Boat Closing Settlement Guidelines
How and when to close and settle a boat purchase and sale agreement.
BoatWiki - Guidelines
Use of these guidelines may have legal, financial, and tax implications.
You should consult with an attorney or professional about any such concerns.
These guidelines will define the steps a third party boat closing agent typically implements in finalizing a purchase arrangement. Such agents may include brokers, lenders, professionals, vessel documentation companies, and attorneys. Although not oriented toward buyer to seller direct closings, this information may offer some helpful pointers. The guidelines are not intended for foreign or more complex transactions.
Step 1 - Review the purchase agreement.
A well drafted boat purchase agreement should dictate the closing terms, including the time allotted and designated closing agent. When the agreement has been accepted and all contingencies eliminated, the closing kicks in. If the agent anticipates any untimely delays, title deficiencies or is otherwise unable to comply with the closing terms, the parties should be immediately notified. The agreement may then need to be amended.
Step 2 - Conduct the title research.
In order to structure a closing, the agent should conduct a thorough title and lien search for the subject boat and any ancillary watercraft or trade-ins that may be involved. This should also include payoff demands for any outstanding liens or encumbrances that will need to be retired as part of the settlement. Although a closing agent is expected to employ due diligence in performing this step, the parties should be made aware that such action does not constitute any form of title insurance.
Step 3 - Gather the buyer and seller items.
The agent should construct a closing statement that identifies all funds and other considerations required of the buyer and seller. This should be approved by both parties and any brokers that may be involved. Arrangements should then be made to expedite the transfer of such items into the agent's hands and/or trust account. This includes all necessary funds, instruments of transfer and any related title, documentation, or registration certificates. It may also necessitate the required authorizations allowing the agent to implement any payoffs.
Step - 4 - Clear the funds.
All funds received into agent's trust account should be cleared for irrevocability before making the final settlements. This may take several days unless funded by wire transfers or cashier's checks drawn upon and confirmed by domestic banks.
Step 5 - Obtain final closing authorizations.
Before implementing any settlements, the agent should inform the respective parties about any remaining shortcomings or deficiencies. This may include anticipated delays in obtaining a title subsequent to a payoff, incomplete title searches, insufficient funding, or other shortcomings and deficiencies that may have potential ramifications for the buyer or seller. The affected parties should then be given an option to go ahead with the closing or append the purchase agreement. Any such exceptions should be acknowledged in writing for the agent's protection.
Step 5 - Make the settlement distributions.
All settlement payments and other distributions to the receiving parties must be transmitted according to their written instructions. The agent should notify the parties immediately upon finalizing the closing. The buyer is then typically entitled to take possession of the subject boat. However, subsequent title, registration or documentation recordings may be delayed pending a secured party's title release.
Due diligence is paramount in choosing a qualified and reputable closing agent. This is especially true if a closing involves the processing of funds. Visit the boat closing settlement blog link in WikiTags for more detailed information. We would also appreciate a WikiShare regarding these guidelines and any closing encounters you may have experienced.
Credits and References
6/22/2022 - Page initiated by Team BoatWiki.