Hypothetical Accident Liability Question
 

Supposed to be picking my Pantera up sunday and now my friend (who is giving me a loan) seems to have gotten cold feet. Apparently, people have been telling her that as the lienholder on the title, that if someone gets hurt on the boat when in MY control, she may be liable.

I, for one, think this is total nonsense.

For instance: Let's say I sell someone a Nissan Altima, and they finance it through Nissan Motor Acceptance.

The buyer kills a pedestrian with the car.

There's no way in hell the bank could be or would be held liable for the operator's actions.

I will be maintaining full coverage insurance from Allstate on the boat and will be merely putting my friend on the title as the lienholder when I register the boat.

I think she is right.

The leasing laws in NY were changed because of this.

I just spoke to an attorney that I sold a car to-

He says that I'd have to have a full indemnification agreement, over and above my insurance limits, and then I'd be all right.

I'll assume you are going to be sole title holder and she'll be listed as a lien holder. If so, she bears no liability. Having said that, there's absolutely no way to prevent someone from naming her in a lawsuit in the evnt something happens. Nor is there any way to prevent an individual from suing any other lending institution that financed a car, boat, plane or whatever that was involved in an accident. Obviously, you'd have to find one screwy lawyer willing to add that party to the complaint and doing so would certainly not earn him any credibility with the judge who will now have to deal with this nuisance before tossing it. That's going to cost the lender a few bucks and the hassle.

A solution- have her placed on your insurance policy as "Named Insured". This affords her all the same protections as you enjoy under the policy. If something happens, the attorney the insurance company is paying for will represent both of you. An additional agreement of hold-harmless and indemnification from you to her is another additional step. it would not be specifically enforceable agains your insurer so whatever you agree to, you might be personally on the hook for.


Having said all that...

She's trying to tell you she doesn't want to do this. She never did but she agreed to please you. Now that she has, she's regretting it. The insurance/liability thing is a hollow objection- she doesn't want to have to tell you the truth. She's worried about loaning money to someone that the banks and credit unions won't loan to. If you continue to push the issue, you're still not going to get the loan and you're going to lose a friend. Even on the slight chance that you do get the loan, this will be a source of friction and will ultimately end badly.

She's doing you a favor. Take her up on it. The boat isn't worth it.

P.S. If you wanted to borrow money from me for a performance boat and told me you were insuring it with Allstate, I'd laugh in your face.

You've probably seen this very recent thread about owner financing...

http://www.offshoreonly.com/forums/s...d.php?t=185259

Well said

Hey if you need financing I have a bank that Is real good and qwik

Hey BIG Daddy I thought you were gettin the $$$ from the bank last week :cool-smiley-011:

Chris:

Thank you for the insight on the matter. I will look into having her 'named insured' on the insurance policy.

As far as my credit worthiness is concerned, I was able to get a loan from a bank, just at an awful rate, and without simple interest. This is due to the current credit crunch and the fact that I'm not a homeowner- I live with my father and have no bills except my car payment. Apparently, banks frown on a luxury purchase even though I'm pacing to make $70k+ this year and have little to no debt whatsoever. I have also not been in file that long and I don't have a lot of credit. The NADA on the boat I'm buying is $39,000+. I'm buying the boat for $28,000 and putting $12,000 down, financing the remaining $16,000. So, I understand where you're coming from, but she stands to make $4000 from the loan, and she offered, I didn't ask. ;)

As pertaining to the linked thread:
I understand the risks involved to our friendship. However, I'll be giving more than the boat as collateral (I have a paid off car that is worth almost as much as the loan itself that I will also be leveraging against the loan- $30k boat + $12k car = $32k worth of collateral on $16k loan.) I'm not trying to debate the merit of my particular loan situation, but the guy in that thread was getting $6k down on a boat that costs $45k. I think we're a long way away from that loan in this instance.

StraightJacket, thanks for the help, I'll let you know if it comes to that. I don't think it will.

Bill: See above.

heres the problem, if someone gets hurt, they will go after everyone....she is right to be concerned....and if your broke (just for instance) they will go after her without a min to lose

not true, if in Florida... a lienholder is not responsible for the acts of the owner of a vehicle or boat....if you are on the title as an owner, then yes, but not as a simple lienholder.....the title is not in your name, you only have a lien right....thus, you are not responsible.....

You're paying her 25% interest........what the heck was the rate the bank gave you!!!!!!!

Guessing you're at 10% for 5yrs with her, if she is capping 4k in interest.

I would call Skipper Buds Finance dept in Waukesha WI, with about 40% downpayment I think you'll do better.

