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The Benefits Of Co-Ownership

The average trawler owner keeps his boat for around three years. Why not share the cost and work?

Sharing the Dream

As my flight takes off from Baltimore on a beautiful, sunny July afternoon, I look down and see thousands of boats docked in marinas throughout the Chesapeake region and along the entire route to Ft. Lauderdale, my destination. There are rows upon rows of boat slips full of yachts wishing they were out enjoying the warm ocean breeze, the sun, and the smells and sounds of summer. This scene is repeated all over the world at thousands of marinas with hundreds of thousands of boats. I see this and wonder why people are not out enjoying their boats. Many of these vessels hardly ever leave their slips.

The reasons are many, but as owners of vacation homes, jets, and planes have discovered, they just don’t use these things as much as they originally thought they would. These beautiful yachts often go unused for months, or even years, until they are finally, joyfully sold. Who hasn’t heard the expression, “The happiest day in a person’s life is when they buy their boat and the second happiest day is when they sell their boat”? My goal is to help you eliminate the second happiest day by making yacht ownership more affordable and less burdensome by dividing the cost and work associated with owning a boat.

The average trawler owner keeps his boat for only about three years. This occurs for a number of reasons, but mainly due to lack of use, cost, or justification for the expense and the work involved in keeping the boat maintained. So why not share the cost and work, giving you a more lasting and pleasurable experience?

Co-ownership has worked fine for me. I was a partner in two co-ownerships, and I’m now working on my third use agreement, in which I do not co-own, but get to use a boat in exchange for contributing to annual expenses and maintenance. The owner uses the boat for about two months of the year, and when it is free, I get to cruise a luxurious 60-foot trawler. This is another great way for an owner to save money.


The Wall Street Journal contains many ads selling condo and jet time-shares. Small airplane owners have appreciated the advantages of this arrangement for years and have realized something else as a result: Machines run better and last longer if they are used more often, rather than being allowed to sit for long periods. As an attendee of multiple PMM Trawler Fest events and a lifetime boater, I have looked for boating co-ownership ads or businesses, but have found very few. Yet, at almost every boat show I have attended, I have talked with people who would be interested in just such an arrangement, but don’t know where to begin finding a boating partner and/or how to structure the deal.

I found one of my past co-owners through a broker. After showing interest in a boat I told the broker that it was out of my price range, but I could afford half the purchase price. A few months later the broker found another interested party, introduced us, and—voilà—we hit it off and the broker made a sale. My other co-owner was a friend. Both of these experiences were great, mainly because we had a solid written agreement and were both flexible in our interests and scheduling. Remember, this is not an arm or a leg, it’s just a boat.

The primary advantage of co-ownership is financial, especially in this economy. Many people cannot afford their dream trawler, but when you consider dividing not only the initial expense, but also the costs associated with insurance, dockage, maintenance, and upkeep, it becomes more doable. Have you ever heard the axiom, “Two heads are better than one”? You should treat co-ownership as a business so the work portion is divided and each partner has more time to enjoy cruising. Having a partner to share new ideas and different points of view is a great benefit as well. Unless you want a boat to live on full time or use every single weekend, co-ownership might be of interest to you. In addition to sharing the workload, if the boat is used more often, the machinery usually runs better, the bottom stays cleaner, and the fuel is less likely to become stagnant. And that pungent, musty smell associated with a closed-up boat will also be decreased.

There are other issues to consider when thinking about a co-ownership arrangement. You must first get over the psychological aspect of sharing a boat—overcoming this hurdle is a major step to becoming co-owner material. However, many of us have owned condos or vacation homes and have rented them out to others when not in use. Why not bring that attitude over to your trawler?

If you and your co-ownership partner are still shopping, there are many factors to consider, such as make, size, price, features, engine size and number, and all of the things that attract you to a particular boat. You will probably never find the boat and exact features you both can be 100-percent satisfied with, so you might have to give and take a little. Cooperation in the co-ownership purchasing decision will only carry over to other decisions later.


You really need to know your co-owner well before jumping into this relationship. It is a form of marriage and you don’t want to end up in divorce court! Both sides must learn to compromise and avoid arguments over the little things. If you and a potential co-owner haven’t been friends for years, you need to get to know each other well and spend time together before moving forward. You want someone who will treat the boat with the same level of care as you would.

