Thanks for the all the feedback on my first boat survey question. My second (and hopefully final) when $ go into escrow (in this case held by the marina boat sales who is handling the sale) do I have any control over what this money can be used for? I was told originally that this money is rarely used and held back in case of major issues. I am in the north country so it will be April before launch and the more I think about it I should have said no escrow we don't need to close until April with an approved sea trial. Now I am worried that the marina and the buyer use it as they desire and I have no control.
Survey Question 2 - Escrow
- Thread starter buckeye
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It should all be spelled out in the contract you and the buyer signed. Usually finds stay in escrow until closing, they are not supposed timber used for anything unless set in the contract and the buyer has no control over it
On eexception would be if a problem is found at survey and both parties agree to keep some fund in escrow after closing to be used to fix the issue if it could stay be done before closing.
On eexception would be if a problem is found at survey and both parties agree to keep some fund in escrow after closing to be used to fix the issue if it could stay be done before closing.
Lets see. Sounds to me like the seller and a third party , who also has an interest in selling ; may be acting somehow as the seller's agent, have control of the money and you have none. Is that right? If so, that does not sound like an escrow account to me.
I was lucky not to get jammed up by a broker when he got his hands on the sales money (I was the seller) at the same time he was being pursued by his local bank for an alleged fraud. My "escrow" money (the total sales receipts) were deposited in his marina general operating account NOT A SEPARATE AND SOMEHOW PROTECTED ESCROW. Those moneys were exposed to the marina/broker's creditors demands. It all ended well, however, not without some sleepless nights. Caveat Emptor! When is an escrow account really an escrow account and when not? In your case I don't think your money is protected at all. If the "marina boat sales" spends your money on its general operations or entertaining clients in Las Vegas and gets into financial trouble I believe your bucks are at risk.
I was lucky not to get jammed up by a broker when he got his hands on the sales money (I was the seller) at the same time he was being pursued by his local bank for an alleged fraud. My "escrow" money (the total sales receipts) were deposited in his marina general operating account NOT A SEPARATE AND SOMEHOW PROTECTED ESCROW. Those moneys were exposed to the marina/broker's creditors demands. It all ended well, however, not without some sleepless nights. Caveat Emptor! When is an escrow account really an escrow account and when not? In your case I don't think your money is protected at all. If the "marina boat sales" spends your money on its general operations or entertaining clients in Las Vegas and gets into financial trouble I believe your bucks are at risk.
captainwjm
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I agree with Pascal that the contract should spell out the conditions of how the escrow money is held and under what conditions it is to be paid and to whom. You do have a contract, right? Normally escrow is held to ensure that the deal goes through, that is to protect the seller if the buyer defaults. If the seller defaults, unless the contract states otherwise, usually the escrow goes back to the seller minus an agreed amount to cover the broker's costs. In large contracts, or those with a long time frame, the contract may specify an interest bearing account with the interest earned to be paid, again, according to the contract. Given the historically low interest rates and the usual short-term of a boat sale agreement, interest provisions are not common.
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Agree with everything said so far. Normally, escrow is held in an account separate from the broker's or third party's operating funds. The contract should spell out what it can be used for. In the event of a legitimate cancellation of the sale, it is returned to the buyer less any allowable fees. Those normally include the cost of the haul and anything allowable connected to the inspection. If the buyer defaults, it is typically not refundable and pays the broker's expenses with the excess going to the seller.
What you have to be careful of is what legitimate reasons for cancelling the deal are. I typically tell buyers that you just can't "change your mind" unless that is written into the agreement.
What you have to be careful of is what legitimate reasons for cancelling the deal are. I typically tell buyers that you just can't "change your mind" unless that is written into the agreement.
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Another reason to use a broker to represent you when buying.
If you have a broker on your side, he would be holding the funds in his escrow. Typically 10% witch are the fees paid to the brokers.
I know some boats do not come up to the price that a buyers broker is needed but here is a good example of why you should really use a broker when you are buying.
If you have a broker on your side, he would be holding the funds in his escrow. Typically 10% witch are the fees paid to the brokers.
I know some boats do not come up to the price that a buyers broker is needed but here is a good example of why you should really use a broker when you are buying.
The contract determines every step of the transaction, or should. IMO there is no escrow unless the money is held by an independent third party who will do as the contract specifies. A brokers account is not escrow but additional deposit IMO.
Sadly these questions should precede the contract. Boat US has contract and escrow services. If it is a major brokerage company and survey results are reasonable things should work out. It is the small brokers that seem to have financial problems.
Dont forget that any sales tax should be paid to the tax authority not the broker. get a receipt.
Sadly these questions should precede the contract. Boat US has contract and escrow services. If it is a major brokerage company and survey results are reasonable things should work out. It is the small brokers that seem to have financial problems.
Dont forget that any sales tax should be paid to the tax authority not the broker. get a receipt.