When to use:
Use whenever two or more people or sets of people share ownership and use of a boat for recreational use. If you use the agreement for commercial use, small amendments might need to be made. The agreements are designed to regulate use where only one owner occupies the boat at one time. However, there is nothing to prevent a second owner sharing time with another owner.
Ownership: legal matters
When you share a valuable asset with another owner, you partake in ‘fractional ownership’ – that is, you share a percentage of ownership. There are a number of ways of dealing with this.
First, establish the most suitable structure for your arrangement. If you are looking at a recreational arrangement or one for fewer than ten people then it makes better sense to hold the property (the boat) under an agreement like these. However, if you are looking at a commercial arrangement or one for more than ten people, then it makes better sense to hold the property in a limited company and buy and sell shares in it. That way, the ownership of the boat itself never changes.
However, running a company does cost money, so if there are between 2 and 10 owners it is simply a matter of preference as to whether you want the formality, expense and greater certainty of a company structure and shareholders agreement or the lower cost and comparative informality of an agreement like these.
We offer two versions of the same deal. One is for a situation where only two parties share. The other is designed for more than two parties.
Even if ownership of your boat is registered with some organisation, the particulars will not record the shares in which the boat is held. So if you own 60% and I own 40% we have to record that in some other document. If we do not do so, “the Law” will assume we own in the shares in which we contributed to the purchase price. This may or may not be the same thing. These Net Lawman agreements specifically record the shares. They also record shares which may be owned by someone who is not a registered owner. This is called a beneficial interest.
ZA-CB101 includes provision for:
· Terms of beneficial interest - beneficial trusts provision
· Price and payment for the boat
· How many people allowed in the boat at one time and who they may be
· Who and how will manage payment of expenses
· Purchase of accessories for the boat – how they are purchased, whom they belong to
· Management of the boat, including operating costs
· Undertakings by the parties
· Alternative exit strategies
· Timetable in the form of a schedule to allow you to arrange who will have the boat when
· Effect of termination
· Alternative exit strategies
· Other legal provisions
ZA-CB102 includes similar provision, but provides for a management structure ordered by annual meetings of the owners, possibility of proxy voting, and more. The exit strategy allows for a share to be sold to a third party, after offering it to all other owners.
