Conference unifix::sailing

    I have what I feel is the perfect partnership.  I do not have any
    capital stake in the boat but share seasonal expenses and labor in
    exchange for 1/2 of the season.  Our arrangement is for us to trade 
    off every other weekend and notify the other partner when plans change.  
    Long weekends like Memorial Day, July 4th, and Labor day were split by 
    each choosing a weekend and the third was available to the owner.  This 
    whole arrangement has worked out superbly for me.  I do not have the 
    time for full ownership let alone the finances.  My partner needed to 
    defray expenses and knew ahead of time the boat would be idle for much 
    of the season.  He is just dissolving a co-ownership on the boat with 
    someone else and wants to maintain sole ownership so he was not interested 
    in another co-own situation.  I think his last partner was also less than 
    ideal.  He plans on retiring and sailing off into the sunset with his wife 
    in a few years.  I see the keys to our success as follows:
    
    Compatible personalities including spouses
    Responsible individuals so work is split more or less evenly
    Our individual objectives matched well 
     - I wanted to sail without ownership
     - He wanted to sail with lower cost of ownership
    I had skills and abilities he valued for maintenance purposes
    I wanted a taste of ownership without all the responsibilities of same 
     
    St. Kilda is a 40' PH sloop so for me this was a chance to move into a
    big boat immediately for less than the cost of a vacation.  The cost 
    associated with the upkeep for him were almost prohibitive with other 
    financial burdens in his personal life.  The cost to me initially this
    season was $1500.00.  It will probably go to $2000.00 next season. 
    Still a bargain in my book.  Could not ask for a better arrangement or
    nicer partners.  My only gripe is that the Rum bottle always seems to
    be empty.  ;-)  Check newspapers for similar situations or consider
    posting an ad yourself.  I know other people that have similar
    arrangements which have also worked out extremely well.    
    
    Brian
    	

    Two points.  First is that Brian got an incredible deal.  It costs
    roughly $10,000 per year to own a forty footer including payments
    on a loan with 20% down.  And that does not include any capital
    improvements like new sails or electronic upgrades.  To be able to have
    access for half the time at 20% of the annual cost is unusual.
    
    Secondly, there is an article in November SAIL magazine on
    partnerships.  It is a weak article, but better than nothing.  The
    article emphasizes what has been mentioned in notes before; get an
    agreement and have your attorney scrutinize it!  It will save many
    headaches in the future.
    
    Dave
    

    Yes, admittedly I have found an extraordinary deal when you factor in
    the costs of full ownership.  My partner has paid for the boat in full
    so there is no mortgage to speak of.  It is 20 years old and is not 
    worth what a new 40 footer is and there haven't been the upgrades in
    the last several years as one might expect.  Other contributing factors 
    are a free mooring (cost us a case of rum), fairly low cost winter 
    storage no cost for launch or dinghy storage in season.  So yes, I am 
    very fortunate and this should not be used as an accurate indicator by 
    any means.  It is however quite common for this type of arrangement to 
    be made where ownership is maintained by one of the partners and expenses 
    for the season are split.  A person here at work did the same out of Boston 
    Harbor on a 1972 Cal 25 for about the same money.  They had a slip at 
    Marina Bay though which almost equalled our annual maintenance budget!     
    
    Dave's suggestion about a getting legal help is good.  This will save
    many future hassles if the partnership goes sour.  Get it in writing is
    a good motto to live by for everyone's security.    	

    I've co-owned 2 boats - a Pearson 26 (with, get
    this, 5 others), and a Pearson Ensign with one other.
    There is an article in the latest SAIL mag on the subject,
    but the bottom line is to get everything in writing, expect
    a little less flexibility and a lot less costs than owning
    a boat yourself.  By the way, one of the 6 Pearson 26
    owners had a 17 year old who used the boat as a party platform...
    write it into your contract that the owner must be ON the boat
    when they take it out. All in all I would do it again (want
    to buy 1/2 of a C&C 25??).  The cost of owning a boat is
    astronomical considering the amount of time you use it. Save
    your extra money for vacations in the sun!
    
