When do you make your final payment?

Hi... I’m buying a brand new trawler from a broker on the east coast. The boat is being built in Seattle.

The Seattle manufacturer wants the final 10% payment once the boat finishes its sea trial out west. The contract between the broker and I reads that the boat will be delivered to me in Annapolis.

I’m in a “discussion” with the east coast broker because I contend that if I’m taking delivery of the boat in Annapolis I should have some kind of “hold back” until the boat is delivered to me and I’m assured everything is in good order.

What is the “standard” of the industry? I’m sure many readers have bought boats on one coast or another that were being constructed on the other side of the the country or even the world.
Thanks in advance for any feedback.

You make your final payment to the Marine Title company according to the terms and conditions of your accepted offer to purchase.

That offer is your contract.

The Marine Title company is also your impartial closing agent.

Kevin is correct, but if possible get your own surveyor to inspect the boat before the sea trial and to be present on the sea trial. Be there yourself as well if at all possible.

Then get any defects found by the surveyor or yourself addressed by the builder before the boat ships across to the East Coast. Make sure there is insurance for any damage during that shipping as well. The key thing is that the boat has no defects before you hand over final payment.

During the commissioning phase things may well crop up. What does your purchase contract with the builder say as to commissioning location and how are issues handled? Is your East Coast broker a currently accredited, with NT in CT or MD, sales agent? As mentioned by Kevin and Brian you should have an agreed upon governing contract already in place, with closing details and payment terms clearly spelled out.

Greetings,
I think there is a provision in various Mechanics Lien Acts that allows one to retain a percentage of monies owed for a period of time to make sure that things are as they should be. Perhaps this may apply although this is usually for a service and not necessarily for a sale.

I bought two overseas built boats in my life, one from France- a Jeanneau and the other from Canada, a Saga. I paid for the Jeanneau (100%) when it was delivered to Texas. I paid a deposit to the Saga builder and the final payment when it crossed into the US and was ultimately delivered to Annapolis.

If I were negotiating a contract from scratch I would insist on a 10% hold back until I accepted the vessel during a seatrial. That doesn't mean I wouldn't be the owner. until then The contract should say that I own any part of the boat that I had paid for. That lets me take possession of a half finished boat in case of bankruptcy if I had paid half.

But it all depends on what your contract says. I don't think that there are any provisions to hold back in law, only by contract.

David

Commissioning a new build is different than a few hour sea trial. Both are necessary but for different purposes. A really savvy commissioning group will come up with a punch list of items whether miswired receptacles or missing hinges on cupboard doors. NT's reps in CT and MD have been down the commissioning road before.

Tom Kallman, is the commissioning process well described in the current contract?

Personally, after the builder finished the commissioning process in Seattle, I'd insist on a local 2-3 day shake-down cruise. You'll surely find things that the standard process missed. Much easier to get them fixed properly before the boat leaves for the East Coast.

Welcome.

For me (I have no experience in this matter) final payment would be due once delivered and accepted by the buyer and once a survey is completed on the east coast.

Suggestion, back it down in a reasonable tight circle to check the transmission and both the shaft and rudder seal. Watch the both the engine and transmission temp.

We had a sea trial and survey and made final payment after them.

When you buy a boat, there is no final payment. You just keep paying and paying and paying.

pete

I used to deal with the concept of transfer of ownership quite a bit in a previous career.

Who is delivering the boat from the manufacturer to the buyer?

That shipping company is either the agent of the sellor, or the agent of the buyer.

If the shipping company is the agent of the buyer, then the shipping company is taking possession on your behalf at the time of pickup.

If the shipping company is an agent of the seller, then the transfer of ownership occurs at the time of delivery to the buyer.

The concept of possession and ownership are mutually exclusive. The shipping company may posses the product (and assume some liability during transit), but either the seller or the buyer actually owns it.

It depends on the terms of the sale and the terms of shipping.

pete meisinger said:

when you buy a boat, there is no final payment. You just keep paying and paying and paying.

Pete

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we have a winner!!!!!

I agree with the comments that the contract dictates. But I see the logic in the builder requiring final payment when you "accept the vessel". That is done after sea trial and when any noted deficiencies are corrected. After you accept the vessel, they will prepare it for shipment. If there are any damages during shipping, that would be a separate claim.

I'd say you can't expect the builder to ship a boat to you when you have not accepted that all the work is done. What happens if you get it on the opposite coast and say "there's too much vibration" or you find some other defect. At that point they have to ship it back, or send a crew to correct something that may not have been a construction defect.

I'd think paying upon acceptance at the builder's yard, then a separate delivery contract with insurance is logical.

Bkay said:

I agree with the comments that the contract dictates. But I see the logic in the builder requiring final payment when you "accept the vessel". That is done after sea trial and when any noted deficiencies are corrected. After you accept the vessel, they will prepare it for shipment. If there are any damages during shipping, that would be a separate claim.

