Would you buy without a contract?

[krouth]

We are in a dilemma and need advice.

We put an offer on a boat, which was accepted. The offer letter was basically just that - a one-page form that had our names (the buyers) and the brokerage, but nothing about the sellers. It had our offer price and basic stipulations that it was pending a survey/sea trial/etc. Again, just a one-page, pretty plain document.

After negotiation on price, we arrived at an agreement with the seller (via the broker) but we have nothing in writing, other than a string of texts between us and the broker with our final offer price and a reply that it was accepted.

As such, I contacted the broker this morning asking for a contract to be drawn up using a standard industry Purchase & Sale agreement but the broker was hesitant. The broker reached out to the sellers who responded that they would not sign a contract because if a better offer came along they wanted to be able to take that instead of ours.

Any thoughts or experiences you can share would be greatly appreciated!

 

[Tingum]

Walk!

 

[Comodave]

Well, you have a deal in name only. Nothing to back you up on. I would not proceed with this deal. You could pay for a survey and then the seller backs out and you are out in the cold. I would tell the broker that you want the deal in writing or else you will withdraw the offer. I had this same thing happen to us last year when we were boat shopping. An ethical broker doesn’t do business this way. But if you really want the boat, roll the dice and take the chance. It all depends on your desire for this particular boat. Anyway, good luck hope it works out for you.

 

[DavidM]

Walk!

What he said

What if you spend hundreds, maybe a thousand dollars on a hull survey, engine survey, sea trial and the seller says "Sorry, I just got a better offer."

And shame on the broker for taking on a client who wants to work that way.

Find another boat and never do business with that broker.

David

 

[Shrew]

I would not spend a penny on a survey. This is the entire point of a P&S. What you have is a very thin offer and a verbal second hand acceptance (the buyer didn't accept. The broker 'said' that the buyer accepted).

You can start the survey process and they could enter into a binding contract with another party. The broker should know better.

 

[Shrew]

Does the P&S you signed have a time contingency on the offer itself? (e.g. Offer valid until 'n date')? If not, I'd rescind the offer in writing to the broker. The seller could sign your contract at a later date. The survey and se trial contingency should be enough, but you're also sending the broker and the buyer a message.

 

[Bacchus]

I would ask to speak directly with the owner and see if that was really their response or translated by the broker. The broker should be educating the sellers and if they are both stubborn and stupid I'd pass.

 

[O C Diver]

Walk! You have nothing without a contract.

Ted

 

[ranger58sb]

As such, I contacted the broker this morning asking for a contract to be drawn up using a standard industry Purchase & Sale agreement but the broker was hesitant. The broker reached out to the sellers who responded that they would not sign a contract because if a better offer came along they wanted to be able to take that instead of ours.

What if you spend hundreds, maybe a thousand dollars on a hull survey, engine survey, sea trial and the seller says "Sorry, I just got a better offer."

Typical cost components of a buying trip:
- air travel
- rental car
- hotel
- marine survey
- mechanical survey
- travel lift

That could add up to some serious beer money, and if the seller backs out after you've spent all that... you could thirst to death.

-Chris

 

[krouth]

Thank you to everyone for your replies! It definitely seems like this not the "normal" way of doing business - which is what I was trying to confirm. All of this is new to us so we wanted to make sure we weren't just being "sticklers"!

We have notified the broker of our decision to rescind our offer so we'll see where this goes from here!

Thanks again to all who replied!

 

[slowgoesit]

Krouth, am I correct in the broker submitted your offer to the seller's NOT USING a P & S agreement?
Also, is the broker the seller's broker, or a buyer's (your) broker?
Either way, a professional, ethical, and responsible broker would have used a P & S, with included provisions, such as "subject to inspection, survey, obtaining insurance, etc, to extend the offer to the seller's, and would NOT have told you, the perspective buyer that the offer was accepted until he had the P & S (signed by the seller's) physically in his hand.
Any other behavior on the part of the broker is neither professional, ethical, or responsible.

If the broker is your broker, fire him and find another broker.
If the broker is the seller's broker, fire him and find another broker, or walk on the deal.
Best of luck!

 

[FWT]

"The broker reached out to the sellers who responded that they would not sign a contract because if a better offer came along they wanted to be able to take that instead of ours."

You are lucky. Because you reached out and asked, they told you they do not plan to act in good faith.

You don't need to wait for something worse to happen with the deal. They told you what kind of people they are. Believe the first time.

Good decision to walk.

 

[twistedtree]

I completely agree with the sentiment others have expressed, but I wouldn't just walk. I would give them an opportunity to correct the situation.


I would draft your offer in the form of a standard contract and present it to them. That's how I've always seen it done. And that contract should obligate the seller to sell the boat to you at the agreed price unless you reject the boat after survey and inspection, or otherwise fail to perform to your obligations. The contract basically "reserves" the boat for you so you don't spend a bunch of time and money on survey and inspection only to have the rug pulled out from under you. Politely respond back that you can only proceed with the contract signed by both parties. You broker should also convey to them that any other offers coming down the line will be in the form of a contract too, so they might as well get used to the idea.


