Ask The Attorney

Should I Release My Broker from Liability for His Surveyor Recommendation?

I made an offer on a boat and am trying to locate a qualified marine surveyor in connection with the purchase. My yacht broker gave me a list of three surveyors, but none of them are available to inspect the boat before the deadline set forth in the purchase contract. The broker is reluctant to refer me to a fourth surveyor, so he has asked me to sign a release to hold him harmless if he refers me to a surveyor who overlooks something. The entire process seems more complicated than it needs to be. Should I sign the release?
Yacht brokers are in a tough position when it comes to recommending a marine surveyor. On the one hand, their clients look to them for expertise and counsel in all matters relating to the purchase of a boat. On the other hand, clients may want to hold their broker responsible for any problems relating to the purchase. And, since an undiscovered defect in the boat’s condition may lead to thousands of dollars in repairs, the recommendation and selection of a surveyor can be particularly tricky.

Surveyor recommendations are complicated by the fact that surveyors are not licensed by any government agency. We discussed surveyor licensing in a previous installment of this column (“Ask a Maritime Attorney: Marine Surveyors Don’t Require Licensing,” The Log, July 26, 2007), and we noted that it may not be practical to license surveyors because of the wide range of services they provide.

In fact, the pre-purchase inspections that are familiar to the yachting community comprise only a small part of the marine survey industry. Many surveyors work exclusively in marine insurance investigations, commercial voyage consulting, inspection of large commercial vessels and testifying as marine experts.

Due to this lack of government oversight, many people look for a surveyor who is a member of either the National Association of Marine Surveyors (NAMS) or the Society of Accredited Marine Surveyors (SAMS). These trade groups assist their members in maintaining a high standard of professionalism, but membership is not mandatory and a qualified surveyor may choose not to join either organization.

In practice, a referral to a marine surveyor will be based on the surveyor’s reputation in the community and upon the experience of your yacht broker with that surveyor. That’s not much to go on. A referral from a broker is, therefore, a good starting point — but a buyer should never follow this kind of advice blindly.

Ask your broker to explain why he is recommending a particular surveyor. What are the surveyor’s qualifications? A red flag should go up if the broker is unable to explain why he or she has recommended the surveyor.

How often has that surveyor worked with the broker? If a surveyor has worked with a broker on an extraordinary number of deals, they may be too closely connected for the surveyor to be truly objective.

Similarly, after choosing a surveyor, the buyer should be fully involved in the inspection process. A buyer pays good money for an experienced professional to inspect the boat, and most surveyors are happy to walk the buyer through the entire inspection process. In short, a buyer should remain fully engaged in the purchase process.

In the transaction described by our reader, the broker has asked the buyer to sign a release, to protect the broker against any claim that the surveyor failed to spot a problem. If properly drafted, this type of release will probably be enforceable, and we may see it used by more brokers in the future. 

It is impossible for us to advise the reader to sign the release without knowing more about his particular circumstances. But it may be that he is not giving up a lot by signing it. A lawsuit against a broker for negligently recommending an incompetent surveyor will be very difficult to prove, unless the recommendation was patently biased, and unless the broker’s behavior in other areas of the transaction was fairly egregious. 

In the end, the buyer’s best protection is probably to stay engaged in the process as described above, to ensure that any problems are identified before the deal closes.

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