Contingencies in a Purchase & Sale Agreement

[long-cours.62]

I have a question concerning broker and "offer".
I saw a smaller boat who can partially fulfil what we are looking for our next boat ( smaller, smaller engine...).
The broker propose to us to take an "option" on her.
And wrote as condition something like : " if my actual boat will be sold" ( of course with all habitual reserves).
He said it is possible to doing that in USA !? I don't know.
It is a well fame big broker company, but before go further, i ask here

 

[O C Diver]

I have a question concerning broker and "offer".
I saw a smaller boat who can partially fulfil what we are looking for our next boat ( smaller, smaller engine...).
The broker propose to us to take an "option" on her.
And wrote as condition something like : " if my actual boat will be sold" ( of course with all habitual reserves).
He said it is possible to doing that in USA !? I don't know.
It is a well fame big broker company, but before go further, i ask here

Yes, you can put your boat selling as a condition of buying the next boat. May not be accepted though.

Ted

 

[Shrew]

They referred to as 'Contingencies'.

Such as ....

Subject to satisfactory survey
Subject to satisfactory Sea Trial
Subject to Financing
Subject to obtaining suitable insurance
Subject to sale of current vessel
Subject to obtaining a slip or mooring
Subject to clean and clear title (no liens or encumbrances
Subject to sale completion by <date>

You can ask for anything you want. There is no guarantee they will accept the offer with the contingency.

 

[Diep]

Think through the mechanics a bit before you decide what to do. Suppose you offer on this vessel and it is accepted. You proceed through survey, sea trial and final negotiations. If your vessel hasn't sold, now what? It is very unlikely the seller will have agreed to hold their vessel off the market indefinitely. If they sell it to someone else after some agreed period you have lost your opportunity to buy as well as the time and expense invested in due diligence.

To me is it might be a reasonable contingency if your vessel is already under contract or you otherwise expect to sell it very quickly.

 

[DDW]

There is almost always a time limit on contingencies. The seller would be foolish to agree without it. If you and he are happy with the time limit then no problem. In other property, there is a thing called an option, which involves you paying the seller some amount of cash (not refundable) to give you the right to purchase at an agreed price for a certain amount of time. If you choose not to exercise the option, for whatever reason, he keeps the money. Often the option cost is applied towards the purchase price, if the purchase proceeds.

 

[tiltrider1]

Usually when this is done there is not only a time limit. The seller is usually free to accept a full price offer with no contingencies. Meaning, if some one made a full price offer with no survey or financing requirement the seller has the right to take that offer.

If you go this route you will need to carefully understand what you are offering. Will you be sacrificing your deposit if the time limit is reached, what are your outs, what are the sellers outs?

 

[long-cours.62]

Thanks all for your precision.
- "normally" our boat will be sold before the end of this year
- the seller propose that to us " subject to sale of the current vessel".

Thanks again and we will see