Find a co-owner who has a similar level of boating experience. Experience can come in many forms—sailing, cruising, driving the family ski boat, seminars, certifications, licenses, Trawler Fest events, etc. You need to be comfortable with each other’s boating expertise. You also need to choose someone who wants to keep the boat in the same location(s) or has the same dreams of cruising now and in the future.

When two or more parties jointly own a boat, I strongly recommend creating a written agreement between the co-owners that is as thorough as possible and covers just about every aspect of co-ownership, including the terms listed here. After you have come to an understanding on each item, bring your written comments to an attorney to draw up a formal agreement. If you can’t agree on the terms, it’s much better to find out now rather than after you purchase your boat. Let’s get started.

Forms Of Co-Ownership. Identify the parties in the co-ownership. Are two or more individuals, spouses, or entities such as corporations and LLCs ((Limited Liability Company) forming the co-ownership? Decide how the co-ownership should be formed. There are numerous possibilities including a simple partnership, LLC, and a corporation.

An LLC is more in tune with how the boat should be held. As a hybrid entity, an LLC generally provides some of the best features of both a partnership and a corporation in terms of flexibility, limited liability, and tax treatment.

Term Of The Agreement. The length or term of the agreement is from your purchase date until one or both co-owner(s) sell their interest in the boat.

Specify The Boat And Equipment. Once you have a specific boat in mind, it must be specified in detail in the agreement listing the manufacturer, model, size, and serial numbers. Also mention the equipment, such as engines, dinghy, and navionics, as well as the items on the boat that are not included in the agreement like bikes, linens, binoculars, etc.

Selecting A Broker. If you are purchasing a new or used boat and not selling an interest in a boat you already have, do you want to use a broker to help locate the boat of your dreams? If so, whom? If the co-owners have determined what boat they want, but don’t have the particular boat picked out yet, then it might be wise to use a broker who is familiar with that make of boat.

Sea Trial, Pre-Purchase Inspection, And Haulout. When you find the boat you want, both partners must take it out for a sea trial to see how it feels and to determine if everything is working the way it should. It is certainly wise to have an expert with you during the sea trial and to inspect the boat, both in and out of the water. A number of ABYC ( experts should be at the boatyard you choose and you or your surveyor should decide which mechanics you want to look at certain items on the boat. A surveyor, accredited by the Society of Marine Surveyors (, the National Association of Marine Surveyors (, or PMM Technical Editor Steve D’Antonio ( are great sources of expertise. This inspection will undoubtedly cost a few thousand dollars, but could give you bargaining power on the final price and will allow you to discover items that need attention.

Boat Closing And Registration. The co-owners must decide where and how they want the boat registered. An attorney knowledgeable in marine sales or a broker can assist in lien searches, U.S. Coast Guard documentation, bills of sale, escrow, and tax matters.

State Sales And Use Tax. This could be costly, but if you want to keep the boat in the same location, you are probably going to have to pay it. States are becoming more and more aggressive in collecting sales tax. Also, find out whether there is personal property tax or a use tax in the state where you want to keep the boat.

Financing. I strongly recommend against co-owners financing the boat. If you do, then you will have to co-sign for each other and if one of you defaults, for whatever reason, the other co-owner will be financially responsible for the entire amount. If you need to borrow money for the boat, think of using a home equity loan or other financing.

Insurance. The co-owners must agree to keep the boat insured at all times and come to a consensus on the amount and type of coverage. There are many considerations when purchasing boat insurance, including type and amount of coverage (which will be determined by your agreed value), boat location, salvage insurance, partial loss, replacement cost (new or value of loss), liability, protection and indemnity, medical payments, personal property, uninsured boaters, towing, etc. Also, don’t forget to insure your dinghy, either as part of your boat or under a separate policy.

In your co-ownership agreement, stipulate who pays the deductible if a mishap or claim occurs. It may be a good idea to specify that the co-owner in control of the boat at the time of the accident pay the deductible. In addition, set a time limit for which the boat must be brought in for repair. Your insurance company may have a say in who repairs the boat, but in all cases you want to expedite the process. What if it is neither co-owner’s fault? Who is responsible for paying legal fees if the LLC or the co-owners are sued?