    Beau
    

    O.K. - I might consider a co-owner or time share if the arrangements
    were right. However, I have a gorgeous 32 foot tall-rig cruiser/racer
    Islander.  So, I would be a little fussy with whom I should share.
    I would envision 3 or 4 investor/sailors at about $2k - $3k per year
    plus fairly minor expenses.
    But! Is there anyone out there that would seriously be interested??
      

Well, I would be interested if I knew I could have the boat for five weekends
a year (once a month from May-Sept) and it was in an interesting place to sail
(==Maine) and I knew *exactly* what the upper dollar limit on "fairly minor 
expenses" was.  And I liked the boat and your maintainance practices.

And if you happen to be a good experienced pilot an airplane-sailboat 
time-swap is not inconceivable. 

    Re .5 - I've been thinking about time sharing a boat, and might be
    interested.  Where is your boat located?

    Currently, boat is in Marblehead.
    
    Regarding piloting, might be interested in flying lessons..always
    wanted
    to start!
    
    More later, have to run!

    .5 - I am interested!!  I sailed the Salem waters for several years
    and have decided to move up but this could be a very valuable step
    in between..  If you need more info please let me know.  I was in
    the Boston Harbor Sailing Club this year and for the expense I could
    be tempted in a partnership....
    
    Charles DeMoss
    TOLKIN::DEMOSS
    DTN 225-5584

    RE: .5	Here's another interested party. I've been sailing/racing
    off and on for 20 years and am a 1/3 owner in an old 25' Cal (6 - 7
    years). I'm interested in moving up.
    
    George McInnis
    DELNI::MCINNIS
    226-7688

    The purpose for opening this topic was to get some first hand
    information from those who have co-owned.  I have been thinking about
    this idea and have come up with some financial details that I would
    like some input on from other readers in this topic.
    
    My goal is to be able to sail without having a large financial
    obligation or without feeling a lot of pressure to do a lot of sailing
    because of monthly payments.  If I owned a boat by myself alone
    I would feel stress if I did not maximize using it.  IN this case
    it would own me.  I once owned a boat and during the months it was
    stored I used to feel like I was being robbed because there it sat and
    I still had to make those monthly payments.  So my goal is to sail
    without feeling the financial burden or the stress of having to use it.
    
    With that in mind, I have come up with the following figures.  Let me
    know what you think.
    
    Cost to purchase 28-30' used boat:  $25,000 (estimated)
    
    # of co-owners:  5  (each person puts up $5k)
    
    Each season's costs: $4,000 (insurance, taxes, storage, launching,
    			  etc.)  Therefore, each co-owner pays $800.
    
    Other Costs:  All bills (repairs, new equipment, etc.) are divided by
    		  amongst the 5 co-owners equally.
    
    Usage:  Assuming season goes from May 1 to Nov 1, there are 185 days,
    	    or 37 sailing days per co owner. 26 weekends or 5 per co-owner.
    
            As for holiday weekends, there are 4 (Mem. Day, July 4th, Labor
            Day and Columbus Day). Earlier than 1 May would include
            Patriots Day. Usage for holiday weekends would have to be
   	    worked  out.
    
    BOTTOM LINE:  5 people would pay about $5k to co-own, then about $800
    per season for season costs, share other costs and have 37 sailing
    days, plus 5 weekends.
    
    So what do you all think, is this model workable or unrealistic.
    
    Paul
                                             
    

    re: .11
    
    It sounds like you want to buy the boat outright to begin with.
    Have you thought (or figured out) what the costs might be if you
    financed the purchase ? 
    
    The only reason I mention it is because for the size boat you are
    talking about, you could probably deduct the cost of the financing
    interest as a "second home". Not sure how that works between 5 people
    from a legal, IRS, or tax situation; but I would think that if its
    "doable" (legal) that it would be cheaper than buying.
    
    You also need to figure in "resale" of the boat into the equation
    too....
    