I'd say you can't expect the builder to ship a boat to you when you have not accepted that all the work is done. What happens if you get it on the opposite coast and say "there's too much vibration" or you find some other defect. At that point they have to ship it back, or send a crew to correct something that may not have been a construction defect.

I'd think paying upon acceptance at the builder's yard, then a separate delivery contract with insurance is logical.

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Or secure outside financing.
Either way, only logical.

Boat builders either wont or are very reluctant to send a crew to the opposite coast.
A lot of time totally lost to the yard even if you are willing to pay time to fly over and back plus hotel and food plus parts and labor to correct a problem.
The workers could work on 2 or 3 or more boats during the "lost time" to flying.
The labor costs would be the killer.
Chances are, the builder can suggest a local yard and or craftsmen to work through your problems.

tomkallman said:

Hi... I’m buying a brand new trawler from a broker on the east coast. The boat is being built in Seattle.

The Seattle manufacturer wants the final 10% payment once the boat finishes its sea trial out west. The contract between the broker and I reads that the boat will be delivered to me in Annapolis.

I’m in a “discussion” with the east coast broker because I contend that if I’m taking delivery of the boat in Annapolis I should have some kind of “hold back” until the boat is delivered to me and I’m assured everything is in good order.

What is the “standard” of the industry? I’m sure many readers have bought boats on one coast or another that were being constructed on the other side of the the country or even the world.
Thanks in advance for any feedback.

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A couple of questions and comments. Is the boat being completed in Seattle, meaning all equipment and no remaining commissioning to be done on the East Coast? i ask because in my mind, it's not complete until it's ready for you as a customer.

If all is being done on the West Coast, then I think you should go there for the sea trial and the survey and a shake down cruise. Then get everything fixed, the punch list taken care of, before shipping to the East Coast.

Allows you to get some west coast cruising in too but the biggest thing is to find any issues where the factory can still address them, not depending on some broker or dealer to do so.

Is there a reason you cannot go to the west coast for the sea trial/survey and 'corrections' and then another survey and sea trial?

I love all the "I would blah blah blah....."

To the OP, there's a few people above that actually have some knowledge of the law and highlight the LEGAL aspect of it all. Those are the people that you need to listen to.

If you want "blah blah" it better be in the contract.

Finally, another post on which I can provide some marginal thoughts. The contract is the document to read - this controls above all else. When I bought my new boat a couple of years ago, the contract stipulated that "title and ownership" passed to me at the "dealer's location on the Closing Date" - that is when I paid the last payment on making the boat (like the earlier post said, there is no final payment!). The dealer arranged trucking the beast to Hilton Head, but I was named as the "additional insured" (or loss payee, if you will) on the trucker's insurance on the boat while it was on the tractor trailer running it to Hilton Head. I got a copy of that document before we closed. So in your case, if all else checks out, your biggest risk is loss in transit. For belts and suspenders, I also had my Geico Marine Policy in place before we Closed and it covered transit by third parties post-closing so I was super covered. You should, as well, from your insurance company since you are going to be hauling it quite a ways. I can't comment on sea trials and repairs since I don't know much about that.

The Seattle manufacturer wants the final 10% payment once the boat finishes its sea trial out west. The contract between the broker and I reads that the boat will be delivered to me in Annapolis.

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Mr. Tom K:

Are you (a) asking for legal advice on your boat build/delivery contract, or are you (b) asking to find out what is "customary" regarding final payment in new boat deliveries and sales?

(a) If the terms are not clearly spelled out in your contract, you need to consult an attorney who specializes in contracts, or a maritime attorney.

(b) Every boat builder is different in their contractual requirements. However, your contract is with the boat broker, which adds an interesting layer of potential legal jeopardy for the builder, the broker and you. Then there is the shipping aspect.

At bottom, I think the answers to both (a) and (b) are that you should Go Visit An Attorney Right Now and show them your contract. Because if every single detail, including commissioning, shipping, final payment, and repairs-after-delivery are not spelled out clearly in your contract with the broker, well then, that's not good.

All brand new boats need some kind of repair. It can be anything from ill-fitting joinery to misaligned shafts.

It's not enforceable if it's not in writing. I would sure hate to see you have to pay to ship the boat back to the builder if it has a major defect, which does occasionally happen with brand new boats.

And congratulations on your new trawler! Hopefully this can all be cleared up to your satisfaction (but get it in writing!). Please update us with what you find out about your legal obligations for that final payment, and how the sea trial and survey goes, etc.

Cheers,
Mrs. Trombley

EDIT: Just noticed the date of the original post was 10-04-2019, over 3 months ago. I hope Tom K got it all worked out.