Buying a boat, whether new or used, can be a stressful experience even when it goes well. It’s like having a custom home built, only more complicated. If you dissect the process, there are two main components: the nuts and bolts, and the fine print.
The nuts and bolts: How are you going to use the boat? The primary use will dictate whether you’re shopping for a full-displacement, semi-displacement, planing or catamaran hull. Do you know how fiberglass boats are built? Understanding construction methods is key. How about materials? Custom builds can be metal or wood with epoxy, each with their own advantages and challenges.
And then, the fine print: What is the role of the yacht broker? What are the elements of a good sales agreement? What kind of insurance do you need, and from whom should you purchase it? Then there are tax implications that happen when you leave home waters to go cruising.
The bridge between the nuts and bolts and the fine print is the surveyor, who acts as expert and boat-buying confidant, providing the information you need to decide whether to go through with a purchase and how much to pay.
Failing to think about the nuts and bolts, and the fine print, from the start of the boat-buying process can lead to years of stress and problems. There is the oft-told story of a man who fell in love with a full-displacement trawler. Then, he and his buddies would go boating, but with the slowest boat, he was always last to arrive back at the marina. He insisted on repowering with bigger motors, defying the laws of physics. The laws of physics prevailed. He took the boat’s manufacturer to court and lost again.
Don’t be that guy who wanted a fast boat but didn’t know it. Or that guy who kept his boat one day over the limit in a high-tax state because he didn’t read the fine print. Or that guy who skimped on the surveyor and overpaid for a boat that was actually a money pit. —Peter Swanson
THE PSYCHOLOGY OF BOAT BUYING
Unlike a car or a house purchase, for which most of us have enough experience to know what we need and can afford, a boat purchase involves a bewildering array of trivial and significant choices.
First, take a careful look inward to determine what you really want to do with a boat before you start shopping. Realize that, as with puppies, you can fall in love with a boat online or at a show, making your decision emotional instead of orderly. Buying a boat is a business decision. Be realistic about your goals, capabilities and finances. These will change over time, so search for a boat to suit your immediate needs rather than a remote dream.
Make lists of your intended uses. Separate those that happen occasionally from those that happen often. Make more lists, this time of range, speed, amenities and other features you’d like to have. List hard constraints: draft, dockage, acquisition cost, operating costs. Make yet another list, this time of preferences: style, propulsion options, interior arrangements.
Now, make sense of the lists. Hard constraints are just that. Try to sort the other items in order of importance to you. Place a high priority on those that affect how you will usually use the boat and a lower priority on items for occasional uses. The way you use the boat should dictate the type of hull—whether it’s full-displacement (long range), semi-displacement (faster) or planing (even faster). Choosing a hull type will narrow your search considerably.
With this logical way to make sense of the market, you should be able to determine which few boats deserve closer evaluation.
The takeaway: If you cannot find anything that meets your criteria, then it may be time to relax some of your constraints. Real cost is likely the first one to reevaluate (upward). If nothing is truly available, then you might be that one-half of 1 percent of buyers who should consider a custom project.
While boatbuilding materials have evolved from wood to fiberglass, the process of boatbuilding remains little changed. We still use some kind of a structural fabric laid into a mold. That fabric can be traditional fiberglass or an exotic material such as Kevlar, carbon fiber or Innegra. The fabric is then saturated with a liquid such as polyester resin or epoxy. The liquid hardens and creates a part, such as a hull, deck or interior module; and the saturation can be accomplished with hand layup, infusion or pre-impregnation. Each method and material can be excellent when used properly.
A boat buyer needs to know whether the designer got the recipe, or laminate schedule, right. Did the fabricators follow the schedule with the specified materials and techniques? Few standards can ensure proper lamination, and none are mandatory for builders to follow in the United States for pleasure vessels. Thus, many great boat designs are poorly fabricated.
Learn everything you can about the boatbuilding process, and seek out experts for advice. There is no reason to end up with a boat that has built-in problems too expensive or nearly impossible to cure.
The takeaway: Not every boat with a wood core is necessarily a bad one, but that type of construction should be a cause for skepticism and scrutiny, especially when buying a used boat.
If you have shopped the available production boats and nothing in the used-boat market is striking your fancy, then you, my friend, are entering the semi-custom and custom wood-epoxy zone.
Fiberglass, aluminum and steel all require specialized skills for boatbuilding. And in the cases of aluminum and steel, construction practices and finishing protocols are rigid, or you might end up with a real mess.
