Taking over Boat payments

[Jc2094]

I live in Michigan and am thinking about taking over payments on a good friends boat. He is getting older and doesn't use the boat at all but still owes 13K on it. He wants my boat which is bigger and he feels safer on it because it has higher sides. Mine is paid off but only worth 5-6K. He asked if I wanted to sell mine to him and buy his and suggested I just give him money to make his payment each month and not worry about getting a new loan.

I do trust him. He is 1 of a few people I do trust. So my biggest concerns are what sort of agreement do I need to write up in the case something does go south or worse case something happens to him? As I said earlier he is getting older.

 

[latigo]

I live in Michigan and am thinking about taking over payments on a good friends boat. He is getting older and doesn't use the boat at all but still owes 13K on it. He wants my boat which is bigger and he feels safer on it because it has higher sides. Mine is paid off but only worth 5-6K. He asked if I wanted to sell mine to him and buy his and suggested I just give him money to make his payment each month and not worry about getting a new loan.

I do trust him. He is 1 of a few people I do trust. So my biggest concerns are what sort of agreement do I need to write up in the case something does go south or worse case something happens to him? As I said earlier he is getting older.

Would it not be difficult for him to be any more than "1 of a few people you do trust"

And everyone among the living is getting older! Not really earthshaking news. ("Shangrila" was a fictional utopia central to James Hilton's popular novel and screen adaptation, "Lost Horizon".)
_____________________

The question here is if you are mature enough to realize how foolhardy it would be for you go give him the money to make the loan payments on a boat, his or yours.

Asking "what sort of agreement you need" such as how his boat would become your boat; how his loan balance would be treated; your boat become his boat; their respective market values managed, etc., etc., is beyond the scope of this Q&A forum. Which may account for the lack of interest in your posting.

 

[Zigner]

Just to add on to latigo's post...contractually, the guy cannot transfer any ownership interest in the boat without violating the terms of his financing agreement.

 

[tranquility]

The main issue is ownership. The next is responsibility.

Getting ownership of a boat you do not have responsibility (The loan to buy.) is awesome. No one should let that happen.

There are multiple issues you need to deal with. A lawyer or one knowledgeable in boat "exchanges" might help. I say "exchange" to make sure there is the potential of no tax issues. To me, if you MIGHT live on the boat for a bit or if you just go out a day is different. If you bring out business people other than your buddy where all you both do is drink beer on the waves, is different.

To the basic question, think you sold the boat and have taken complete responsibility as the buyer will pay you over time. There are other ways to think of things, but that seems most likely.

That you "trust" a person is good. If he performs, there is most likely no problem. If he does not, it depends. From your post, you are completely liable. (With right to sue the guy for things you are out.) Completely liable can be a problem. Are you readily to lose everything?

 

[latigo]

Just to add on to latigo's post...contractually, the guy cannot transfer any ownership interest in the boat without violating the terms of his financing agreement.

Mmm?

If the terms of loan agreements financing the purchase of chattels were uniformly such, would it not (for an example) bring the market in motor vehicles sales, re-sales, trade-ins and upgrading to a screeching halt?

 

[Zigner]

Mmm?

If the terms of loan agreements financing the purchase of chattels were uniformly such, would it not (for an example) bring the market in motor vehicles sales, re-sales, trade-ins and upgrading to a screeching halt?

I can guarantee you that the terms of motor vehicle financing (and boat financing) do not allow one to transfer their ownership interest without (at the very least) notifying the lien-holder to obtain their approval. In fact, of the motor vehicle and boat financing agreements I've seen, one specifically cannot do so. If one sells their financed car/boat, then one must satisfy the lien before the title is transferred. If one trades in their financed car/boat, the lien is satisfied as part of the trade in. As for upgrading...that doesn't transfer ownership.