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Is a Lawyer Necessary for a Big Boat Purchase?

We are preparing to make an offer on a fairly large boat, and I am concerned that I may be overlooking some of the legal issues associated with the purchase. Our broker seems pretty knowledgeable, but he’s obviously not a lawyer so he may be overlooking something too. We have purchased several homes over the years without hiring an attorney, but real estate transactions seem a lot more standardized than the boat purchase process. The cost of this boat will be similar to the cost of our home, so we really want to do it right. Should we hire a lawyer?
I’m sure I don’t need to point this out, but if you ask a lawyer for advice on whether you should hire a lawyer, the answer will be pretty obvious: Yes!

Seriously, though, this is a legitimate question. For many boaters, the purchase of a boat will rival the cost of their home. But the process of buying a home is familiar and routine when compared to a boat purchase, and many of the issues that face the buyers, sellers and brokers of real estate simply do not apply to a boat purchase transaction.

For example, the law in California (and most other states) requires the seller and the broker of a home to disclose any information about the property that might be relevant to the sale or to the condition of the property. There is no similar requirement for the sellers of a used boat to make any disclosures, so long as they don’t fraudulently conceal anything.

The purchase of a boat also differs from a real estate purchase in many of the procedural steps that are not governed by law. For example, very few licensed escrow companies are qualified or experienced with boat purchase transactions, and as such, it’s almost impossible to escrow funds on a boat purchase through a licensed escrow agency.

In California, licensed yacht brokers are authorized to maintain trust accounts to escrow funds, but this is a problem in other states, since California and Florida are the only states that have a broker licensing program. And it is also a problem in California for private party purchases that proceed without a broker.

Similarly, buyers in real estate transactions rarely worry about claims against the title to the property, because virtually all real estate purchases are covered by title insurance, and because any claim against the title must be recorded with county recorder’s office. This is not the case with boat purchases. A maritime lien may be valid without recording it anywhere, and title insurance for boats is not currently available for purchase from any insurance company.

Perhaps most important to this discussion, almost all real estate transactions in California are conducted using the form contracts created by the California Association of Realtors. The California Yacht Brokers Association (the CYBA) has a very good set of forms available for use by their members, but those forms are used by only around half of the brokers in California.

Form contracts, whether for real estate or boat transactions, have been developed over many years by the attorneys who work with the organization, and the forms have been tested many times in court. A transaction that is not covered by a form contract may have been pieced together by the broker from various other contracts. The language of these contracts is often so ambiguous that litigation is almost certain to follow if there are any problems at all with the transaction.

So, with all of these concerns, do you need to hire an attorney to buy a boat? You should certainly consider it if you have concerns about any of these issues during the course of the transaction. However, an experienced yacht broker — particularly a broker who is a member of the CYBA and uses its forms — will be qualified to guide the buyer and seller in most transactions. The best brokers are also qualified to spot red flags in a transaction that may lead to legal problems, at which point they will refer the clients to a qualified maritime attorney.

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One thought on “Is a Lawyer Necessary for a Big Boat Purchase?

  • Ethan Wilde

    As a recent party to a transaction using the CYBA contract I can say is refuse all clauses that waive broker of responsibilities or you may end up with a boat without title papers. The CYBA contract explicitly protects the brokers from their failures and leaves the buyer and seller to duke it out when broker fails.



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