Modern wood-epoxy construction offers a number of advantages. For starters, high-quality wood helps keep the vessel neat and tidy with minimal maintenance. Using epoxy as a fastener helps to encapsulate the wood, keeping it from absorbing moisture or having the potential to decay.
Wood—especially epoxy-sealed and encapsulated wood—floats, so even in the worst circumstances, you still have a platform that will float and protect you. Wood also is insulating, so the boat will be easier to keep warm or cool, depending on your cruising grounds. And because wood is insulative, you don’t need to cover the inside of the hull with insulation or a barrier from the interior. Fiberglass and metal construction require you to baffle the inside of the vessel; imagine the difficulty of inspecting the inside of the hull should you encounter a deadhead or some other partially submerged object.
Because wood boats are built by hand, you can make quick and easy patches and repairs. Wood holds simple fastenings well, and with hand tools and simple repair kits, almost anything can be repaired in the field.
Plus, you get the boat you want. A wood-epoxy boat can be customized to your needs, and a multitude of designers are capable of drawing your dream cruiser.
The takeaway: Wood-epoxy designs can be customized. You can use wood-epoxy techniques to build a boat yourself or have her built affordably to a high standard of quality.
METAL BOAT CONSTRUCTION
If you worry about spending a night pounding on a Bahamian coral reef, or hitting a deadhead log in the Pacific Northwest, or crashing into a floating container at sea, then you can’t beat a metal boat. I have been hit by a whale while I was sailing an aluminum boat: While a fiberglass boat most likely would have sunk, the aluminum boat sustained no damage. Immense tensile and yield strength, along with high plasticity (the ability to deform without tearing), mean that metal boats are much safer in certain conditions than boats built of other materials.
Metal boats do not rely on bulkheads for strength and stiffness, so the interior can be whatever an owner wants. In fact, metal boats lend themselves to custom designs because there is no tooling involved.
Metal boats present their own maintenance challenges, but on balance, a properly engineered and well-built metal boat requires no more maintenance than a fiberglass boat. Still, you should exercise extreme caution when considering the purchase of an older metal boat: Choose a surveyor with experience in metal, and make sure the survey includes a close examination of the electrical system.
Today, the best yards use 3-D drawings and direct numerical control plasma cutters to create structural members and plates with an accuracy that was unimaginable in the past. Techniques have evolved to produce amazingly fair hulls that require only a skim coat of fairing putty for a high-gloss paint finish. Modern yards apply paint “systems” under virtually clinical conditions to prevent rust or corrosion for years.
While aluminum is roughly 35 percent to 45 percent lighter than the same hull in steel, steel is more abrasion-resistant and fireproof. Often, steel hulls have aluminum decks and superstructures to save weight and lower the boat’s vertical center of gravity. Though they are dissimilar metals, steel and aluminum can be safely welded together using special techniques.
The takeaway: Anyone frustrated by the lack of quality metal boats in North America should consider a yard in the Netherlands, were almost all boats—even as small as 30 feet length overall—are built in steel or aluminum.
SURVEYS & SURVEYORS
A marine survey is conducted in one day, which is not enough time to find everything that might be wrong. The short haul-out for the hull inspection usually doesn’t allow enough time for a bottom to dry, so moisture meter readings may not be reliable. If the owner’s belongings are on board, then the interior inspection gets complicated. The inherent shortcomings of the survey process make it all the more important that you hire a good surveyor.
Look online for a surveyor who has boatbuilding or repair experience. Ask for a sample report. You want more than an inventory; look for commentary that tells you what you need to know about the vessel. Look to organizations such as the Society of Accredited Marine Surveyors, the National Association of Marine Surveyors, and the International Institute of Marine Surveying for names. Also ask local boatyards for recommendations; their people know who’s good and who isn’t. And, hire a mechanic for a separate engine survey. You probably shouldn’t hire any surveyor that the seller’s broker recommends.
If you think you might be buying a boat that needs work, then have a conversation with your boatyard manager first. After the survey, bring the yard manager the list of deficiencies, and get a repair estimate. You might even hire that person to take a look at the boat and give you feedback regarding the survey report.
And whenever possible, do a final walkthrough of the boat before closing. We do this with homes. Why not boats?
The takeaway: If you take the TrawlerFest seminar “What to Look for Before You Call a Surveyor,” then you might be able to rule out certain boats without having to pay people like me.
BROKERS & CONTRACTS
Buying and selling a boat can be riskier than buying and selling a home. Unlike real-estate transactions, vessel transactions do not come under the jurisdiction of state laws except in California and Florida. You can eliminate potential headaches by working with a qualified yacht sales professional to navigate the complex and difficult details.
