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Old 11-26-2012, 06:51 AM   #21
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We have good friend who just bought a 40' Mainship in a partnership. He had previously owned (successfully) recreational property in a partnership.

Here's the a copy of the draft agreement. He is delivering the new boat as we speak to FL. Keep an eye out for a south bound 40' Mainship. Yesterday she was near Brunswick, GA.

DRAFT Term Sheet


The …. LLC


09/17/12

Form of Co-Ownership: LLC with 50/50 ownership shares. Set up concurrent with purchase offer. Attorney’s fees split 50/50.
Term of the Agreement: Until the Sale of the Boat. A minimum period of 2.5 years from the purchase of the boat.
Boat & Equipment: 2004 or later Mainship 40. Propane stove & washer dryer. Full electronics & thruster(s). $200K including sales tax. Other boats possible. Purchase offer on or before Dec 1, 2012
Sea Trail Inspection and Haul out: Both parties will be present if possible and share costs 50/50
Boat registration & sales tax: Florida
Financing: None. The boat will not be used as collateral by either partner.
Insurance: Co-owner in control of the boat pays deductible for any claims. Coverage to extend to the Bahamas during the winter months.
Hailing Port/ Moorage: The hailing port will be Dinner Key Marina in Coconut Grove. The marina fees will be split 75/25 by Francisco/ John. These will be paid one year in advance on or before January 1 of each year. Estimated marina fees are $8,328 /year to be shared $6246/$2082 by Francisco/John. Boat must be returned to Dinner Key Marina at the end of each owners use, unless co-owners agreed to another location for hand off.
Boat scheduling: Parties will agree each year, on or before August 1, to a usage schedule. The year is divided into 2 halves. The summer half runs from May 1- October 31 and is for Francisco’s exclusive use. The winter half runs from Nov 1 through April 30. Francisco may select a period of no more than 4 consecutive weeks for this half. John will then select 4 months. The final month can be used for boat maintenance or by either party as agreed to.
For the first year Francisco has Dec. 15, 2012 – January 9, 2013. John has the period Jan 10 2013- April 30, 2013. Francisco has May 1, 2013- October 31, 2013.
Authorized Operators: Only the owners and spouses of the LLC can operate the boat without the written permission of the other co owner. Permission will require demonstrating that the operator is a competent ship captain that has previous experience operating a power boat this size or greater. An e-mail will suffice.
Fixed Expenses, major equipment repair & annual haul out: Fixed expenses other than moorage will be shared 50/50 and include insurance, registration fees, taxes, major equipment repair and annual haul out which includes:
· bottom painting
· zinc replacement
· check or replace water pump impellers
· coolant flush as needed
· other annual maintenance items identified in the boat manuals
These will be paid one year in advance on or before January 1 of each year. Estimated fixed expenses including an reserve account for unanticipated expenses are estimated at $8000/ year for $4000/ party and will be adjusted to actual costs for the prior year after the first year. The haul out will occur in the November time frame of each year unless a different time is agreed to by the parties. The parties may agree to a different haul out schedule after the first haul out in November 2013.
Operating Expenses: Each party will be responsible for operating expenses during their period of use. Prior to hand over, each party is responsible for completing regular maintenance items including oil change for engine and generator, new fuel filters, diver cleaning, battery fluids and coolant check and other items agreed to by the co-owners. Boat will be handed over topped off with fuel and water and empty holding tanks.
Log Book:Each party will maintain the log book for the ship detailing maintenance and usage.
Expenses: A separate bank account will be maintained for paying moorage, fixed expenses and equipment replacement. Equipment repair or replacement in excess of $200 will require both co-owners written approval which can be done by e-mail. Minor equipment repair such as a leaking water pump will be the responsibility of the operator to repair.
Upgrades: The parties may from time to time agree on necessary upgrades. These will not be done without the other co owners written permission.
Legal considerations: The boat will be used only for legal purposes and operated according to the Rules of the Road as required by the insurance contract. Any liabilities arising from operating the boat illegally will be the sole responsibility of the operator. The boat may not be used for any commercial purpose.
Pets: Pets are allowed on board. Repairing any damage they cause will be the sole responsibility of the operator.
Smoking: No smoking is allowed in enclosed areas (e.g. the cabins)
Boat cleanliness: The boat will be thoroughly cleaned (interior and exterior) before handing the boat over.
Financial Management: Need to decide who will be responsible for maintaining business and accounting records and checking account.
Failure to meet Financial or Contractual Obligations: Notice may be served by either co-owner that the other party is not meeting their financial or contractual obligations and provided a period of 30 days to rectify the situation. If the parties can not settle the dispute, then it will be elevated to binding Arbitration.
Sale of the Boat: Two and a half years from the purchase of the boat, the parties will:
· agree to extend the agreement another 2 years (at which time the clock starts again), OR
· agree that one of parties can purchase the other parties share in the boat at 85% of the original purchase price plus sales tax (e.g. depreciation of 5% per year), OR
· agree to list the boat with a broker for sale.
Death of co owner: In the event of a death of a co-owner, the Sale of the Boat will be initiated and the deceased co-owners partnership proceeds will go the surviving spouse.
Arbitration:Binding arbitration will be used to settle disputes that cannot be resolved between the co-owners. Each party will bear 50% of the arbitration costs.
Other restrictions: The co-owners cannot sell or pledge their partnership shares to a third party or use the boat as collateral for a loan.
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Old 11-26-2012, 07:26 AM   #22
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I'm questioning is whether this would be an intelligent use of resources, given that such boats spend the bulk of their time in one place, collecting bills and barnacles.
Major, this is not a subject that should ever be brought up on this board.
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Old 11-26-2012, 10:12 AM   #23
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MM