    JC
    

re .11:

I think you underestimate costs and overestimate usage. In New England (where 
you are located) the sailing season is more like mid-May to mid-October. 
Unless April weather is very good, getting a boat in the water by May 1st is a 
bit problematical. Under your scheme the most you will sail will be one-fifth  
of the weekends the boat is in the water plus whatever vacation days you spend
sailing (and if your wife doesn't like to sail, that may not be too many). The
cost per day of sailing will be higher than you think -- perhaps much higher. 

By the way, one obvious cost you overlooked is the interest you can earn on
the $5000 if you don't buy (part of) a boat -- this is about $400 per year. 

Coordinating all the work that must be done to own a boat is no small task, to 
say nothing of the actual doing. Ask anyone who's owned a large boat. I'd 
suggest having one co-owner do all the management and maintenance in return 
for not paying his share of expenses. 

You'd have to find an incredibly compatible group of people for this idea to 
work. The potential for unhappiness is very large. I'd find friends with boats 
or charter rather than get involved in large-scale joint ownership. 

signed,

ever the skeptic

    For those expressing an interest in some form of partnership, please
    add your DTN. I would like to contact each one on one.
    
    One aspect of co-ownership that (to me) over-rides all other aspects of
    co-ownership.  How about the liability to each of the co-owners? 
    Picture a breezy day in some busy harbor when the 5 to 8 tons of boat
    gets out of control in a puff, rams another boat and there is personal
    injury.  To finish the scenario, suppose the sailor in charge really
    doesn't have a "pit to hiss in", as they say. Who pays the $500,000?
    Insurance gives partial protection, but personal liability cases are
    sky-rocketing. Imagine a lien on your home and you weren't even on 
    the boat! So, it appears the ownership must be a trust or limited
    partnership, or equivalent.
    
    Does anyone out there have a representative agreement usable by
    co-owners?
    
    Niles (DTN 282-1669)
    
    

    One suggestion is for each owner to purchase an Umbrella Insurance
    Liability Policy. These are usually inexpensive, less than $100 for a
    $1,000,000 policy, and they kick in after the regular liability policy
    is expended. They usually require a $100,000 liability limit on all of
    your other insurance. I own some rental real estate with 3 other
    parties and we all have such a policy. Metpay can give you details.
    
    Fred
    

    One point that is missing is that co-owners don't necessarily need to
    use the boat exclusive of the other owners.  I co-own and can count the
    times I've sailed without my partner by memory compared to the hundreds
    of times we've used it together.  True, we are friends and have a
    common purpose to owning, but using it together allows more time on the
    water and helps solve the crew problem.
    
    The biggest partnership I was involved with had five partners who
    tended to use it together also.  Five was a bit much.  three seems to
    be the best as long as two don't side against one.
    
    The insurance thing is an easy fix with the liability rider as
    mentioned earlier.
    
    Also, Alan correctly noted that the sailing season doesn't really start
    all that early around here.  We sailed up from Newport to Marblehead
    the weekend of April 29th last spring and that was the coldest I have
    ever been in my life.  Mid to late may the real season starts.  Ends
    by mid to early October for all intents too.  That is why dividing up
    weekends without sharing seems a little silly to me.
    
    Dave
     

    We divided the available weekends by design as a place to start. 
    Having only two partners in the deal provided plenty of opportunities
    for both of us to sail.  We did invite each other to come along
    occasionally but it just never seemed to materialize.  Part of the
    exclusivity was due to us having distinctly diffferent sets of friends
    and people we wanted to invite sailing.  Again, this was a known and
    acceptable factor to both of us prior to agreeing upon the partnership.
    As far as useage goes, I think we had about two weekends between 
    Memorial day and October 15th that the boat was unused.  Maybe three 
    weekends total, I found myself sailing with him and his wife. My wife 
    never sailed with my partner with the exception of having the boat 
    comandeered for an evening "harbor cruise"  through the dumplings a 
    few weekends ago.  If I can find the note of incredibly stupid things 
    to do I may post that experience there.  
    
