Are Sailing Partnerships practical? Here are some opinions from people who have tried it:
"Boats and maintenance decisions are generally far to personal to share with someone. It might work if you were extremely easy going and just didn't care about most things and it would help if your partner was the same. Having a vote or argument every time a hole needed to be drilled would get old very quick. For these reasons it's really not very common at all."
"I am currently involved in a few co-ownership agreements, and have written a number of them over the years. When they work it can be a huge money saver, and help relieve some of the stress of ownership. When they don't work it can be the biggest mistake you can make with a boat.
The biggest issues I see are not having enough money dedicated to the boat at the outset, and not having clear rules about how things like usage, disagreements, maintenance will work.
I have drafted a few for clients, plus my own and have a pretty good idea of how to work thru these problems, but it can be tricky."
"Figure out an exit strategy, for every owner."
"I did this with a good friend once, and no problems. I don't know about with strangers"
"I've seen partnerships break up good friends, who pays to fix it, it isn't clean, all kinds of issues, what you consider clean is not what they consider clean. Agreement has to state all kind of things, like fuel tank must be filled prior to hand over, how much set aside there is for maintenance and what happens when that is exceeded, who does the maintenance etc."
"I've known first hand of such situations. Several were relatives. Among those most worked although I know two where one brother wasn't holding up his end of things.
I've also known non relative situations. Two sets of them work well as neither uses the boat much. I also know one situation where two partners owned a boat without any true legal partnership. One operated drunk and wrecked with one death involved. The other one got sued by the victims of the wreck as well for several million dollars. Ultimately insurance settled but it was also financially devastating.
In general it seems it works best when neither partner uses the boat much and conflict comes when they are both heavy users. Where it's family and they actually use together, it seems to go decently. "
"Partnerships in any situation are an extremely difficult arrangement. There is no one who can make a decision. All votes can go 1 to 1 with nothing resolved. If one is going to enter into one then have lawyers write up a good agreement with a pre-defined escape mechanism and make it an LLC to protect yourself. Have everything detailed so there is a clear method of resolving issues. "
"I've done partnerships on several boats. In both cases, it's been fairly inexpensive older boats. It's always been between friends, and we've always handled all partnership issues as they come up informally, without even needing to refer to our partnership agreements (which I drew up with zero legal training or consulting). I suppose having such a thing drawn up by an attorney would be the safe thing to do, but there's a thousand little scenarios and situations that can occur with a boat and with partners. I've got to believe that a proper legal agreement covering every conceivable situation would be huge, and consume massive attorney time ($$$). I suppose if we're talking a million dollar yacht it might be applicable, but are you really willing to pay thousands in attorney fees for a $5000 partnership?"
"I'm sure there are successful co-ownership examples but it is a business relationship and therefore an iron clad contract will be required to protect both parties and the assets.
On a personal note I would never share a living space with strangers. Nor would I expect a co-owner to treat my toys as well as I do. Good luck."
"I owned a boat in partnership with a friend for 6 years and it worked out pretty well. We stayed friends but there were some differences of opinion at times. I would make sure of all the following.
- The insurance is valid for multiple users AND if there is the chance of renting the boat to outside parties is valid for chartering. Make very sure of this as otherwise you have the possibility to being on the hook for a large liability claim if someone is injured or you boat damages another and you get sued.
- Yes, a plan for an exit strategy. What happens if another member wants to bail and you don't? Will you have to buy out his/her share? Will you have the first option to buy his/her share if you want to? What will you get for your share if you sell?
- Who pays if the boat is damaged? With full hull insurance there might still be a large deductible. Is that shared? What if something happens that isn't your fault, say a chainplate with a hidden flaw that causes the mast to come down? Are you stuck with the whole bill just because you happened to be onboard when it failed?
- Ongoing maintenance, what if there's a really big bill like new engine? How are these costs shared.
- Will your name be on the title? What if the guy with the title decides to take off?
- Who decides when and where the boat will be based? What if the primary owner wants to move the boat to Panama and you don't want to go there?
I could go on but as you can see, there's lots and lots of questions that may or may not ever come up. Bottom line, especially with strangers, I would not put any more into this that I could walk away from."
"Boats and maintenance decisions are generally far to personal to share with someone. It might work if you were extremely easy going and just didn't care about most things and it would help if your partner was the same. Having a vote or argument every time a hole needed to be drilled would get old very quick. For these reasons it's really not very common at all."