OK, I'm convinced you have the money to put $150K into a 50% partnership. As you said, there are many $300K boats out there - maybe one of these currently for sale would be the place to look with the current owner willing to become your partner. What boats for sale in Canada have you seen that would fit the bill - 47' Bayliner, 37' Nordic Tug, 44' Tollycraft or what?
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Old 11-26-2012, 03:09 PM   #24
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Larry M: Thanks for the document! Very helpful.

Moonstruck: You're right, of course. Fools rush in where wise men fear to tread!

Sunchaser: I would have to review the market again to provide a serious answer to your question but, off the top of my head, here a few sub-$300K boats that are good values. The Cheoy Lee finally found an offer, after languishing on the market for two years or more. The second probably does not have the range for a true passagemaker but seems like a good value. The third is a beautiful wooden trawler (which most boaters these day would not even consider, of course). Believe me, there are good prospects out there, if you look for them.

http://www.yachtworld.com/core/listi...url=&imc=pg-fs

http://www.yachtworld.com/core/listi..._id=64991&url=

1962 Romsdal North Sea Trawler Power Boat For Sale - www.yachtworld.com

I actually prefer a single-diesel boat for reasons that knowledgeable writers have spelled out. (See the book Voyaging Under Power.)
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Old 11-26-2012, 03:26 PM   #25
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If range is one of your primary criteria then a displacement boat with one right-sized engine is the smart way to go.

For us in our cruising area, fuel is readily available from Olympia at the lower end of Puget Sound to Skagway and Haines at the top end of the Inside Passage. As this is the only area in which we will ever be using a boat, range is not a consideration at all for us even though our current boat has a theoretical no-wind, no-current range of some 600 miles.

Even if our range was half that it would still not be a consideration which is why we will always have a twin engine boat.
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Old 11-26-2012, 09:23 PM   #26
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Martin,
If you do get a boat with a partner, here is some free legal advice, and from someone who owned a boat with a partner, NO SPECULATION here.
Get all in writing at the outset, everything, then the exit strategy.
Party A wants out and tells party B how much he wants.
This is the important part, if pary B says that is too much, I will not pay.
At that point party A is OBLIGATED to purshase A's interest AT THAT PRICE.

Since A thinks it is so valuable he now has the opportunity to capitalize on his belief and it also keeps everybody honest.
I put this clause in quite a number of business partnerships over the years.
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Old 11-26-2012, 10:22 PM   #27
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A caution. Years ago I owned a sailboat. A friend I had sailed with proposed buying a half share. I could continue to race the boat; he was not interested in racing and would use it to cruise locally.I decided against it, partly on the principle I don`t like the compromises partnerships bring (l left a law office to became sole practitioner trial lawyer). My friend bought his own same class sailboat,and promptly began racing it, at the same Club, in the same races.
What would have happened had we gone into partnership? I`m not sure, but kind of glad I never had to find out.
My advice would be do your own thing, without a partner. Others may have opposite stories to relate of harmonious enduring partnerships.
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Old 11-26-2012, 10:36 PM   #28
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We were "partners" on a sailboat. We didn't enjoy the situation as it did not feel like "our" boat. we got out of the partnership and bought our trawler. No hard feelings on our part. Don't see the ex partners much as they moved out of state so don't know how they feel but they still have the boat.
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Old 11-28-2012, 01:53 PM   #29
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Okay, you guys have convinced me! Boat partnerships are bad idea!

In fact, having anything to do with human beings is probably a bad idea!!!

I'm taking my boat proceeds and buying beans, guns, ammo, and a cabin in Idaho.

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Old 11-28-2012, 02:28 PM   #30
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Originally Posted by Major Martin
Okay, you guys have convinced me! Boat partnerships are bad idea!

In fact, having anything to do with human beings is probably a bad idea!!!

I'm taking my boat proceeds and buying beans, guns, ammo, and a cabin in Idaho.

Lol it's not THAT bad. Yet.
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Old 11-28-2012, 02:40 PM   #31
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Hey. It depends on the people involved.

Just make sure you have a plan B

Or at least a way out should it not be what you want.

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Old 11-28-2012, 03:00 PM   #32
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I'm taking my boat proceeds and buying beans, guns, ammo, and a cabin in Idaho.

[/QUOTE]


Major Martin

Pender Is offers an equally good refuge to Idaho. Now back to your question--

I had a very good partnership with my BIL who is quite well off but without much time. He turned all the boat maintenance over to me with no questions asked. It was a 50/50 deal and whoever broke something fixed it, again no questions asked. Upgrades and improvements were mutually agreed upon, but almost always we moved ahead on them.

