marriage and co-ownership, so spend some time in advance
working through as many contingencies as possible.
Pre-existing Ownership. If you begin your co-ownership with
one partner already owning the boat, be sure to stipulate that
the original owner indemnify the new co-owner for all pre–
existing obligations. If the original owner had any liens or owes
any payments on the boat, he must have them released and/
or paid prior to commencement of the agreement. The new co-owner must be provided copies of any existing contracts the
original owner may have, for example, marina contract, charter
contract, boatyard contracts, cleaning contracts, etc.
Sale Of The Boat. Do you want each co-owner to have the
right of first refusal? Co-owners should discuss a buyout of their
interest in the boat up front. For example, if you purchased a
new boat you might tentatively agree to sell your share to the
other co-owner for 10–20 percent less than the purchase price
after one year, and 5–10 percent less each year thereafter. This
should include the value of major items added to the boat such
as dinghy, liferaft, safety equipment, etc. Or you may want to
engage an independent broker to quote you a price of what
the boat would realistically sell for in today’s market. Or maybe
use a combination of these two ideas because what is true of
the market this year may not be true in two years. Suppose
one co-owner wants out of the co-ownership agreement and the
other co-owner doesn’t want to purchase his share? Does the
co-owner who is keeping his share have the right to approve the
new buyer? What if one owner walks away because of health,
death, loss of income, or loss of interest? If you both want out of
the boat, sell it and divide the proceeds 50/50.
Death Of Co-Owner. This is a possibility and you don’t want
half of the boat tied up in probate for years with beneficiaries
fighting over the boat and terms. Also, covering this issue in the
original agreement will make it easier for the surviving spouse.
Arbitration. If two co-owners cannot settle a dispute, I recommend
each side agree to binding arbitration rather than filing suit. It
will save you both time and money in the long run and keep the
boat from being tied up for years in a civil law suit. You should
use an arbitrator that is familiar with maritime law and who
resides in the same state that the boat is registered.
Restriction Of The Co-Owners. The partners and attorney
may want to agree to restrict certain other actions that might
jeopardize the co-owners and/or the co-ownership assets such
as assigning, pledging, borrowing, selling, or transferring a co-owner’s equity in any of the co-ownership assets without the
consent of the other co-owner. This may be addressed in the co-ownership agreement or in an LLC operating agreement.
If you are interested in finding a co-owner, please contact
me and I will keep track of people with similar interests
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