"I am currently involved in a few co-ownership agreements, and have written a number of them over the years. When they work it can be a huge money saver, and help relieve some of the stress of ownership. When they don't work it can be the biggest mistake you can make with a boat.
The biggest issues I see are not having enough money dedicated to the boat at the outset, and not having clear rules about how things like usage, disagreements, maintenance will work.
I have drafted a few for clients, plus my own and have a pretty good idea of how to work thru these problems, but it can be tricky."
"Figure out an exit strategy, for every owner."
"I did this with a good friend once, and no problems. I don't know about with strangers"
"I've seen partnerships break up good friends, who pays to fix it, it isn't clean, all kinds of issues, what you consider clean is not what they consider clean. Agreement has to state all kind of things, like fuel tank must be filled prior to hand over, how much set aside there is for maintenance and what happens when that is exceeded, who does the maintenance etc."
"I've known first hand of such situations. Several were relatives. Among those most worked although I know two where one brother wasn't holding up his end of things.
I've also known non relative situations. Two sets of them work well as neither uses the boat much. I also know one situation where two partners owned a boat without any true legal partnership. One operated drunk and wrecked with one death involved. The other one got sued by the victims of the wreck as well for several million dollars. Ultimately insurance settled but it was also financially devastating.
In general it seems it works best when neither partner uses the boat much and conflict comes when they are both heavy users. Where it's family and they actually use together, it seems to go decently. "
"Partnerships in any situation are an extremely difficult arrangement. There is no one who can make a decision. All votes can go 1 to 1 with nothing resolved. If one is going to enter into one then have lawyers write up a good agreement with a pre-defined escape mechanism and make it an LLC to protect yourself. Have everything detailed so there is a clear method of resolving issues. "
"I've done partnerships on several boats. In both cases, it's been fairly inexpensive older boats. It's always been between friends, and we've always handled all partnership issues as they come up informally, without even needing to refer to our partnership agreements (which I drew up with zero legal training or consulting). I suppose having such a thing drawn up by an attorney would be the safe thing to do, but there's a thousand little scenarios and situations that can occur with a boat and with partners. I've got to believe that a proper legal agreement covering every conceivable situation would be huge, and consume massive attorney time ($$$). I suppose if we're talking a million dollar yacht it might be applicable, but are you really willing to pay thousands in attorney fees for a $5000 partnership?"
"I'm sure there are successful co-ownership examples but it is a business relationship and therefore an iron clad contract will be required to protect both parties and the assets.
On a personal note I would never share a living space with strangers. Nor would I expect a co-owner to treat my toys as well as I do. Good luck."
"I owned a boat in partnership with a friend for 6 years and it worked out pretty well. We stayed friends but there were some differences of opinion at times. I would make sure of all the following.
- The insurance is valid for multiple users AND if there is the chance of renting the boat to outside parties is valid for chartering. Make very sure of this as otherwise you have the possibility to being on the hook for a large liability claim if someone is injured or you boat damages another and you get sued.
- Yes, a plan for an exit strategy. What happens if another member wants to bail and you don't? Will you have to buy out his/her share? Will you have the first option to buy his/her share if you want to? What will you get for your share if you sell?
- Who pays if the boat is damaged? With full hull insurance there might still be a large deductible. Is that shared? What if something happens that isn't your fault, say a chainplate with a hidden flaw that causes the mast to come down? Are you stuck with the whole bill just because you happened to be onboard when it failed?
- Ongoing maintenance, what if there's a really big bill like new engine? How are these costs shared.
- Will your name be on the title? What if the guy with the title decides to take off?
- Who decides when and where the boat will be based? What if the primary owner wants to move the boat to Panama and you don't want to go there?
I could go on but as you can see, there's lots and lots of questions that may or may not ever come up. Bottom line, especially with strangers, I would not put any more into this that I could walk away from."
Sources
Forums:
http://www.cruisersforum.com/forums/f2/not-sure-how-to-go-about-this-201165.html
http://www.cruisersforum.com/forums/f67/want-to-co-own-a-catamaran-221638.html
http://www.cruisersforum.com/forums/f67/boat-co-ownership-154813.html
http://www.cruisersforum.com/forums/f67/boat-co-ownership-123457.html
Articles:
https://blog.onboardspace.com/2019/03/yacht-chartering-owning-co-ownership-or-just-crewing/
Slightly different models:
http://karaka.org/
https://www.onboardspace.com/
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