Sales Contracts

A written agreement will eliminate or minimize questions and problems that could later turn a sweet deal at the dock into a sour one in court. By spelling out the obligations of the buyer and the seller, as well as the time frame in which the sale is to take place, you have a legally binding, written document of the parties' intentions.

It's not necessary to have a lawyer write the contract, although this should be considered, especially if you're buying a high-ticket boat or are having one custom-built for you. Most dealers use contracts printed with their name and address, but "fill-in-the-blanks" contract forms found in stationery stores or online will suffice for private sales. (Or click here to download the BoatUS Purchase Agreement.) A handwritten agreement will also serve the purpose. Regardless of the form, both parties must sign the contract. If the sales agreement requires the signature of both the salesperson and an officer of the dealership, make sure both spaces are signed.

If you're buying from a broker, the sales contract will usually be standardized. But that doesn't mean you shouldn't carefully go through it and make sure that such items as tankage and engine hours are filled out accurately. The broker's information is only as good as what the seller provides.

Basic Contract Terms

Sales agreements or contracts should include the following minimum information:

• Complete names and addresses of buyer and seller

• Complete description of boat and engine, including make, model, year, hull-identification number (HIN) and engine serial number(s). New boats will come with a Manufacturer's Statement of Origin, something you will need to register the boat. A complete equipment list is a must. If there's a trailer, include its serial number, as well.

• The purchase price, including a description of any deposits paid by buyer and how the balance will be paid (for example, certified check). It should also describe the trade-in boat, if any, and its exact value. Most states require the trailer to be registered with the motor vehicle agency, and usually require tax to be paid, just as it would with a car. It's wise to separate the trailer value from the boat on the contract to make this easier.

• A firm delivery date describing when and where the boat will be delivered and the deal finalized

• The boat's condition at the time of delivery, including a complete list of the accessories and items that convey with the boat

• A full description of any warranty from the dealer or manufacturer. When boats are sold in "as is" condition, recourse may be impossible if problems arise.

• Buyer's contingencies: Spell out that the sale hinges on a satisfactory survey and sea trial and the ability to obtain acceptable financing and marine insurance.

• A statement that the boat is free of all liens and encumbrances

Finance

Financial institutions often consider boats to be luxury items, so the application process is more like buying a house than buying a car. As part of the underwriting process, many lenders will ask for a personal financial statement along with tax returns. For used boats, a tax return is often required. Terms up to 20 years with down payments between 10% and 20% are common, but rates and terms can vary depending on the age, size, type, and use of the boat. It's a good idea to talk with prospective lenders before filling out a loan application.

On a new boat, lenders need the Manufacturer's Statement of Origin. It certifies that it has had no other retail owner. With used boats, lenders check for a clear title or record of ownership. For larger boats, lenders usually require marine-insurance coverage and federal documentations as conditions for loans.