262 544 1200

7.9% for six years, simple interest?

I'm not paying a flat $4000... It ends up being $4100 or so if I keep the loan to term, which I won't.

Thanks Downtown, I will definitely look into this if the deal with her pisses back. :cool-smiley-011:


Soooo, back on topic fellas.

I understand that they'll go after everyone in the event of an accident.

Maybe I can insulate her completely by not naming her as the lien but merely signing the title and handing it over to her?

There's an informal term the legal community uses for tactics like this. It's called "getting cute". They don't work, but they do piss judges off. Plus it's a bad move on her part. Unless she transfers it, all you have to do is get a replacement and you can sell the asset.

I wish someone would have gotten through to me when I was your age. The mistakes I now regret...

Making $70K and having to borrow $16K and on top of that, taking 6 years to repay? About a $300 payment? On your income, living at home?

With all due respect...
RUN, don't walk but run from this deal. You should be looking to put those dollars to work on an appreciating asset like a home (or even better, a rental and keep living w/dad) than an older boat that's going to be a cash sponge, even if you have good luck with it.

I know you didn't ask so feel free to tell me to go F- myself. I wish someone would have convinced me a couple decades ago. Moves like this are the precursor to a life filled with high-interest loans and visits to bankruptcy courts.

Chris, as usual, you are right on the money. (no pun intended) This situation is a perfect example of how the banks are bulging with inventory of foreclosed homes, repo'd cars and boats, and credit card defaults at stratospheric levels. This generation does not care to wait, save, and buy with cash. Now, I realize that mortgages are necessary, as well as vehicle loans. However, when you are only making 70K, and don't yet own a home, why would you saddle yourself with a depreciating expenditure? If your bank won't loan you the money, or is charging you high interest, they know more than you. Run away from this deal, and save your money until you can afford to pay the extra 16K.

Sorry to be so negative, and it's only my opinion.

Sorry....need coffee. Why not go with the bank deal and pay your dues? You will earn more credit that way if you make your payments ON TIME.

I also feel badly about being the bearer of bad tidings. There's nothing stronger than the siren call of performance boating in the Spring. All those thoughts of wave-mashing and being a chick magnet at the local waterfront watering hole are tough to ignore. For a young man with limited capital, it's the siren song of Satan. I know the feeling- I succumbed to it and it bit me. Had I been smart (is anyone in their 20's capable of being smart?) I'd have listened. I didn't.

I know all about making payments on a boat that didn't run, monthly rent on a place to store it and a young wife who looked at me like I was some sort of a$$hole for pissing all that money away while we crammed a new baby into a tiny apartment. It was a long time ago but it seems like yesterday.

I don't think there are too many people on this site that have ever boat a boat as an investment....true, there are better ways to "invest" your money, but sometime you can't put a price on a good time. May dad used to say that a boat is a hole in the water that you throw your money into, and as long as you know that going in, then go ahead and buy what makes you happy. And I have to say, if there was ever a time to buy a boat, now would be the time, when you have no other obligations (mortgage/rent, wife/kids, etc.).

Go buy the boat and enjoy.

No reason to tell you that, but then again, if I couldn't afford it, I wouldn't be buying it. I can appreciate where you are coming from, the voice of reason... But then again, you really don't have any clue of my capacity to pay the boat off, and do it quickly.

I have a paid off 575 horsepower Camaro, a paid off Harley, and in a year or so I'll have a paid off Pantera.

I'm not buying it to make money. I'm buying to have fun while I don't have any responsibilities to speak of.

Don't worry about it.

The other 12 grand didn't just come from thin air though, guys.

BTW, when I want to get a house, I can sell a toy or two. With 12k down and barring any catastrophes, I will have a lot of equity in the boat. It's worth more than I am paying, period.

Thanks Big, you hit the nail on the head. The right time for me to have a toy like this is now.

NO OBLIGATIONS WHATSOEVER. :evilb:

Ditto on that BIG Daddy :cool-smiley-011: Chris buy the boat and have loads of funn with it ... u got your whole life to make $$$$$$$$ and let your investments work for ya .......:D PARTY ON !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

If it has a bed, head and some means of cooking.....you can write off the interest as a home.....your first home!

I only debate this point. It is now worth exactly what you paid. :D From a fellow Z28'r.

List her as lienholder, provide that she be listed as an additional insured on the insurance policy. If you want to get really cute, get a tax ID and a bank account, register a DBA or LLC for her, and use that name as the Lienholder/Additional Insured. It doesn't guarantee that the DBA/LLC won't be named in a lawsuit, nor that she wouldn't be personally named. But it provides a perfectly legal and well accepted layer of protection. You should also spend the money to have your payment history listed on the major credit bureaus. Helps your credit and provides yet another layer of deniability for her.

