You are here

The Purchase of a (Second-Hand) Boat: Legal Matters

The most common disputes in the water sports practice that come to me are about the purchase of a second-hand boat. Usually because the buyer has insufficiently researched the boat or because the seller has withheld information. But it also often happens that both seller and buyer were not aware of something. In that case, it remains to be seen who is responsible for this.

A golden rule is and remains; As a buyer, do good research and preferably have the boat inspected by a yacht expert. Don't buy impulsively (which often happens). With a used boat, there is usually something wrong, even if it is always well maintained. Below I will discuss a number of topics that are of great importance from a legal point of view when buying or selling your boat.

From the buyer's perspective

Close a purchase agreement

Always prepare a written purchase agreement that is signed by both the buyer and seller. The main reason for this is that it provides clarity about the agreements made and the condition of the boat. The details of the parties and of the boat are stated herein and can be included what is wrong with the boat. After all, discussions often arise about the latter. If this is written in black and white beforehand, it saves a lot of discussion (and proof problems) afterwards.

It can also be included in the purchase agreement that the buyer has the right to have a purchase inspection performed, also called an expertise. A good construction is that it is agreed that the buyer first makes a down payment, after which a purchase inspection can be carried out by a (recognized) yacht expert. It is usual that the material defects that emerge during the inspection must be repaired at the expense of the seller or that the price is reduced by the repair costs. If the repair costs of the essential defects are higher than 10% of the purchase price, the agreement can be dissolved by both parties.

Many standard purchase agreements – such as those of the HISWA – have this arrangement. But not all brokers include this by default, so be careful about this. If you carry out a purchase inspection, but there is no possibility of dissolution, then a problem can arise again.

Do good research

Don't rely on the seller's blue eyes and do your research, preferably through a purchase inspection. Many people omit a purchase inspection for boats that are not too high in price. In that case, it is very important to conduct proper research yourself and to always do at least one trial run. If you have no or limited knowledge, bring an acquaintance who does know a lot about the technology and construction.

And most importantly, ask the owner questions. The reason for this is that the owner must give the correct answers to questions and that you can in principle assume the correctness of his answers. If it turns out afterwards that the owner has not told the truth – even if it was unconsciously – then you as a buyer are in a much stronger legal position. After all, the boat does not meet the reasonable expectations that you might have of it and you can invoke error, because you (probably) would not have bought the ship for that price, if you had been aware of the correct facts.

So ask about the maintenance history of the boat and the engine, ask if he knows whether the ship has or has had osmosis (with polyester yachts), ask for rust, weak spots in the construction, the status and operation of the electricity, ask what is less good about the ship and whether the owner expects special maintenance to be done in the short term, etcetera. And if you ask these questions, it is good if someone is still present on your behalf at that time. If it comes to providing evidence with regard to what has or has not been said, then the statement of two witnesses weighs more heavily than one (party witness).

Hidden flaws

If defects still come to light after you have bought the boat, it depends on a number of things whether the seller can still be held liable for them. Firstly, it must concern defects that already existed at the time of the sale. In principle, the seller is not liable for anything that has arisen after the sale. That burden of proof lies with the buyer (this is different if you buy a ship from a company; in that case the burden of proof always lies with the company for the first six months, even if you have not agreed a guarantee). It must also be a serious defect. For example, a lack of the engine or – in the case of a sailboat – a lack of the rigging or the mast. You probably cannot recover a problem with a leaking box from the seller.

However, this does play a role in whether the boat meets the reasonable expectations that you may have. For example: if the owner says that the ship has always been perfectly maintained and that it is in 'as good as new' condition, then you as a buyer may have higher expectations. So the price is right here. If there is then a leaking box, you can in principle recover this from the seller. What the seller has communicated and how the ship is advertised and recommended plays a major role in this. Also as a buyer, always make a screenshot / copy of the advertisement. That can serve as important evidence.

Notice of default

If there are defects on the basis of which you can address the seller, be aware that you must first give the seller the opportunity to properly fulfill the agreement, in other words to repair the defects. You do this by means of a written notice of default. Only if the seller is unable or unwilling to comply is there a possibility to claim damages or in some cases even to cancel the purchase. So do not have repairs carried out in advance, because then you can no longer recover those costs. It is very important that the correct step-by-step plan is followed. A number of important requirements are imposed on a notice of default and it is advisable to first obtain legal advice on this.

The VAT statement

It must be possible to demonstrate that VAT has been paid for every pleasure craft built after 1985. There is an exemption for older ships. Both a VAT statement and an original purchase invoice can prove that the VAT has been paid in the past. Customs checks on this and you can therefore come into contact with it as soon as you leave the Netherlands. If you continue to sail within the Netherlands, the chance that you will encounter problems without a VAT declaration is very small. But if you do sail over the rivers to Belgium, or to the German mudflats or cross over to England, there is a good chance that you will come into contact with this.

And even if you don't expect to go abroad yourself, if you want to resell the boat in the future without proof that the VAT has been paid, this could have an adverse effect on the market value. After all, you cannot sell the ship to a buyer abroad, or to a Dutch buyer who does want to sail abroad. So make sure that this proof is included with the boat, or adjust the purchase price of the boat accordingly.

From the seller's perspective

The following applies to the seller; be honest and make a good purchase agreement. As a seller you have a duty to disclose. This means that you are obliged to report all defects in the boat to the potential buyer. If you do not do this, you are liable for a defect that you knew existed. There may therefore also be error, on the basis of which the purchase agreement can be annulled by the buyer.

In addition, it is important to be honest about the condition of the boat and the maintenance. If you tell the buyer that the boat is in perfect condition, then the buyer can assume this too. If a problem arises shortly after the sale, you will soon be liable. After all, the buyer could assume a boat in perfect condition. And that doesn't mean that problems quickly arise.

You can state which defects you are aware of in a purchase agreement. That also gives you security. In that case, the buyer cannot hold you liable for those defects. You can also include in a purchase agreement that the buyer has been given the opportunity to have a purchase inspection performed. If the buyer subsequently abandons this, it is at his own risk. This can play a role in the question of whether the buyer has done sufficient research. After all, you cannot report what you as a seller did not know and if the buyer does not do enough research, it is usually at his risk.

Subscribe to The Journal

* indicates required
Areas of Interest
                    

Pragma International will use the information you provide on this form to be in touch with you and to provide updates and marketing. Please let us know all the ways you would like to hear from us:

You can change your mind at any time by clicking the unsubscribe link in the footer of any email you receive from us, or by contacting us at info@pragma.international. We will treat your information with respect. For more information about our privacy practices please visit our website. By clicking below, you agree that we may process your information in accordance with these terms.

We use Mailchimp as our marketing platform. By clicking below to subscribe, you acknowledge that your information will be transferred to Mailchimp for processing. Learn more about Mailchimp's privacy practices here.

Article Rating: 
Average: 5 (1 vote)
Total reads: 105
Marcel Smit's picture

He has significant experience in labour law, liability law and contract law with international aspects.

Areas of Practice

Economic Sectors