Joint owners contract examples

We are now gearing up to be an owner, well potentially joint owners. I was interested to know if anyone has an example of a joint ownership contract which would help us establish the legal aspects of two couples owning a charter boat. We are long time racers and have vacationed together so we hope that we are entering a 5 year contract with our eyes open.

Any word on selling owners time through Moorings? Only 1/2 of our crew is retired so there may be weeks available.

Thanks

IS

You are only allowed to sell 2 weeks of owner's time per year and only in off season - April15-December 15.

KF Quinn

You should worry more about what happens after the 5 years are up.
Been there done that for 19 years now and after Irma we are on the 2nd boat.

Jim


Can you elaborate?

Did it ever occur to you to ask this question of a lawyer? If all you are looking for is ideas then Google is your friend. Try sample partnership and joint venture agreements.

Selling two owners weeks is one of the keys to making the Moorings program successful. You will have no issues selling the weeks. A ad here will get plentry of responses. I have owned charter boats under many different financial arrangements and in the end the Moorings program was by far the most successful for me. The current boat I have with the Moorings provided more revenue to me in the first year than I earned in over 4 years with Voyage and based on my negotiated trade deal is going to provide a much better resale percentage.
One thing I do need to mention. In a Moorings type program what you are really doing is buying access to points. You don’t really want to get emotionally involved with the boat. If you trend in that direction I would look at other options. I recently explored all those options and on the emotional side CYOA was my first choice. The Moorings simply made too good a trade offer and agreed to a 9% program on the owners version of the boat we selected.
One last and very important point. Not one Moorings owner missed a single check as a result of IRMA. I have friends in shared revenue programs that were hit very hard.
G

I'm with Wes, I'd love for you to elaborate.

Thx,
Dave

We formed an LLC that had two members for our non-charter boat in the VIs. The LLC operating agreement was essentially the contract. If you're familiar with LLCs, boilerplate operating agreements handle most issues. We used an attorney to handle the formation.

Cheers, RickG

After the 5 years are up you will have tough decisions to make. You will now own a very used boat and still have a mortgage on it that will be upside down. What now? Put it in another charter option that will be a net negative situation? Keep it as a private boat that will also have additional expenses including insurance and boat care, new sails, slip fees, bla bla bla etc. Don't get me wrong it has worked for us mainly because the boat is used by one of us probably a total of maybe 180+ days every year.
That's what I mean by take a very hard look at what happens after the 5 years.

If you sell two owners weeks a year and apply them against the note as well as all Moorings funds you should not be upside down on the note. I made a profit on both Moorings boats I have owned. The current boat based on agreed trade in value has well over 100,000 in equity above our down payment and the remaining note. My first boat was cash positive over 60,000. The key is all revenue needs to go against the note. If you finance on a 15 year loan and put the monthly excess in your pocket you will be upside down.
G

I think that if that was the case routinely, that the charter companies would buy the boats themselves rather than give away potential profit and cash flow.

George is certainly the expert in this game no doubt. I would not challenge his expert knowledge.
But still have a real hard look at what happens after 5 years. Will the partnership still be intact if not then what?
Our partnership is between two brothers and a sister all avid sailors and able and do use the boat as much as possible. That includes nephews and a very few friends that we trust using the boat on occasion. She is rarely in the slip for more than a week or two.
For us I feel we should have taken the first Moby out of charter sooner. The new Moby II a Jeanneau 53 is not and will not be in charter. We are currently enjoying some time in Grenada/Grenadines before the return to BVI's.

A couple of points (some of which are not exclusive to multiple owners).

Amortization 10-12 years. 25% down. Less chance of being upside down.

Partners should have similar philosophies.

Partners should have reasonable expectations about their own use and "rules" set up. Perhaps, number weeks in high time that one could book. Internal "book keeping" of time used (85% of charter rack rate for time booked greater than 90 days, 60% for booking 45-89 days in advance, 40% for time less than 45 days out)... in the end, if similar philosophy of usage, you should likely wind up with similar account balances. Many different ways to set up usage expectation, but do it in advance and thoroughly scrutinize plan.

Define who can use boat owner "time".

Who can authorize discounts to friends/ others (ie, Last minute discounts are smart business. Giving excessive discounts to friends of one owner may "cost" others money)

Each partner should financially be able to afford vessel alone. Helps when revenue down or considering maintenance costs/upgrades that were unexpected.

Having odd number of partners avoids a 50:50 split vote on any issues.But having too any members using boat will negatively affect charter income

Have defined "Out" at end of 5 years, such as boat will be listed with broker X and sold. (Can be amended differently if all parties agree).

Can a partner sell his share? Under what circumstances (ie health issues prevent him/her from using boat).

With many of these points agreed upon, consult a lawyer who may have even more points to add, and get all in writing.

Bottom line, spend more time contemplating the end than the beginning.

Hopefully others can add more/other points to consider.

Yep, Wes you said it very well. Worry about the end not the beginning. The beginning 5 years will be smooth sailing, my original point. But you made it much clearer.
Thanks

The only ship that won't sail is a partnership