Common Issues With Buying and Selling Used Boats

In other articles, notably Three Mistakes to Avoid When Selling Your Boat, and the companion article, The Seven Deadly Sins of Boat Buying, we have discussed some of the pitfalls of buying and selling recreational boats in South Carolina. In addition to these topics, we wanted to briefly discuss today the importance of having good legal advice regarding the provisions of your purchase contract.

As the prices of new and used vessels continue to climb and the risks associated with uninformed decision making in these transactions increases, we are more often contacted by buyers and sellers for assistance. Although many view the purchase and sale of a boat as a routine transaction for which legal advice is not necessary, it makes sense for many of these buyers and sellers to consult with an attorney familiar with the intersection of state laws and maritime laws related to these sales and their associated transactions. 

One of the most common issues that we see in the sale of used boats between private parties is that buyers and sellers who are savvy enough to realize that they need a purchase agreement think that any agreement will work. Many people who end up downloading something off of the internet think that a canned contract dealing with the sale of a boat is acceptable. In reality, however, many of these contracts contain provisions that are wildly out of sync with the expectations of the parties to the sale.

Although contracts for the purchase and sale of vessels in South Carolina are generally governed by state law, the contract itself can, and often does, dictate which state law applies and in what forum any dispute over the contract will be decided. Because state laws related to the sale of goods, including boats, varies from state to state, it is often best for buyers or sellers in South Carolina to use a contract that applies South Carolina law and provides for the resolution of any disputes in a South Carolina forum.  It is also good to address any express or implied warranties using state specific language to either confirm or disclaim them, depending on the expectations of the parties to the transaction. An agreement providing for interpretation under Florida law or the law of New York may mean something far different than the exact same agreement being interpreted under South Carolina law. And many South Carolina sellers who agree to resolution of disputes in an out of state forum would be both surprised and disappointed to be required to answer a claim there if something went wrong with the transaction.

Another fairly common issue is that, although the purchase contract itself is governed by state law, there are many issues that are incidental to a vessel purchase that are governed by maritime law, or both maritime law and state law. One such issue that comes up in many transactions is the question about whether there are liens on the vessel at the time of sale that will need to be resolved. Those familiar with lien resolution in real estate or other landside transactions may think that quick reference to government title and lien registration indices would resolve this issue quickly enough. However, many maritime liens arise as a matter of law upon the occurrence of certain circumstances and require no registration or recording to make them valid. In essence, they are secret liens which follow vessels through most transfers in ownership and may subject them to arrest or attachment for enforcement of the lien. It is important to understand the risks and responsibilities surrounding these liens when buying or selling a vessel and for the contract to clearly set forth the responsibilities of the parties in dealing with such liens if they exist or are discovered after the transaction has closed. 

These are just a couple of the more prevalent issues that we see in vessel purchase and sale contracts. For these, and many other, reasons, it is important to either take the time to educate yourself on the implications of buying or selling a boat without representation or to find someone knowledgeable to help you with your transaction. 

More next week on The Admiralty Docket. Until then, remember, your rights and responsibilities may change as you approach the shore and may God Almighty grant you pleasant sailing.

Disclaimers – The rules governing the professional conduct of lawyers mandate that we let you know the following information to prevent any confusion or misunderstandings about the content of this article:

The above information is provided for the reader’s general knowledge only and is not intended to be legal advice for anyone’s particular situation. The law is ever-changing, and different circumstances may require the application of different law or result in the above guidelines being irrelevant. If you have legal questions related to this content, you should consult an attorney of your choosing for advice regarding your individual situation.

Each case that we work on is different, and successful results that we may discuss related to cases that we have handled in the past do not mean that similar results are necessarily achievable in future cases that we may handle.

John Townsend Cooper is the attorney responsible for this content. His office is located at 1476 Ben Sawyer Blvd., Mount Pleasant, South Carolina 29464.