Hailing Port. The co-owners need to determine the boat’s home port not only for the immediate future, but also for the next couple of years. Take a look around together at marinas and decide where you would like to dock the boat. Determine if the marina meets both your needs for location, cost, amenities, parking, smell, and noise.

Boat Scheduling. This is one of the drawbacks of co-ownership—the fact that you don’t have the freedom to go cruising whenever you please. How do you determine who gets the boat and when? I recommend dividing the year in two-, three-, or four-week blocks with each owner getting primary use every other block. If one co-owner wants to use the boat during the other co-owner’s block of time, then just ask. The key here is communication, flexibility, and cooperation. If the boat is out of commission for weeks getting the bottom painted or maintenance performed, don’t schedule it all to be done on one co-owner’s block of time.

Leaving Home Port: How Long, How Far? This relates to both scheduling and insurance. For purposes of insurance, you might have location (latitude) limits depending on the time of the year, such as during hurricane season. And as far as scheduling, you can’t take the trawler 600 miles out and back in three weeks (or whatever your schedule period allows) unless you agree upon a one-way trip for each partner.

Authorized Operators. Who can operate or take the boat out? The co-owners must agree on who is allowed to solely operate the boat. For example, can one co-owner let his brother, child, or spouse take the boat out? What qualifications must the operator have? What is the minimum crew?

Fixed Expenses. Your agreement should stipulate that the fixed expenses be split equally by each co-owner and paid on time. There are a number of fixed expenses that you could incur even if you never move the boat out of its slip—insurance, dockage, LLC franchise tax, registered agent fee, use tax, personal property tax, just to name a few. I suggest initially paying boat slip fees, insurance, and any other known ongoing expenses a year in advance. This eases the pain, at least for a year, of financial worry in case the other co-owner falls upon difficult times. In addition, discounts are often given for an entire year’s payment.

Operating Expenses. Fuel, oil, oil changes, maintenance, repairs, and home port electrical usage are just a few ongoing expenses you will incur. Are these costs equally shared or proportional to usage? Maintenance—do you do it, get a local car mechanic, or use an ABYC-certified marine mechanic?

Log Book. Every boat should have a log book to keep track of maintenance and operations. It should be a hardbound book with the boat’s name on the cover, registration information in the front pages, and have no removable pages. Divide it into two sections, Operations and Maintenance, and keep it in the pilothouse in a readily available location. Each co-owner must commit to updating it regularly.

Expenses. Do you keep a separate bank account for expenses or do you pay your pro rata share individually as you go? How much can an owner spend without the other co-owner’s authority? How will you handle expenses when big-ticket items need repair or replacement? How much is one co-owner authorized to pay without the other’s approval? Today, with the Internet, texting, and cell phones, one is almost never out of touch, so keep each other informed!

Upgrades/Replacements/New Items. How will you deal with upgrades, replacements, or the purchase of a new major-expense item on the boat? Suppose one of you wants to add, replace, or repair an item and one doesn’t? Again, this is a give-and-take situation and another good reason to attend a major boat show together prior to purchasing a trawler. Look at every gizmo before forming the co-ownership to ensure that you are compatible. If one of you really wants an item and the other doesn’t, can the partner purchase the item and have it installed at his own expense?

Operate In Accordance With The Rules Of The Road. In addition to the COLREGs (International Regulations for Preventing Collisions At Sea), operate the boat in accordance with state and local laws, the insurance contract, and the boat and equipment operating limitations. This should go without saying, however, it should also be in writing. It is always a good idea for co-owners to have a USCG license, if possible, or at least have passed the written exam. Insurance companies usually offer a discount if you have it, and more importantly, it gives you a better understanding of safely operating on the waterways.

Use For Legal Purposes Only. You should state in the agreement that the boat can not be used for illegal purposes or the transportation of illegal substances. An attorney familiar with maritime law will assist in this and other legal phraseology associated with any co-ownership agreement.

Commercial Purposes. Do you want to use the boat for commercial purposes such as for charter, rent, lease, or as a hotel, motel, or bed-and-breakfast? Or is the boat only for the private use of the co-owners? Ensure that this is addressed in the agreement because commercial situations will result in the boat being used much more often and by inexperienced boaters who might damage property. Your insurance policy may restrict this kind of activity.

