Seven Ways To Avoid The Boat Buyer Blues

By Debbie Schaefer

"He sounded so nice. Unfortunately, I found out later that the boat he sold me had been salvaged, and had spent four hours at the bottom of the lake!"

Boat buyer cartoon

At the BoatUS Consumer Protection Bureau, we often hear from members who thought they were purchasing the boat of their dreams, only to find that the seller was less than honest, and they ended up with a nightmare on their hands. But there are ways to protect yourself, by following just a few steps, before you sign on the dotted line.

1. Get It In Writing

A contract is more easily enforced if it's in writing. Dealers often use standardized purchase agreements, but buyers have a right to protect their interests. By crossing out terms that are inappropriate and adding optional provisions or contingencies, you can tailor the contract to protect yourself. Check out our "Buyer's Toolbox" to see how you can obtain a sample contract.

2. Have A Pre-Purchase Survey

Be sure to add a clause in your purchase agreement stipulating that your offer is contingent on a satisfactory survey. Hiring a surveyor to perform a pre-purchase survey and sea trial of your boat is the best way to discover any problems before it's too late. Surveys are essential for used boats (and even for new boats when buyers are inexperienced), or if the boat has sophisticated equipment. Typical fees for a survey are between $15 and $30 per foot, but could go higher for more complicated vessels. Be aware that haul-out fees are the responsibility of the buyer.

When choosing a surveyor, make sure the individual you hire does not work for or represent the interests of the seller or broker. The BoatUS referral list of National Association of Marine Surveyors (NAMS) and Society of Accredited Marine Surveyors (SAMS) is a good source of independent experts. When the surveyor completes his inspection of the boat, he'll prepare a written report, including his recommendations for needed repairs and their estimated cost. Armed with this information, the "satisfactory survey" contingency in the contract allows you to renegotiate or walk away from the deal without losing your deposit. If you decide to walk away from the deal due to a contingency, the contract may require written notification, and a strict time frame which, if not followed, could entitle the seller to keep your deposit.

3. Conduct A Sea Trial

You should also sea-trial the boat. According to Derek Rhymes, a surveyor in Annapolis, Maryland, "The purpose of a sea trial is to test the vessel in a manner in which it is intended to be used." His test includes the operational evaluation of the propulsion machinery, steering systems, trim tabs, and navigational electronics. He runs the engine at wide-open throttle (WOT) for a sustained period and says an engine's WOT capability is a good overall indicator of the condition of the engine.

4. A Word About Buying A Boat "As-Is"

Whether buying from a broker or a private party, a used boat is likely to be sold in "as-is" condition. "As-is" means that you're accepting the boat and engine in its current condition with no recourse should a problem be found after the sale. Federal and most state laws absolve sellers from liability in as-is sales. Getting a survey is the best way to help minimize the risk. Remember, "as-is" must be stipulated in writing in the contract to be enforceable.

5. Decide On A Budget

It's good to remember that the initial cost of buying a boat is not the biggest expense of ownership. An annual budget should include your boat loan (if financed), storage or slip fees, insurance, operation, and maintenance fees. One surveyor told us he recommends that in the first year of ownership, buyers should be prepared to spend 10 to 20 percent of the purchase price for repairs and updates. Another expert recommends allowing anywhere from $50 to $250 per foot, per year, for annual maintenance and repairs. The amount will vary depending on whether you do all the work yourself or hire experts, as well as whether the boat is stored at home or at a commercial facility. If your boat and engine won't be covered by a warranty, it's a good idea to set up a rainy-day fund in the event you have a major breakdown.

6. Look At The Warranty

If the boat is brand new, it will come with a warranty from the builder. The engine and other components, like radios, stoves, and generators, will have their own warranties. Consumers have the right to review these warranties prior to purchase to see what's covered and what isn't. Because warranties require owners to follow service requirements found in their owner's manuals, it's good to look them over, too.

Most warranties are "limited," meaning the manufacturer can impose certain conditions on coverage. Most companies won't honor a warranty if the boat is used for commercial purposes or if the boat has been modified contrary to factory specifications.

If a boat has been on a dealer's lot for more than 12 months, check with the manufacturer to make sure the original warranty period still applies. A gray area for warranty coverage may be on boats used as demos or at boat shows. If you have any doubt as to the existence or status of a warranty, check directly with the manufacturer. Using the hull identification number for the boat and serial number for the engine, the manufacturer can give you the status of their warranties. New-boat warranties are often transferrable, so check to see if this is a possibility when you buy a late-model used vessel.

7. Service Contracts

Commonly called extended warranties, service contracts are actually repair insurance policies. It is important to know that while the manufacturer's name may be written on the literature, they're administered by a third-party company. Service contracts don't create a legal obligation between the manufacturer and buyer, so before you buy a service contract, read it over and make sure you feel the coverage is worth the money. 

— Published: December 2011

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