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.
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, you’re almost never out of touch, so keep each
Upgrades/Replacements/New Items. How will you deal with
upgrades, replacements, or the purchase of a major-expense
item on the boat? Suppose one of you wants to add, replace, or
repair an item and the other doesn’t? Again, this is a give-and-take situation and another reason to attend a 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 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 International Regulations for Preventing Collisions At Sea
(COLREGs), 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 cannot 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 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? How many and what size?
Smoking. As in any enclosed space, smoking leaves a lasting
signature on a boat and should be addressed in the agreement.
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, 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