    The liability issue for absent partners I do not believe is that big of
    an issue.  I believe the person in control of the boat at the time has
    full responsibility for all actions.  Consequently, If I ran a
    sailboarder down while picking up the mooring, my partner could not be
    sued and vice versa.  It is important for all owners/operators to be
    listed on the policy.  It is also important for the partners to have an
    agreement as to how deductibles are handled if an accident occurs etc.
    and what to do if one of the partners is grossly negligent and sinks
    the boat, kills someone etc. and the insurance does not cover it.  In 
    any event, the personal liability rider couldn't hurt you and has uses 
    beyond a boat partnership.  I do not think it should be a prerequisite
    though.  
    
    Brian

    I've been reading this with intrest as I thought about doing a
    co-owership with a power boat. (read: MUCH higher expence).
    
    A lot of good idea's here so far. I do have a question and a suggestion
    to add.
    
    Only one person mentioned common usuage of the boat by partners, I was
    thinking of myself and another owner when both of us like to dive and
    fish together. I would think the uses exclusivly would be faqr less
    than mutual outings.
    
    Heres a possibility: For multipal owership a corporation is formed
    consisting of "partners" as stockholders. The boat is held in the
    corporate name and all expences are witten against the corporation as
    liabilities. The stock holders bareboat charter the boat(s) from their
    own corporation in accordance to the expences they incure.
    
    This will offer a liability shield to the owners and also allow then to
    charter out to non owners if they wish to fill in time slots not usable
    by the owners. They may even make enough income to offset expences?
    
    How about some comments on this one? Any CPA's out there?
    
                                       Walt
    

Yes, do talk to a lawyer and an accountant or two. Life isn't that simple. 
You'll have to file Federal and state corporate income tax returns every year.
If you keep the boat in Massachusetts, under Massachusetts law you will have
to pay a MINIMUM annual corporate tax of about $450 plus a fee to the
Secretary of the Commonwealth of around $100. These Massachusetts taxes are
due whether or not you have any income or profit. Other states may vary. Plus,
though I am not a lawyer, it is my understanding that a corporation is not an
absolute shield against liability, especially if it can be shown that the
purpose of the corporation is to avoid liability. Ask an experienced lawyer.
Insurance is much higher if you bareboat charter. If you do captained
charters, you'll need a Coast Guard license and oodles of liability insurance.
It is extremely hard (yea, even impossible) to make a profit from part-time
chartering. This too has some tax implications, whether you're a corporation
or not. Sure, you can deduct expenses from profits, but you can do that even 
if you're not a corporation. Expenses (including depreciation and mortgage
interest, if any, accountant and legal fees, corporate taxes, etc) are
substantial. If you eventually sell the boat for more than its depreciated tax
value, you'll have to pay tax on the difference between the selling price and
the depreciated value. 

Our boat is owned by a Delaware corporation (so the corporation pays both 
Massachusetts and Delaware taxes), and we own the corporation. I fervently 
wish we owned the boat. 

    I went through the same nonsense as Alan did with a Delaware
    corporation.  Waste of time and a considerable amount of money.
    I was part of a subchapter S corporation whose purpose was to charter
    the yacht it owned.  Fear of being sued, a desire to simplify bookeeping,
    and an irresistable urge to bend the tax laws were the initial
    motivators.
    
    The non-utility of the corporate shell made itself apparent when
    we tried to borrow money to buy the boat.  We all had to countesign
    the loan.  When the boat arrived and we had to outfit it, no marine
    supplier would take our corporate checks.  Cash, personal check
    or charge card.  Even the insurance agent wouldn't take a corporate
    check.  Guess they had been burned too often in the past to fall
    for the scam again.
    
    We had a lot of inquiries about charters and could have chartered
    it out the whole season very easily.  But the desire to sail overcame
    fiscal wisdom and we only chartered it out one week.  This caused
    some amount of pain since we were all financially stretched at the
    time.  Nothing like money problems to dissolve a partnership.  I
    wouldn't try a joint ownership arrangement again unless I could
    support the boat on my own if the others decided to bail out.  Having
    legal recourse against the others is nice but it's not the same as
    having the money.  
    
    My partner felt smug about the massive tax loss he claimed on his
    return until the audit.  This was just one deal too many for him.
    