If you do a search you should be able to find examples of brokerage association's contracts. All I have seen take largely the same form with the same terms. In a nut shell:


- Price is agreed on
- Brokers are named.
- Closing date is set
- Buyer has opportunity to survey and inspect. Be sure to give yourself enough time. This is your blanket opportunity to "reject" the boat and get your deposit back, but there will be a time limit, after which the boat will likely be automatically accepted by you.
- It's common for issues to be surfaced during the survey and price adjustments made. But keep in mind that if he has other offers in the wing, he's not likely to negotiate, especially if those offers are higher.
- Once you "accept" the boat, you become obligated to buy it.
- Throughout the process the seller remains obligated to sell to you at the agreed price and cannot sell to someone else.
- If you reject the boat, then the deposit is returned to you and the seller can accept any other offer.

 

[Rufus]

Could be that the seller didn't understand or anticipate, the survey/sea trial contingency, which of course, is not a hard and fast requirement. Yes, it's common practice, but the current seller's market is uncommon.

 

[O C Diver]

My only dilemma if I were the OP, would be if a week from now the broker calls saying the owner will now write a contract. Just don't think I could trust anything the owner says. Never bought or sold a boat that I felt I couldn't talk to the other person if their was an issue to resolve, a license to transfer, or a question on some system.

Ted

 

[bowball]

You should also pay a deposit. A contract needs consideration from both parties in order to be deemed valid. The sellers consideration us an agreement not to sell it to someone else during the time period. There is also estoppel through reliance, but that’s pretty weak.

 

[krouth]

Krouth, am I correct in the broker submitted your offer to the seller's NOT USING a P & S agreement?

You are correct. The initial (and only) "contract" we ever saw was a single-page generic write-up with general terms of the offer - but no dates of any kind and nothing like a typical P&S agreement.

We even asked about it because another boat we looked at had us sign the P&S before anything moved forward. (We ended up passing on that one because it had significant work the previous owner started but didn't finish - which wasn't disclosed in the online descriptions.)

Any yes, we walked....so the search continues!

 

[krouth]

I completely agree with the sentiment others have expressed, but I wouldn't just walk. I would give them an opportunity to correct the situation.

Thanks for the reply - but the broker was very adamant that the sellers were not willing to sign any contract. They even told the broker they wanted to keep their options open if a better offer came in before closing. I all but pleaded with the broker to get them to agree to a contract - to protect ALL the parties. But they wouldn't do it so we're moving on. Thanks again!

 

[krouth]

Could be that the seller didn't understand or anticipate, the survey/sea trial contingency, which of course, is not a hard and fast requirement. Yes, it's common practice, but the current seller's market is uncommon.

I don't think so because the initial offer letter (the one-page document) clearly stated that the sale would be dependent on a hull survey, diesel engine survey and sea trial. But again, the broker said the seller outright stated they wanted to keep their options open in case a better offer came in before closing - and that was why they would not sign a P&S agreement.

You should also pay a deposit. A contract needs consideration from both parties in order to be deemed valid. The sellers consideration us an agreement not to sell it to someone else during the time period. There is also estoppel through reliance, but that’s pretty weak.

We actually did put a deposit on the boat - 10% of our original offer. At this point I am just hoping that the refund goes smoothly and this doesn't get ugly. Fingers crossed!

 

[BruceK]

As I understand it, the Sellers accepted your written offer. Was it subject to the parties entering into a formal agreement? If not,(without seeing it) isn`t that an agreement? Did it stipulate how they had to accept?
You then paid a deposit which they accepted?
Seller then indicates they don`t regard themselves as bound. A Repudiation? Accepted by you, you then walked.
Beware this Seller may want their cake, and to eat it too. I hope the deposit comes back pronto.

 

[twistedtree]

Who’s holding the deposit?

 

[krouth]

The money is in escrow per the original agreement. I have written confirmation from the broker that the money is in escrow and will be refunded tomorrow. Patiently waiting!

 

[BandB]

other than a string of texts between us and the broker with our final offer price and a reply that it was accepted.

As such, I contacted the broker this morning asking for a contract to be drawn up using a standard industry Purchase & Sale agreement but the broker was hesitant. The broker reached out to the sellers who responded that they would not sign a contract because if a better offer came along they wanted to be able to take that instead of ours.

Any thoughts or experiences you can share would be greatly appreciated!

Ok, there's a major conflict between statements and broker either lied or seller changed mind. Note that you said you had no contract, just a string of texts saying the offer price was accepted. Well, texts are just as much contract as anything. However, then seller said he reserved the right to change his mind, meaning broker mislead you by saying your offer was accepted.

