Boat Partnership Agreement
Introduction
There is much responsibility regarding the ownership of a boat especially with regard to finances. A boat partnership agreement could come in handy for individuals that desire the luxury of owning a boat. This is especially when they do not want to bear the financial burden. Further, a boat partnership agreement is a suitable medium for families and friends that desire to mutually benefit from the ownership of a boat. Nonetheless, before one strikes an agreement to purchase a boat under joint ownership, they should ensure that they are fully committed.
Owning to the property type with other people, thy can cause strains on the relations if the conditions and terms are not established. Thus, one should start by asking the correct questions. If one of the groups has never owned boats initially, they should talk to people.
Boat partnership agreement
A boat partnership agreement is mainly utilized for the joint owners that desire to put in writing the conditions and terms for managing the boat individually. Such boats denote a cruiser, yacht, among others where one party could use the boat for business or leisure. Further, the management should be written based on the responsibilities that the owners could have for their maintenance. When utilized for business, it is significant to outline the sharing rule of income. Otherwise, the laws presume that the same is done on equal shares. Therefore, a boat partnership agreement is significant in ensuring that the agreement is evidences in writing.
Ownership rights
The ownership rights of in a boat partnership agreement should be equally split. Thus, fifty per cent for the two owners, the thirty-four per cent, among others. Such will be significant regarding determination of maintenance costs, scheduling, taxes, and repairs. Defining the meaning of ownership denotes usefulness thus no one exceeds the boundaries without fully agreeing.
Purchase
Comprehensive research should be done before the purchase of the boat through a boat partnership agreement. The boat should also be a vessel that every person can operate and handle. It should also meet the agreed purpose as per the boat partnership agreement. Such include skiing, fishing, overnighting, and wakeboarding. If it is a used or new boat, it should be tested and driven at first instance. The boat should not be one that only some of them enjoy. Further, the style, model, and price ought to be something agreed upon before exchange of money.
Costs
Ownership of a boat is a serious tax, and when the boat is shared, one has to discuss all the involved financial decisions. Some of the list of items that could be included in the boat partnership agreement are:
- Maintenance
Even if one buys a new boat, its maintenance and other costs are something that each and every boat needs. The supplies that could keep the boat running in the best of conditions could add up to significant amounts over time. Thus, an account could be set up such that every partner is aware of when the money that is being deducted from the costs of maintenance.
- Damages
What is considered normal tear and wear should be outlined in the boat partnership agreement. Further, other aspects like major damages such as smashed unite should be listed. One should also include the damages context that are incurred when the boat is in the owner’s car. This is as compared to the things that occur at the marina or in natural disasters. One can also pull from the maintenance accounts or establish separate emergency funds to cover for the damages from the incidentals and natural disasters. Further, the partners should discuss the main responsibility for costs of repairs when the damages are excessive or results of carelessness. All the preceding should be expressly included in the boat partnership agreement.
- Insurance
If there are any unforeseeable circumstances, insurance could serve as the saving grace. If one resides near water bodies that are active in hurricane seasons, insurance of the boat is important. Nations also require unique requirements for the insurance coverage. Thus, after signing the boat partnership agreement, the boat owners should contact insurance providers and schedule meetings to discuss the policy options. Further, every partner should be listed as partners on the selected insurance policy which should cover all the operators in the boat partnership agreement. Further, agreeing on the deductibles, premiums, and cost sharing is important.
- Incidentals
The summer and spring are famous for increased gas prices, and also for bank accounts for marina owners. Such are also the recommended seasons for being out in the water. The partners of the boat partnership agreement should agree on a plan for refueling the boat between the uses of the owners. Further, the incidentals could include beverages and food, supplies, cleaning, tools, registration fees, and tax. The owners should also decide on the costs that will and will not be covered by the boat partnership agreement.
Storage
There are some considerations that should be taken into account by the owners regarding the boat in the boat partnership agreement. They include:
- Storage of the boat in the offseason.
- Where the boat will be stored during the season.
- Whether the owners of the boat could share the marina slip and boat house.
- Whether the purchase of the storage facility that is easily accessible by the parties will be the best option.
Such considerations and many more should be answered with regard to the storage of the boat. Further, the terms of storage in the boat partnership agreement should be cost effective and convenient for every person.
Schedule
The boat partnership agreement should also include a schedule that entails who gets the boat at certain times. In instances where the partner is a fishing friend, then it is highly likely that one will not be in the boat without them. More often, nonetheless, joint ownership denotes creation of schedule and assignment weekends or days to each other. Creating such a schedule could be tricky especially during holidays though it is best if the partners organized it early enough.
Dispute resolution
Akin to all relationships, conflicts and disputes between the partners could occur. The boat partnership agreement should include the possible dispute resolution mechanisms that could be resorted to when the conflicts or disputes occur. For instance, when one runs into issues with other partners, the help of a third party could be sort to solve the problem. Taking extreme measures like litigation would ruin the relationship.
Selling, buyouts, and transfers
Discussion of the termination of a partnership in the boat partnership agreement is significant. Such saves the partners headaches in the event of anything. If one of the owners desires to leave the partnership, dies, or wants to transfer their ownership, the agreement should entail the language that outlines the process of handling such events.
Additional information
As opposed to general belief, a boat partnership agreement does not have to be n writing. However, a never-ending decision stream should be made for the purchase, operation, and sale of the boat. There should also be a written agreement to offer guidance to the parties regarding the making of decisions.
Further, before drafting a boat partnership agreement, the partners should consult a knowledgeable and experiences intellectual like a lawyer to draft the same. This hinders fundamental mistakes in the agreement. An agreement that is superficial could cause problems if it is insufficient in addressing issues that face the partnership. With this in mind, there are several categories of important partnerships regarding boats. They include the ownership entity, sale and purchase of the partner’s interest or in the entire boat, the boat’s use and division of operating expenses.
By using the term “ownership entity” in the boat partnership agreement, the owners are clear on whether they will form a corporation or limited liability company (LLC) to own the boat. Such entities could lack a true business purpose thus they could fail to protect the owners from liability. However, their structures provide a myriad of advantages. For instances, the sale and purchase of interests in a company that owns boats could be simplified since the boat partnership agreement could remain unchanged. Hence, the company could continue to own the boat notwithstanding who owns the company. Further, the operating could be customized to deal with the issues on the ownership of the vessel. There may also be tax advantages when the boat is ultimately sold.
The disadvantages of owning a boat through a company or limited liability company include the need to carry out certain expenses and procedures regularly. Such include the payment of annual fees to the nation and the possible disclosure conditions. These conditions are related to paying annual fees to the nation and likely disclosure requirements that could accompany the sale of corporate securities that could fail to apply to the conventional sale of boats.
Whether the boat is owned through specialized entities or not, the sale and purchase of partners’ interests in the boat should always be expected. The economic problems that we deal with daily could lead partners to making the decision to sell without the others’ consent.
References
https://www.reportlinker.com/markets/reports
https://searchandshopping.org/topresults.searchshopping
https://www.zapmeta.ws/web/results
https://fastquicksearch.com/topresults/fastquicksearch
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