MORE LESSONS LEARNED: THIS TIME, FROM THE SALE OF MY OUTER REEF 70 TRAWLER

Another post from Fred....

MORE LESSONS LEARNED:   

THIS TIME, FROM THE SALE OF MY OUTER REEF 70 TRAWLER

APPARENTLY posting LESSONS LEARNED FROM THE PURCHASE OF MY OUTER REEF 70 TRAWLER had an impact, so much so, that the purchaser of Jambo required several surveyors to confirm the current condition of the vessel before he would close the transaction.  It took a full year to find a buyer for Jambo, which is about what was expected.  The sale process resulted in several additional lessons learned that may be useful for other boaters.

Based upon the discussions with prospective buyers of Jambo, the majority of them were not cruisers, but essentially utilize their boats as entertainment venues or condos or both.  Since many boaters do not venture offshore, the features of a cruising trawler have little importance.  The major concern of Jambo was the 2,000 hours on the CAT C-12 engines over the 4 years of ownership.  My wife and  I took Jambo between Ft. Lauderdale and New England each year of her ownership and enjoyed the passage, both inside the ICW and offshore, and appreciated the New England summers.  At an average  cruising speed of 9-10 knots, there was no major stress on the engines or systems as evident by having no CAT warranty claims.  Jambo had a CAT Platinum Plus Warranty that covered everything except normal wear and tear. The warranty was extendable, as all CAT required service had been performed and documented, except for the 2,000-hour service, which was just due.  Having the CAT Platinum warranty effectively answered any survey questions or concerns on the engines on Jambo. 

As a buyer, I would want a vessel that had been used and properly maintained so any construction problems would have been exposed and remedied.  This appeared to be the case with Jambo, but there were surprises in spite of the significant use and maintenance routine provided by Wheelhouse.  When buying a new boat, I suggest that Buyers be wary of any caution from the builder that he will not “rebuild the boat" based 

on what the Purchaser’s surveyor finds during the survey.  If a boat is properly constructed, there should be no requirement to make major changes unless the builder and Seller (if different) failed to check the work and remedy the problems during the construction process. 

The Sea Time Global, Ltd. Purchase Contract with Outer Reef Yachts had a provision that the construction would be completed in accordance with ABYC Guidelines, where applicable.  The verification of this requirement, however, was left to the Buyer, which was a contractual failure on the Buyer’s part.  It would have been necessary to hire a surveyor to be on site during the construction process to fulfill this obligation properly.  Reliance on the Seller’s part-time surveyor was grossly ineffective as was any reliance on construction photographs.  Another Buyer’s contractual failure was that the boat was delivered “as is where is” and all warranties were transferred from the builder to the Buyer, whereby excluding Outer Reef Yachts from any responsibility.  This makes the Buyer contractually responsible for the remediation of any and all construction defects with the Yard and all other equipment suppliers.  This is not a good situation, especially in those cases where the Seller is not the same as the builder, as is the case with Outer Reef Yachts.

In Sea Time Global, Ltd.’s sale of Jambo, the Buyer's survey uncovered several construction defects that had to be dealt with, in this case by negotiating a reduction in the purchase price.  There were hull problems from the original removal of the hull from the mould. There were instances where improper hoses were used that failed to comply with ABYC standards or specifications, instances where the yard installed receptacles without GFI protection in wet areas, built battery boxes with no ventilation, undersized ground wires, freshwater pumps used for salt water applications, etc., etc.  What is disappointing is that some of these problems were apparently known by Outer Reef but there was never any notice or recall to remedy the problems if, in fact, they were known by Outer Reef.  

The Buyer of a new vessel has the responsibility and obligation to know in what the condition the vessel is before taking title.  In the purchase of Jambo, Sea Time Global, Ltd. was too focused on the first trip and failed to perform a thorough assessment of the vessel.  Some Sellers rush the closing date because it triggers the start of a guaranty or warranty period.  

Surveyors perform a critical role in helping a buyer understand the condition of his new boat.  Buyers have the responsibility to set the necessary standards for the survey to protect their investment.  Do not limit the surveyor’s responsibilities based on anything the Seller says.  Allow sufficient time for the Surveyor to get answers to all questions or run additional tests especially in the mechanical areas, and insist that all major issues be corrected at the seller’s cost and expense before closing.  Relying on good will or verbal commitments of the Seller is asking for a problem that could affect your enjoyment of a new boat.

Each transaction is a new and different learning experience for the Buyer, but the Seller, especially if a builder, has done this many, many times and knows the subtleties of the business.   No contract can address all the issues with a new build.  Ultimately, it is the reputation of the builder that needs to be relied on.  Be wary of builders who have not lived up to their representations or who have been sued.  Owning a boat should be a good experience, weather and maintenance issues notwithstanding.