    - gene

    We formed a legal partnership for our old boat in order to charter it
    out for income.  Well, we had the same greed in not wanting to let
    others sail when we could and rarely chartered it.  Our checks in the
    partnership name were welcome, however, and it did simplify
    bookkeeping.
    
    The fact that we haven't done anything of the sort for our new boat
    tells us that it wasn't worth the effort.  BTW, don't try to fool the
    IRS.  They are a lot smarter than we are when it comes to this stuff.
    They have seen it all and we look like rank amateurs to them.
    
    All in all, I highly recommend partnerships if done right.  Just keep
    in mind the purpose (sailing more boat than you normally could/would
    want to afford on your own) and jettison all the fancy financial
    footwork as a waste of time and a potential sticking point between
    partners.
    
    Dave

    I am thinking that I might like to be a partner in a boat.  Is there
    anyone out there who would consider it?  If so, my phone number is DTN:
    276 9400.  
    
    Paul
    

    From the International Marine Publishing Co. holiday catalog, I note a
    book called "Yachtsman's Legal Guide to Co-ownership", by Dexter and
    Paula Odin.
    
    "Supplies the text for an ideal co-ownership agreement and covers use,
    maintenance, and boat expenses.  166pp, 6"x9" "
    
    Published at $12.50, bargain locker priced at $4.95.  (This usually
    means you can find it on the cutouts tables at bookstores.)
    
    International Marine is one of the largest (if not THE largest)
    publishers of marine related books.  It is located in Camden, Maine. 
    Orders through their toll free number, 800-822-8158.
    
    Travis
    

I own a C&C 33 - 1987. I have had to buy out my current partner and and very interested in
 finding a new partner(s). If any one is at all interested please contact me. I live in Newton 
MA.

Having looked for a partner for a few months now, and without success, certain replies
in this note have led me to another thought. For most people with whom I have discussed 
partnership the two biggest reasons for not doing it are 1) it costs a lot of real, up-front
money and 2) a boat is not a liquid asset (i.e. how do I get out of it later?).  I would be 
interested in someone who wanted to share the boat on the same sort of club basis, 
i.e. a fee for the season which guarantees some percentage of use. I know about
the clubs around Boston (was a member for a number of years). I think we could come
to some arrangement for a larger, MUCH cleaner, not abused boat. There would not be 
the same issues of coming up with a whole big chunk of money, or the same problems
of selling out.  Some of the replies in this notes have hinted at others who have arranged
something like this, but I have not heard many replies from interested people. I would only 
be looking for one or two people so that boat availability would not become an issue.

Finally, if none of the foregoing pans out, is anyone interested in chartering a C&C 33 out of
Massachusetts or Rhode Island?  Please pass this on, I'm looking for some way not 
to have to sell the boat.

re -1.:

What does your insurance company think of this idea? 

    
    	I am entering a partnership on a Tartan 27, and am looking for 
    examples of joint ownership contracts or templates to use in
    documenting the agreement.  My searches through these notes have
    yielded suggestions and pros and cons of joint ownership, but nothing
    more specific.
    
    	Any help on details to be documented would be appreciated.  
    
    	Thanks,
    		Tom S.

I don't advocate joint ownership of sailboats. Personally I'd only consider a 
boat sharing agreement that has one party as 100% owner, and other parties as
expense-sharing partners. In this structure, the owner can sell when he/she
wants to, and the other parties can walk away after some defined obligation
(e.g. the current years share of expenses) has been met.

If you must share ownership, be sure that the process for selling the boat is
spelled out, i.e. who decides to sell, who decides whether to accept an offer,
etc. In order to make it easier to sell, you should maximize the invested
equity. If the boat is heavily mortgaged and depreciates substantially, you
could find yourself in a position where participants must add money to the
pot to complete a sale. This may make it very difficult to agree on a sale.

I have a close friend who was involved in a sharing ownership of a ski house.
The house stood empty for two years while they tried to figure out how to
dispose of it. Much of the delay was due to the shared ownership. The matter
was not resolved until after one of the parties stopped making payments.

--RS