For 40 years, I’ve answered calls from frantic and confused buyers and sellers with horror stories about transactions gone bad. No matter what has happened, they tend to be stuck with the dispute resolution provisions in the agreements they signed—if such provisions exist. At that point, I tend to suggest that they call a maritime or admiralty attorney because the law of the sea is vastly different than the law of the land.
The buying and selling process for boats requires a great deal of due diligence. Terms and conditions must be clearly defined in writing. Without proper documentation, the buyer and seller are both at serious risk of ending up with a transaction gone sour.
The takeaway: Whether buying or selling a boat, use a time-tested vessel purchase and sale agreement. In the hands of an experienced professional, this document can eliminate disputes.
Unlike homeowner and automobile insurance, there are no standard clauses for policies insuring boats 27 feet or longer. Yacht insurance terms and conditions are not regulated by state authorities, and every insurance company provides different coverages and exclusions. Even if the key phrases in various policies seem similar, what they actually cover, or exclude, can be different.
Here are some of the terms and conditions to look for, and what they mean.
Implied Warranties. When you purchase a marine insurance policy, federal maritime law states that you are promising, or giving a warranty, to the insurer that your vessel is in seaworthy condition. Most insurers do not mention these implied warranties in their policies. If it is later found that your vessel was unseaworthy on the commencement date of the insurance policy, then insurers may void the policy when faced with a claim. Make sure the company you’re dealing with expressly states that implied warranties of seaworthiness are excluded.
Utmost Good Faith. When applying for insurance, you must reveal to the insurance company any material facts you know about your yacht or your own personal background. You have an affirmative obligation to reveal these facts even if the insurance company does not ask about them.
Resulting Damage. Suppose that a hose in your engine breaks due to wear and tear, causing the engine to fail and the vessel to run aground. The hose may not be covered, and the resulting damage may not be covered. You want to look for the phrase “any and all damages arising from” to be sure the grounding damage is covered.
Depreciation. Some yacht insurance companies depreciate your entire vessel. Others will not depreciate your vessel in the event of a total loss, but may depreciate parts of your vessel on an aging schedule in the event of a partial loss. Still others never depreciate your vessel, even in the event of a partial loss.
Latent Defects. Hidden physical defects in the material of a part or component, existing from the time the vessel was built or rebuilt, may not be discoverable by ordinary observation, even with a surveyor. You want a policy that covers latent defects.
Agreed Fixed Value vs. Fair Market Value. Agreed fixed value means that in case of a total loss or a constructive total loss, the owner will get exactly what is stated in the policy as the agreed value. With a policy based on fair market value, there is uncertainty as to the amount the insurance company will pay. The company will look at the current market value of your yacht, which can fluctuate depending on the economy and sales demand.
The takeaway: If for even a split second you wonder whether you should disclose something from your past (such as a DUI charge from 10 years ago), then you probably should disclose it on your insurance application. Failure to do so could nullify your coverage in the event of a claim.
THE TAXMAN COMETH
Let me give you an example of a bad couple years for a new boat owner. He buys a $500,000 boat in Delaware, which he thinks of as a tax haven. Little does he know that his “free” Dover hailing port is red meat for tax authorities everywhere he cruises. His slightly-too-long winter stay in Virginia earns him a sales tax bill of $3,000. His summer on the Chesapeake Bay in Maryland waters turns out to be a couple days over the limit too, and he is presented with a bill for another $13,000, but not right away. The State of Maryland delays long enough to add $2,340 in interest and a 100 percent penalty for noncompliance—another $13,000. He overstays his winter in the state of Florida, and the tax bill for that is $3,000.
Heading back north, he stops in New York where he happens to own property—another tax bill, this one for $1,975. Fed up, he takes the boat to Boston. Similar mistake, same result: The Bay State slaps him with a sales tax bill for the full value of the boat but is kind enough to deduct the amounts he has already paid to other taxing jurisdictions, bringing him to another $11,025.
That’s $47,340 because of bad timing and poor attention to detail.
I promise you, this scenario is possible; I make much of my living defending people who have been taxed unfairly, and who have often been put in a position of having to prove their innocence.
The takeaway: Transient boaters must be keenly aware of the dizzying array of tax policies and deadlines as they move from jurisdiction to jurisdiction. The best alternative is to flag your boat offshore—in places like the British Virgin Islands—to exempt a vessel from state and local taxation.