THE FINE PRINT
A well-crafted conditional acceptance can make or break a deal
After spending months on the YachtWorld and Boat Trader websites, you have finally found the “perfect” boat. You do a personal inspection of the boat with your broker and everything fits your needs, so you make an offer, which is accepted. You set a closing date and schedule the surveys and sea trials. Meanwhile, visions of billfish dance in your head. The whole process is moving along seamlessly, until you get the call from your broker: The survey revealed multiple issues with the boat, which legitimately affect its value or require immediate attention to repair. Naturally, you are bummed … but the deal isn’t necessarily dead.
ACCEPT OR REJECT?
At some point during the purchasing process — typically soon after surveys and sea trials — a buyer must determine if he wishes to accept or reject a boat. The accept/reject date is a crucial stage in a boat deal because if a vessel is rejected, then the deposit is returned and the parties no longer have any obligations toward each other. If the buyer accepts the deal, then both parties are bound by the terms of the agreement. As such, if a buyer backs out after acceptance, then he forfeits the deposit and may be sued for more depending on the terms of the agreement.
WHAT IS A CONDITIONAL ACCEPTANCE?
A simple rejection or acceptance scenario is appropriate in some deals when either the boat perfectly fits the buyer’s needs at the agreed-upon price, or because the boat is simply not in the condition he had anticipated. In many situations, however, a conditional acceptance is presented to the seller. This is arguably the most important tool for a buyer in a boat deal, and it occurs when the buyer “accepts” the vessel but subject only to additional or different terms than were present in the initial purchase and sale agreement. A conditional acceptance essentially acts like a counteroffer, and the altered terms must be accepted by the seller before the parties can proceed toward closing.
USE IT TO YOUR ADVANTAGE
As I mentioned in a previous article, the most common terms or items to be addressed in a conditional acceptance are closing date, purchase price and repairs. For example, the buyer
is willing to purchase the boat, but perhaps conditioned only upon the seller fixing the ice machine and one of the air conditioners prior to closing.
However, a conditional acceptance is also a good time to add or modify other terms of the agreement, such as the delivery location or production of certain documents. For example, a buyer might be willing to accept the boat but conditioned only upon taking delivery of the boat offshore to avoid a state’s sales tax. Likewise, a detailed document list can also be important to a buyer: We prefer to have a seller’s document list attached to every purchase agreement. This is essentially a list of what documents the seller is required to produce prior to closing. Oftentimes, we do not get involved in a boat deal until after the surveys and sea trials are performed but before the agreed-upon accept/reject date within the contract. In such a case, we condition closing on the seller producing the documents in the list attached to the conditional acceptance. These documents include things like corporate records, various certificates and transcripts of the registry, which might be important to verify ownership and clear title of the vessel before closing.
The accept/reject date is a crucial stage in a boat deal because if a vessel is rejected, then the deposit is returned and the parties no longer have any obligations toward each other.
MAYBE THE DEAL ISN’T DEAD
Remember, a boat deal is not dead just because surveys or sea trials reveal deficiencies that might be of concern. Rather than give up on a purchase, a buyer can draft a conditional acceptance that requests terms they feel are necessary to proceed toward closing. In most domestic purchase agreements, the buyer is deemed to have rejected a boat if he fails to give timely written notice of acceptance. As such, if a buyer presents a conditional acceptance that is not countersigned by the expiration date, the vessel is deemed to be rejected, and the deposit will be returned. Hence, there is little harm in presenting a conditional acceptance with terms necessary to make you feel comfortable about the purchase.