ok to have other driver, but one of us must be on the boat.
5. Normal wear and tear is jointly paid for
6. Tears and significant interior scratches are to be paid by that week's owner
7. Log hours in/out. Maintenance based on hours will be divided by each owners percent of total hours used.
8. Annual maintenance (summerize/winterize) and storage will be equally divided.
9. Right of first refusal if one owner wishes to sell. Retaining owner is encouraged to strike a deal as you never know who you're going to get for a co-owner. Selling owner is encouraged to make a deal as a 1/2 ownership interest is more difficult to market.

Good point on the divorce/death. Neither of us are married nor have minor children, and we should probably put the ownership interest in a trust with ownership passing directly to the surviving owner. As the boat is purchased prior to either of us being married, even in Colorado the boat is NOT subject to division in a divorce.

I have checked insurance and it is surprisingly easy to get co-owner insurance. That was actually one of the standard questions from Progressive (online) and there is a surcharge for it, but no big deal. For those curious, $60/month.

I like the idea of a couple of thousand in a joint account for emergency funds.

The other owner and I have already discussed some upgrades and splitting the cost (e.g. better stereo, 2nd battery, etc) and I think we're good there.

Thanks again for all the input and if I've missed something, please feel free to chime in. I love this forum BECAUSE y'all have more experience than I.

 

[JerseyBoy67]

Re: Boat Co-Ownership Agreement form?

Brand new to co-ownership of an 80 foot luxury yacht as a result of my uncle leaving it to us in his will...probably worth $2.5-3.0 mil. Three of the four of us know nothing about boats but realize we need a serious partnership/operating agreement to possibly make this work. I've read some of the previous posts on co-ownership agreements, but wonder if there are additional issues for a boat this significant that should be included in an agreement (which we don't yet have). and/or your suggestions on how to find the best attorney for this partnership. Thanks in advance!

 

[Home Cookin']

Re: Boat Co-Ownership Agreement form?

you need a lawyer in your state who knows contracts and the peculiarities of marine title, doucments and liens. He will likely suggest (or certainly consider) putting the ownership in an entity. You also need a captain!

For 3/4 non-boaters, you need to focus on the sale side. If one owner wants his fourth, where do the rest of you get the $750,000 to buy him out? You also need to establish your decision-making process.

Getting legal advice on the internet for a $3 million asset would be like using Youtube to do your own knee surgery. Lawyer up. Maybe start with the estate lawyer?