So we have written offer through text, statement from broker saying the seller accepted it, statement then from seller, saying not necessarily. I'd go after the broker with all I had, but absolutely would go no further with deals made and then unmade. Extremely unethical and either broker lied about acceptance or seller change mind. If it's in FL or CA, I would report the broker. Furthermore, the first document comprised a contract and that's what you made a deposit with. I'd demand it back immediately and show no tolerance.

Now, your only (and very minor) mistake, not insisting on standard contract from beginning.

 

[mvweebles]

Tribe is uncharacteristically unanimous on this one. Only thing I can add is issue is not just the contact, but a bad seller. Even if the contract issue gets resolved, something else will arise with the seller. As the saying goes "the worst dogs have the most fleas. "

Peter

 

[SoWhat]

I might buy a $2000 dinghy with a verbal 'contract' but I want a signed written contract before any serious money is put on the table. It can be a simple one page contract, but I want a signed contract. The ocean is full of sharks.

 

[Rufus]

As I said earlier, it sounds like there was verbal and email negotiation with the broker in the middle. The sellers probably thought they had a simple, quick sale. Then the contract document shows up with the contingencies...engine and boat surveys and sea trial. Whoops....wasn't planning on that, and the broker never alerted them to expect it. It's a seller's market, and they want a quick deal. I suspect a contract without contingencies would have been acceptable...an allotted time to get the money together and that's it.

The survey contingencies always make me nervous when I think about selling. Not because there's anything significant wrong with our boat, but because surveys can turn into negotiating weapons over piss ant issues that consume time and effort. I wouldn't jump to the conclusion that the sellers are bad people. I'm guessing the broker just failed to keep them informed.

We used the last insurance survey and a personal inspection when purchasing our boat. No surveyor. The sea trial was a 20 minute spin on Lake Travis with the seller...mostly to check out the autopilot. I did have an oil analysis done on the engines. No contract with contingencies. No regrets.

 

[krouth]

As I said earlier, it sounds like there was verbal and email negotiation with the broker in the middle. The sellers probably thought they had a simple, quick sale. Then the contract document shows up with the contingencies...engine and boat surveys and sea trial. Whoops....wasn't planning on that, and the broker never alerted them to expect it. It's a seller's market, and they want a quick deal. I suspect a contract without contingencies would have been acceptable...an allotted time to get the money together and that's it.

The survey contingencies always make me nervous when I think about selling. Not because there's anything significant wrong with our boat, but because surveys can turn into negotiating weapons over piss ant issues that consume time and effort. I wouldn't jump to the conclusion that the sellers are bad people. I'm guessing the broker just failed to keep them informed.

We used the last insurance survey and a personal inspection when purchasing our boat. No surveyor. The sea trial was a 20 minute spin on Lake Travis with the seller...mostly to check out the autopilot. I did have an oil analysis done on the engines. No contract with contingencies. No regrets.

Thanks again Rufus, but as I stated in my original question (post #1) and also in my reply to your initial response (post #19), the initial offer agreement (not a P&S) had our offer price and basic stipulations that it was pending a hull survey/diesel inspection/sea trial/etc. Again, the surveys/sea trial/etc. were known up front by all parties before any negotiations began.

So I am not sure why you keep repeating this. I'm glad your transaction worked out for the best but based on the replies and experience of the other members on the forum, having a P&S is the industry norm and a refusal to have one is not only an outlier, it is a red flag.

It seems a P&S should have existed from the very beginning with our initial offer. Not requesting one was my fault due to not understanding the process. But I learn something new every day! ? Thanks again!

 

[Rufus]

I read your initial post to say there was verbal back and forth regarding price. After a price was agreed upon the broker sent the offer letter which included reference to surveys and sea trial. If the verbal discussions included reference to those contingencies and a P&S, then I see your point. That said the seller pretty clearly wasn't interested in further negotiation regarding survey and sea trial reports. They saved you the trouble and expense up front. I don't see a red flag at all. I'm obviously an outlier with a general distrust of entire industry standard process. I'll sell our boat myself when the time comes.

 

[Moon]

Insist on a written p&s contract!

As a maritime attorney with over thirty-four years of experience and someone that owns, has owned and has sold several vessels you need to steer clear of a "deal" without a P&S agreement. The IYBA P&S agreement is very good. Most, if not all brokers, will insist upon it as it protects their rights as much as it does the parties. Text messages do not create a contract. They can demonstrate intent but little more. There are plenty of good yachts coming to market soon. Find a good broker and narrow your search. When the right yacht comes along that meets your criteria you will be able to consider a purchase. Losing time and money chasing a dream that may not come true is a bad idea. I have had too many people contact me after the "deal" goes bad to count. I rarely agree to represent them because I cannot ask them to waste more money on a losing cause. No contract means no rights or remedies 90% of the time.

 

[Sleepy]

Walk and stay clear of that broker and his company.