If I wanted to do a partnership I would look into a person's philosophy as much as anything. To me, unless the partner understands boating is a money pit to be enjoyed, and not all do, I'd not consider that guy. A well heeled partner is good to have, a cheapo partner is not good to have.

If I was of your mind, here is what I would do -- talk to Anacortes Yacht Charters or one in Sidney or Vancouver. They may well know an owner who is looking for a more pemanent partner than chartering provides.
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Old 11-28-2012, 03:17 PM   #33
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Okay, you guys have convinced me! Boat partnerships are bad idea!
But..... look who you've been asking. Most of us on this forum own our own boats and do so because owning our own boats is one of the things we want out of boating. So your question was a bit like going into a Ferrari dealership and asking, "I'm thinking of buying a Ferrari or an Aston Martin. Which one do you think I should get."

I know a couple of people who have GBs in charter. And while they acknowledge the downside-- can't leave your stuff on board, can't always use the boat when you want to, and so on--- they feel the arrangement suits what they want out of boating quite well.

There are obviously boat partnerships that work very well, just as there are airplane partnerships-- like mine--- that work very well. But there is no one-size-fits-all solution. Lots of variables as SD mentioned earlier.

So I'm hoping that you are taking what we have said on this forum to hand, but that you are also asking people (or groups--- are there forums for boat charterers or partners?) who have good partnership setups for their views as well.

Armed with both views of the issue you can then apply your own desires and personality to the formula to see if it will work for you or not.
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Old 11-28-2012, 03:20 PM   #34
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Great points raised here but SD nailed perhaps the most important one of all. Do not get involved in any partnership without a very well defined exit strategy. To me that is the single biggest issue.
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Old 11-28-2012, 04:09 PM   #35
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If I wanted to do a partnership I would look into a person's philosophy as much as anything. To me, unless the partner understands boating is a money pit to be enjoyed, and not all do, I'd not consider that guy. A well heeled partner is good to have, a cheapo partner is not good to have.
this speaks to one of the disconnects we had with our partners. they were quite well off and happy to spend money on the boat while we are more budget conscious and happy to do work on the boat... which actually worked out great, the problem came in that the husband of the other couple had never owned a boat before and expected to reach a point that the boat would be "perfect." He is still trying to attain that, two plus years and I have no idea how much money later. To us a boat is a never ending project and we derive enjoyment from working on it. Definitely a big philosophical difference.
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Old 11-28-2012, 04:27 PM   #36
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You nailed it Pineapple Girl.

Work on the boat. Use the boat. Something else needs fixing.
Work on the boat. Use the boat. Something else needs fixing.
Work on the boat. Use the boat. Something else needs fixing.

ad-um infinitum.
I love every Minuit of it.

SD
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Old 11-28-2012, 04:31 PM   #37
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To us a boat is a never ending project and we derive enjoyment from working on it. Definitely a big philosophical difference.

While some of this is rationalization on my part, one of the reasons we wanted an older boat was to have a "hobby" that the two of us could work on together. The list of to-do projects is very long and involves a lot of small stuff as well as big items like totally refinishing the main cabin sole, making and installing new solid-panel headliners in the main cabin, redoing all the seat cushions in the main cabin and so on. It's not so much that we're seeking perfection but that we have improvement projects that we can do and get satisfaction from together.

While we do not have the time to tackle these big things right now, we are both looking forward to the day when we can rip out the original headliner and figure out the best way to make, and then make and install, a new headliner and so on.

So our requirement when selecting a boat was to have a boat that would keep us both involved with it (and each other) and to have a boat we could use and enjoy from day one. We did not want to buy a big project that we coudn't use until the project was done. This boat, despite its glacial and really annoying speed, has fit that bill perfectly and promises to continue to do so.
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Old 11-28-2012, 11:07 PM   #38
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It just seems to me there might be a middle-ground between those who must always possess their boats and those who have a more flexible, cooperative outlook. One needn't be a Buddhist monk or a former submariner to make this work; just a mature attitude and the ability to follow a few common-sense rules.
I work at a fly in fly out camp in the oil patch. I wish my cross shift at work was into boating. We live in close to each other and could go two weeks at work and two weeks boating!

I've also been scheming on a boat share with other Nordic Tug 26s. They can use my NT near Desolation Sound for a week and I can use theirs in the Chesapeake for a week.

Alas, I am a former submariner... and yes, I used to hot bunk.
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Old 11-29-2012, 01:24 AM   #39
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I work at a fly in fly out camp in the oil patch.
Alas, I am a former submariner... and yes, I used to hot bunk.
But not a Buddhist monk?
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Old 11-29-2012, 07:12 AM   #40
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My long story short. When I bought the Rose my neighbor wanted to go in a partnership. I declined because he had the money and I had the time. His plan on the repair would have been greatly accelerated and I couldn't keep up with the money. A few years later a man offered me a great deal of money for My boat and I refused. My neighbor "almost partner" fell out! He would have sold it in a minute. I couldn't believe it.
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