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Buying a share from someone who owns the whole asset

| Boat share, collaborative consumption, Property, shared ownership, sharing | February 14, 2013

(I’m going to use boats as my example in this article because using the word “asset” over and over again gets truly tedious, but the principles apply to holiday homes, motorhomes and other assets.)

These tricky financial times are not receding as quickly as everyone hoped and many boat owners are wondering if they can justify keeping their boat or if they need to sell to extract some equity (or reduce their debt). They will also be aware that selling their boat might take a long time.

Most owners don’t even consider selling one, two or maybe three shares. I’m not saying that finding the right partner is going to happen overnight either. But with a little patience, it can be an excellent alternative: the owner keeps their boat and gets some equity.

Most “original” owners fully understand that they need to ensure that their new partners feel equal in the syndicate, but there are some who never really accept that the boat isn’t still entirely theirs and buyers should be alert to this. As with any sharing arrangement, there needs to be extensive discussions to work out all the aspects of the sharing arrangement and this should in turn be recorded in the contract. During this process, the new partners also need to assure themselves that the owner is really willing to share!

I’ve spoken to several people who’ve sold several shares in the asset they previously owned outright and the best method I’ve seen is for each partner to be bought in one by one. For example, say the ideal is to sell three shares so the boat ends up with four owners each with a quarter. The owner finds the first partner who buys half the boat and agrees with the plan to bring in two further partners. The two partners then look for the third partner, and when this sale nets a further third of the value of the boat, this is split between the first two partners. The three partners then look for the fourth partner, and the proceeds of the sale of the quarter are split between them. The contract is amended as necessary at the sale of each share.

The advantage of this process is that at each stage all the existing partners have an equal say in all matters. If each partner simply buys a quarter share, then the original owner inevitably has more control and may be able to push through the sale of a share to a partner that isn’t acceptable to the others. The other alternative is to wait until all three new partners are available. However this might take some time and there is the risk is that the first potential partner gets fed up waiting.

Many owners think that the potential partner will be unwilling to make this greater investment and indeed some will be unable to do this. But if I was that potential partner, I’d prefer to buy the half at the outset so that I knew I had equal input on decisions down the line.

As with all sharing arrangements, there are many ways of doing things, and all require an investment in time, discussion and negotiation to discover the best solution for a particular group of partners. The pay-back is that when set up correctly the vast majority of syndicates work really well, providing much joy, very cost effectively, for many years.

A boat of our own – share and share alike, part 1

| Boat share, Help | October 24, 2012

Reproduced with kind permission of Canals and Rivers, May 2007.

Jackie Sherman and her husband were bitten by the boating bug after a holiday on the Kennet and Avon. This first part of a two part feature describes how they got into boating by going for a shared option.

It only took one week on a narrow boat, cruising down the Kennet and Avon towards Bath, for us to fall completely under the spell of this tranquil and unique form of transport. Knowing that we would want to repeat the experience, we spent the next few months investigating the best way to get ourselves back onto the water. There appeared to be three options – to hire, to buy and own shares in a boat.

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A boat of our own – share and share alike, part 2

| Boat share, Help | October 24, 2012

Reproduced with kind permission of Canals and Rivers, June 2007.

Jackie Sherman and her husband were bitten by the boating bug after a holiday on the Kennet and Avon. This second part of a two part feature describes how they got into boating by going for a shared option.

Continue reading »

Some thoughts on boat share syndicates

| Boat share, Help | October 24, 2012

This article is intended to give guidance on boat share syndicate ownership but is of course one person’s views on the subject.

With the rising costs of owning and keeping a boat there is an increasing interest in sharing the costs by joint ownership. I am not referring to time-sharing, i.e. buying two weeks’ use of a boat in the sun and forgetting it for the other 50 weeks – I just do not see how that can work. By joint ownership I mean a syndicate of two or three sharing the costs, the work, the worry and the joy of owning a boat. This syndicate can afford a larger ship without the worry of how it is getting on its mooring if they have not seen it for a week or two and without the guilt of all that money sitting doing nothing.

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Case study: selling boat shares in a Fairline Phantom 48

| Boat share, Case studies | October 16, 2012

Andrew A sold a 25% share in his 2010 Fairline Phantom 48 based in Cala D’Or, Mallorca, Spain a couple of months ago as a result of an ad posted on yours2share. The current motor yacht share ads are here.

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Case study: successful boat share sales

| Boat share, Case studies | October 16, 2012

Margaret Flatman from Norwich in Norfolk sold her 1/5th share in a Hunter Legend 340 based in Nidri, Lefkas, Greece to Peter Dow from Topsham, near Exeter in Devon. The share was advertised in October 2008 and was sold the following month. The current sailing boat share ads are here.

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Case study: sharing a Jeanneau Sun Odyssey in Spain

| Boat share, Case studies | October 16, 2012

This case study is unusual in a couple of respects:

  • The owner, who only uses their boat occasionally, has sold a 25% share to keep the boat in use throughout the year and to create some income. Although it is more common for the shares to be equal, they don’t have to be.
  • The arrangement is based upon the sharers using the boat together, rather than each owner having sole use of the boat when it is their turn

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Case study: three Yorkshiremen share a boat in Mallorca

| Boat share, Case studies | October 16, 2012

Three Yorkshiremen, Ian Chapman, Tom Harrison and Geoff Sumner had never heard of each other until autumn 2007, but six months later, they bought a Fairline Targa 40 together for £155,000.

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Case study in fractional ownership: yacht share in Southampton

| Boat share, Case studies | October 16, 2012

Nick Fieldhouse, a solicitor from Redhill in Surrey, didn’t realise that yours2share really doesn’t charge commission and when he’d completed the sale of his share in this unique Italian racing cruiser, the Lady Emma, he emailed yours2share to find how much he owed them. Sophie Garrett explained that there was no comission.

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June 2008 Making your dream a reality

| aircraft share, Boat share, collaborative consumption, environment, fractional ownership, fractional rent, Monday to Friday, Press, Property | October 10, 2012

June 2008

Have you ever wondered what it would be like to own the yacht, villa or classic car you have always wanted but without having to fork out the entire cost?

Many people dream about owning a boat on the South coast, having a sports car convertible, owning a holiday home in the Mediterranean or a beach hut in sleepy Norfolk, but for many these luxury assets are just a pipe dream.

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