Pets. Are pets allowed on the boat and, if so, how many and what size?

Smoking. Smoking leaves a long-lasting signature on a boat, as in any enclosed space, and should be addressed in the agreement if you want to allow it or not.

Boat Cleanliness. Discuss what condition of cleanliness the boat should be in after use and in preparation for the other co-owner. This could include pumping out the holding tank, items left refrigerated or in the freezer, ice maker, linens, trash, vacuuming, sweeping, overall washdown, etc. Do you have a cleaning service or will you do it yourself?

Co-owner’s Responsibilities. There are many duties associated with owning a big boat and it is a good idea to divide these duties between the co-owners. For example, one co-owner may be better suited to dealing with maintenance and technical aspects and the other may be better in the areas of finance and insurance. However, remember to always consult with the other co-owner and keep each other informed.

Books, Records, And Documents. One co-owner should have primary responsibility for maintaining complete business and accounting records of all co-ownership affairs. It is best to keep records on an Excel or other accounting spreadsheet that can easily be shared via email. Additionally, one co-owner should be responsible for safekeeping all registrations, certificates, bill of sale, or any other documents relating to the sale, purchase, or registration of the boat and any major purchases.

Payments. Boat ownership costs money and time, and after the initial boat purchase, there are still more expenses to come. As the boat gets older and the newness wears off (and believe me it will), the boat will require repairs and additional TLC to keep it in Bristol fashion. The co-owners must continue to meet their financial obligations. What if one partner doesn’t step up to the plate? This question can be a tough one and has been known to break up many a marriage and co-ownership, so spend some time in advance working through as many contingencies as possible

Pre-existing Ownership. If you begin your co-ownership with one partner already owning the boat, be sure to stipulate that the original owner indemnify the new co-owner for all pre–existing obligations. If the original owner had any liens or owes any payments on the boat, he must have them released and/or paid prior to commencement of the agreement. The new co-owner must be provided copies of any existing contracts the original owner may have, for example, marina contract, charter contract, boatyard contracts, cleaning contracts, etc.

Sale Of The Boat. Do you want each co-owner to have the right of first refusal? Co-owners should discuss a buyout of their interest in the boat up front. For example, if you purchased a new boat you might tentatively agree to sell your share to the other co-owner for 10–20 percent less than the purchase price after one year, and 5–10 percent less each year thereafter. This should include the value of major items added to the boat such as dinghy, liferaft, safety equipment, etc. Or you may want to engage an independent broker to quote you a price of what the boat would realistically sell for in today’s market. Or maybe use a combination of these two ideas because what is true of the market this year may not be true in two years.

Suppose one co-owner wants out of the co-ownership agreement and the other co-owner doesn’t want to purchase his share? Does the co-owner who is keeping his share have the right to approve the new buyer? What if one owner walks away because of health, death, loss of income, or loss of interest? If you both want out of the boat, sell it and divide the proceeds 50/50.

Death Of Co-owner. This is a possibility and should be covered. You don’t want half of the boat tied up in probate for years with beneficiaries fighting over the boat and terms. Also, covering this in the original agreement will make it easier for the surviving spouse.

Arbitration. If all else fails and the two co-owners cannot settle a dispute, I recommend each side agree to binding arbitration rather than filing suit. It will save you both time and money in the long run and keep the boat from being tied up for years in a civil law suit. You should use an arbitrator that is familiar with maritime law and who resides in the same state that the boat is registered.

Restriction Of The Co-owners. The partners and attorney may want to agree to restrict certain other actions that might jeopardize the co-owners and/or the co-ownership assets such as assigning, pledging, borrowing, selling, or transferring a co-owner’s equity in any of the co-ownership assets without the consent of the other co-owner. This may be addressed in the co-ownership agreement or if an LLC has been formed, in the operating agreement. This is a very important section.


Co-ownership is not for everyone, but it is a great way to afford a nicer boat, as well the ongoing costs associated with owning a boat. Once you become comfortable with the idea of sharing a boat, you are well on your way to enjoying years of boating pleasure with less expense and fewer chores. And best of all, the boat will be happier and work better over the years if it is exercised often.

The co-ownership agreement will take substantial effort but could save you hours of grief later and keep your friendship and co-ownership going for many years of smooth sailing.