A deal gone wrong-- How not to sell a boat! / by Trevor

At Yachtworld.com's Yacht Brokerage University, Mr. Micheal T Moore, of Moore & Co., gave an excellent overview of a case in which a sale went horribly wrong, and all 3 parties involved (buyer, seller, and broker) were making claims against each other! I emailed Mr. Moore for more information, as he only spoke for 30 minutes and I could only write so fast, and this was his response:

Greetings Trevor,

I have attached the Case I briefly discussed at the Seminar. It should be required reading by all yacht brokers!!

He also sent the 50 page findings, you can find here. It reads like a case study of 'bases to cover' when negotiating a sale. Obviously, the bigger the boat, the more at stake, and this 156' yacht selling for $7mm meant there would be plenty of time in court when things went sour.

The central issues here are mismanagement of buyer's monies, as far as escrow goes, and poor paperwork, from papers necessary for Power of Attorney, to insufficient and falsely notarized Bills of Sale. Sale of the boat taking place in the Bahamas and even more paperwork issues concerning titling it there add further complexity. And I thought we had legal problems! Take a look at my outline of the claims, and read the full findings for more information.

Major aspects of dispute

  1. Seller VS Buyer
    1. Seller and Buyer both claim a breach of Purchase and Sale agreement by failing to close, so both claim ownership of $690K deposit.
    2. Sellers Defense: Both agents met in Bahamas on the arranged date and executed proper documents to transfer title. Everything that needed to be done under the contract was done; buyer accepted vessel.
    3. Buyer told Broker not to release 7mm, and demanded new closing documents, then lost interest once this process was started.
    4. Buyer claims sale never took place due to:
      1. Warranty of title was defective.
      2. Sellers agent had no power of attorney
      3. Bill of sale lacked apostille (notarization stamp)
  2. Seller VS Sellers broker (alleging disloyalty)
    1. Seller argues allied breached fiduciary responsibility
      1. Did not mention that allied placed the money into escrow
      2. Seller, not knowing this, assumed once paperwork was signed, Broker would be duty-bound to release money.
      3. Seller would not have moved boat to Bahamas had he known this, also the boat sat in the Bahamas, costing owner $146K while waiting for a new buyer.
  3. Broker VS Buyer and Seller, for Attorneys fees and expected commission.
    1. Broker alleges that somebody breached the contract, and that their contract allows recoupment of attorneys fees in such a case.
    2. Broker also wants:
      1. its share of $690k liquidated damages, if court determines buyer breached,
      2. Expected commission from sale, if Seller breached.

(Buyer ended up losing)