I agree. Buy the boat. You can't put a price on the feeling of being on the water. I can appreciate where Chris is coming from, but just from reading your posts, you seem reasonably intelligent. Who of us can't look back on the past and say we could have done things differently? Get out there and live. We only do this thing called life once.

Haha, you're right, it's worth what I paid.

Worth way more than I am financing, anyway. :evilb:

Thanks for the add'l input, I'll post up when I know what's happening.

That's a fact. :D

If I'm gonna f*ck up, I wanna do it now. LOL.

First, you need to have her as a "Named Insured". Additional insured gets her nothing, unless she suffers a casualty under the coverages of the policy. Additional is basically a proof-of-coverage for an interested party.

For the purposes stated here, the corp/llc would provide no real protection. As it would not be a legitimate enterprise but solely a liability shield, it would certainly be ruled invalid. Alot of time and effort for nothing- not that there's any chance you'd get this far anyway.

I wish you all the luck and safe ownership of your new boat.

Reading your posts reminds me so much of me all those years ago. I hope it's easier for you. :)

Thanks Chris, I appreciate all the insight.

It sounds like you had a pretty rough go of a boat deal, sorry to hear that. I know these things are hit or miss.

Not at all. I still have the same experiences today, I can just afford them. ;)

My early big-fast boat experiences were simply because I failed to look at and understand everything that goes into this sport, cost-wise. That and failing to realistically predict future income, financial reserves (none!) and that a guy can go from single and wild to married with a kid so unbelievably fast.

Seriously, you really should sit down with an experienced performance boater and make a list. The Allstate insurance thing is a major newbie mistake. It tells me you've underestimated in other areas as well. Ask any of us- we'll run thru it with you. There's absolutely no reason for any of this to be hit-or-miss. There are many of us that can tell you to the dollar what it's going to cost you.


And for God's sake, get the boat SURVEYED before the $$ changes hands!!! That is, unless you like looking at it on the trailer :)

P.S. On the insurance, seriously- it's very common for an agent to quote and write a performance boat, then a few weeks later underwriting tosses it. You need to at least talk to someone in the "real" HP boat insurance biz beforehand. If you can't get bought now, what will you do after you own the boat and they drop you? Or you find out that $600 a year Allstate number is $4,000 because you're young, have no experience and no strong financial wherewithall (homeowner, etc).

If you're making 70k and have little to no debt, then you should be able to pay the balance of 16k in a year. Go to the bank and pay the high rate. It will paid off fast and the interest difference should not be a big deal. It will also build your credit for the future. The loan from a friend won't do that and may cause problems for the friendship.

The loan through the bank was on a Rule of 78's... I have no interest in paying that kind of juice when I plan on paying it off in a year or two.

Thanks for the heads up on allstate, Chris... Any insight on State Farm? My friend's wife is an agent and a coworker has a boat through there- say's her rates are super cheap with good coverage.

Chris:

I did what you are suggesting. I sold all my toys and got my first house. Got married, moved up to a bigger house. planned on kids, bought a bigger house to fit a growing family.

Even though my wife and I had good times and continue to do so, not being on the water was miserable. I now have my Donzi, which is a small fixer upper... not being on the water is miserable while I fix it.

In hindsight, I wish I never sold my boat (or my Corvette)... being basically debt free (besides mortgage) is nice. Being on the water is nicer. So my advice is carpe diem. Life's BS will work itself out and you can have fun while it does :D

"Most people work their entire lives for things they could only enjoy while they were young"

An older friend told me that prior to leaving on a 9800 mile, coast to coast motorcycle ride that my whole family told me to save my money, as was going to college in 2 months. After hearing that, I went, and I remember it all to this day.

My dad would say, if you could afford all those toys you can afford your own place. I came back east from LA in my 20's ,moved in with my parents for a while, mom charged me rent. No free ride there. Doug

SF is just as bad. You need to talk to Elton Porter Insurance or Sy Goldberg and get a real quote from someone who knows what they're talking about. I $hit you not, they'll write it and once underwriting sees it they'll toss it back. If you absolutely must, you can try Progressive. You're playing Russian Roulette on getting claims paid though. You need to spend some time running searches in the Insurance & Finance section.

State Farm insured our 33 Daytona with 1150s and 138 mph Lakes,rivers, did'nt matter just no poker runs & no coverage for the shootout :cool-smiley-011: