Essay: Shared ownership - shared time, shared suffering
YACHT
· 09.05.2024
Text by Claus-Ehlert Meyer
Which half is yours? The right or the left?" This is the most frequent question I am asked when a conversation leads to me admitting that I live in a community of owners. "Neither," is my answer, "we do it differently. I have the boat in summer, my co-owner in winter."
Then they laugh heartily at this great joke, and then come the questions that really interest them. Are there never arguments about money? How do you manage the summer holidays? How do you share the maintenance costs? Who does the work in winter? How do you agree on purchases? Do you have a joint account? If one of you quits, that's worse than a divorce, isn't it?
Also interesting:
These questions reflect the concerns of the "my boat - my castle" faction. However, a community of owners is often a perfectly sensible alternative to sole ownership. The prerequisite for this is that the owners have a similar idea of what a boat is for and how it should be used. A regatta sailor and a hobby cook with boxes of herbs in the pushpit will find it difficult to share a boat. However, if there is a basic consensus, the advantages outweigh the disadvantages. Purchase and maintenance costs are shared by the co-owners. This gives you more financial freedom. A half 44-foot boat costs less to maintain than a whole 35-foot boat. In my case, I used the free space for a larger boat.
I was looking for a second-hand 35-foot yacht for myself 14 years ago, but then I was offered half of a Luffe 44 and I took it. The bottom line is that I spent less money and had more fun sailing. In my eyes, one of the biggest advantages of shared ownership is the opportunity to share a summer holiday. One party sails off, and after three weeks the other arrives by car, train or whatever, and the crew changes. This doubles the radius and makes it possible to visit areas that would otherwise be unreachable in three weeks travelling there and back.
The principle of unanimity is recommended
This system is of course variable. Two years ago, my co-owner took off and I took over the boat after two weeks in the southern Stockholm archipelago. Then in four weeks I sailed with my family to Höga Kusten, where we spent a week, back south and into the Göta Canal. In Motala, about halfway through the canal tour, we changed again and my co-owner went from Gothenburg to the Oslo Fjord and then back to Strande. In total, the boat travelled for a good eight weeks. But of course, living together in a community of owners also raises questions that harbour potential for disputes or financial risks. It is therefore highly recommended that these issues are identified and resolved in advance by means of a contract.
The starting point is the typical case in which two owners purchase and operate a boat in equal shares. At the latest when the desire to invest arises in the discussion, there must be agreement on how to decide. Should the principle of unanimity apply, or can everyone buy what they want as long as they pay for it themselves? The unanimity principle is recommended, because otherwise resentment will quickly arise over things that the other person does not want on board, regardless of who pays for them.
Many questions are far less obvious: Can an owner sell on his shares? Should the remaining owner be granted a right of first refusal? Since not everyone will be liquid enough to pay out their co-owner immediately, payment by instalments and interest can be agreed for such cases. A similar procedure can be followed if one party wants or has to pull out. At the very least, the instalment payment should only become due after a few months so that the remaining owner has the opportunity to get organised.
What happens in the event of the death of an owner?
An unpleasant question: What happens in the event of the death of an owner? According to the German Civil Code, the heirs take his place, which is not necessarily in the interests of the remaining owner. This case should therefore be regulated in his interest. There are three options for this. Firstly: The heirs are paid in instalments, the first instalment is due one year after the death of the co-owner. Secondly, the boat is sold and the proceeds divided. Thirdly, the remaining owner has one year to find a new co-owner who will pay the heirs.
This raises the question of the value of the ship, which may well be assessed differently by the parties. It is therefore advisable to stipulate the value in the contract and state the loss in value per month. It should then be checked at regular intervals whether this fictitious value still corresponds to the market value. This can be easily determined for common boats by searching the Internet.
Finally, it also makes sense to regulate whether the yacht may be lent or chartered out. In practice, it has proved useful to set up a bank account to which both owners have access and into which they pay a monthly sum that not only covers the running costs, but is also sufficient to build up small reserves for unforeseen events. Bookkeeping can be done on an annual basis. The season should end with a to-do list and an agreement on who will take on which tasks in winter and when the two of you will meet at the boat.
Leaving the community of owners should not be too easy
It can become more complicated if the shares are distributed very differently. If the community of owners is terminated one day by the sale of the ship, the proceeds are distributed according to shares. But how will the investments be paid until then - half or in shares? All these questions should be regulated. Finally, the utilisation itself is regulated - in principle in relatively equal shares, but questions arise in detail and need to be discussed. This takes place with my co-owner at a meeting at the beginning of the year. We decide where we want to go and everyone says when they can't make it. By then the plan is almost finalised.
A general tip: Leaving the community of owners should not be too easy and should entail slight financial losses in order for it to last. Finally, a not insignificant aspect: using one boat for two is more sustainable than using two boats for two.
