Contract for boat co-ownership: what has to be in it?

Reading time: about 10 minutes

Owning a boat between two, three or four people is no legal feat. It makes you fractional co-owners (Bruchteilsgemeinschaft), which the law has recognised for over a hundred years. It only gets complicated with the questions the law leaves open: Who has the boat in the first week of August? Who pays for the new propeller or the new sails? And what happens if someone wants to leave after two years?

This is exactly what the Living Contract (co-owner agreement) is for. It settles your relationship as co-owners among yourselves, however many of you there are. PartABoat is not a party to it.

This page shows you in advance what is in it, question by question. In a whole-boat sale you receive, as the future co-owner group, the full contract and adapt it to yourselves in individual places; if you buy a share in an existing co-owner group, you join its contract.

This guide was written for owners and buyers in Germany. Legal, tax and boat-paper points refer to German law and practice; other countries may differ.

1. Who can use the boat, and when?

Each co-owner gets a number of weeks of use in the high season that corresponds to their share; how you allocate the remaining weeks, you set in the usage model (question 12). The allocation changes every year on a fixed rotation, so that over the years everyone gets the same periods. Time you do not use you can swap among yourselves or pass on.

The most important sentence in this chapter: The usage model and the allocation formula can be changed only unanimously. That is no detail. The usage rules are what you bought for, and anyone who leaves them to a majority gives up control of them.

After each use you keep a logbook with engine hours, consumption, damage and anything unusual. That sounds like red tape and by the second season is the document everyone refers to.

2. Who pays for what, and who decides that?

The running costs, meaning berth, insurance, maintenance, winter storage and reserve, you bear according to your shares. What depends on use, above all fuel, is paid by whoever was out on the boat.

Once a year you adopt a budget and set money aside for maintenance and replacement. As soon as you are owners, you keep a joint account for this. The cost formula too can be changed only unanimously, for the same reason as with use.

3. Who decides day to day?

What belongs to day-to-day management you can decide by simple majority. Everything the contract expressly names needs unanimity.

One of you is contact person for a year at a time, and the role rotates in turn. They run the account, obtain quotes and prepare resolutions. They decide alone only what you unanimously leave to them, for example day-to-day spending up to an amount you set.

4. What if someone does not pay?

If a co-owner does not pay despite a reminder and a reasonable further period, the rest of you can step in and pay for them and demand the money back.

A contractual penalty or exclusion from use is deliberately not provided for in the contract. Both would be open to challenge in a pre-formulated template used with consumers, and the right to buy from question 5 helps here only if the co-owner in default wants to sell or demands dissolution.

5. Can I sell my share again?

Yes. You can dispose of your own share, and a contract cannot change that; the law expressly allows it. So the contract does something else: it settles how it goes in an orderly way.

You notify the other co-owners in text form that you want to sell. The others then have 30 calendar days to take over your share themselves; if your notice names a buyer and their price, they take it over at that price and on the terms of your contract with that buyer. If they do not take it over, you can sell to a buyer they have consented to (question 6).

If you name no buyer in the notice, or if you demand dissolution of the co-ownership, the price depends on the whole boat, not on the individual share. This is the point where the money matters: a single fraction generally fetches less on the market than its proportion of the whole. That is why the takeover price is based on the market value of the whole boat, pro rata to your share. If you cannot agree, the value is set by an expert appointed by the competent Chamber of Industry and Commerce.

6. Who decides who joins?

If you sell, you undertake to sell only to a buyer the other co-owners have consented to. A sale without consent would not be invalid, but the others can demand that you refrain from it. They may reject the buyer only for good cause relating to that person; if there is none, you are entitled to their consent.

The contract says when such a cause as a rule exists:

• if the buyer lacks certificates of competence required for the boat and these cannot be expected by their first own use, or if they pose a specific danger to the boat that cannot be offset;
• if facts suggest they will not keep to the rules on use and costs;
• or if there are well-founded doubts, based on verifiable facts, that they can bear the running costs permanently.

Differing wishes on use are not enough in themselves, and nor is mere unease.

If a co-owner does not refuse in text form with brief reasons within 30 calendar days of your notice, their consent counts as given; your notice, which names the buyer and the terms, must expressly point this out.

Characteristics under the German General Equal Treatment Act play no part in the decision. Requirements that indirectly amount to such a characteristic count only if a legitimate aim such as the safe operation of the boat or the ability to bear the costs justifies them and they are appropriate and necessary for it.

7. How long am I bound?

You agree that for the first three years nobody will demand dissolution of the co-ownership. After that anyone can leave on six months’ notice expiring on 31 October.

Two things worth knowing. The right to leave for good cause always remains; no agreement can exclude it. And the commitment lasts beyond a co-owner’s death: the heirs step into the contract. Without this sentence, anyone could demand dissolution after a death, and the others’ commitment would fall away too.

8. What if a co-owner’s share is seized?

Then the commitment from question 7 does not apply. A creditor enforcing against the share, and an insolvency administrator, can demand dissolution of the co-ownership, even if the three years are still running. That is what the law says, and it cannot be agreed away.

The contract says so expressly instead of keeping quiet about it. An agreement that promises a three-year commitment and does not name this limit gives a false picture.

9. What if we fall out?

First you talk to each other. If that gets nowhere, anyone can propose conciliation by a neutral third person; you split the costs. The route to the courts remains open; conciliation is neither compulsory nor a precondition for going to court. PartABoat plays no part in this, neither as conciliator nor as a body that names one.

10. Who do the papers belong to?

The original papers are kept at a place you decide together. Everyone gets a copy and has access to the original at any time. You keep the chain of title and handover record permanently; for boats without a register entry they are your proof of ownership.

PartABoat keeps neither papers nor keys.

11. What does PartABoat have to do with the contract?

PartABoat is not a party to the contract. The contract settles your relationship among yourselves, and PartABoat gets nothing from it.

PartABoat appears in exactly one place: as a note that we can support you in a later sale of a share or of the whole boat. This note expressly creates no obligation: nobody has to tell us about a sale, bring us in or hold back a sale on our account. If you want to instruct us, you conclude a separate brokerage instruction for this at the time of sale, and only that settles remuneration and terms.

And one sentence we would rather say ourselves: the Living Contract is a template. It was not written for your group, and we do not check your individual case. A review by a lawyer before signing makes sense.

12. What do you set yourselves?

You set four things yourselves as a group, three of them in the annexes to the contract:

• The usage model and the allocation formula. On the Croatian Adriatic the weeks are allocated differently from a German lake.
• The catalogue of day-to-day management. Which decisions are everyday ones and which are not, you decide, not us.
• The template for your logbook.
• The insurance cover amounts. The minimum scope is in the contract, namely third-party liability and hull insurance and use by all co-owners; you set the amounts with your insurer.

This is the part a template contract cannot and should not anticipate. That is why in a whole-boat sale you receive the full contract as the future co-owner group and discuss it, instead of it lying printed and finished on the table.

13. What applies if I stay on board as an owner?

If you have PartABoat bring you buyers, you conclude the brokerage agreement as the seller for this; with your buyers you conclude the purchase contract for their shares and the Living Contract. Once you are owners together, the Living Contract applies to you just as to them, even if there are then two of you. If you later give up another share, what applies to every co-owner applies to you: notice, right to buy and consent of the others (questions 5 and 6), and for brokerage by us a separate brokerage instruction (question 11).

How buying a share works for you and what you pay: For buyers

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