End Of Charter Program: Yacht Phase-Out


This article is mostly geared toward boat owners who have placed a new yacht in a large charter company, like Dream Yacht Charter, Moorings, Horizon Yacht Charters, or Sunsail.

So...you're almost reaching the end of your Management Contract with your Charter Company and you have decided to keep your boat, either for your personal use or to place her in the hands of a Yacht Broker to sell her. Incidentally, this may imply you will have to move the boat to another location, possibly pretty far from her present one. Let's face it: this major event in your life of charter boat owner can be a monumental headache. But help is on the way: Sailonline has assembled a series of guidelines. Also, know that the majority of owners who do this procedure properly are handed a boat in very decent shape.

Preliminary Recommendations

There is simply no substitute for your personal attention to this. Some owners believe their charter company will properly handle this on its own. It could very well be true, but don't count on it. You will find everything, from companies that do a good, honest job, to companies that just want you and your 5 or 6-year old boat out of their life, with minimum fuss and cost to them. And ASAP, please!

Well...NO WAY. You definitely want your boat to be in good shape when she is handed over to you. So assuming you have negotiated adequate provisions in your Management Contract, if you follow our guidelines, you should be in good shape.
Do not have unreasonable expectations.
We have seen some owners insist the charter company must hand them a boat that has been brought back to new condition. This is simply unreasonable and unfair to the Company. Think about it: your boat has been chartered somewhere between 100 to 150 weeks or so during the life of your Management Contract. That can be as high as 10 times more than a private boat is typically used. This is where the concept of "fair wear and tear" comes into play: You can't expect a new boat back at the end of your 5 or 6 years contract. Get used to it, it won't happen. Besides, you have been already compensated for the use of the boat by a cut on the income of the boat or a guaranteed income, remember?

What all this means: Although everything should be in properly inspected working condition, you will not receive new upholstery and sails, a new engine, unless they've all been destroyed or beyond the "serviceable" status. Now, torn sails, non-working electronics, thick black smoke out of the exhaust, cracks in the rigging, large blisters in the hull, etc. are not fairly worn and torn items. Get the idea?
Don't be an abusive owner
Owners will get much more out of the charter company and of their relationship with the base personnel if they are friendly and develop a personal rapport with the base manager and the supervisors. In one word, be the owner celebrated by a round of drinks after work!

Organization (Starts 6 Months Before Phase-Out)

Prepare to go cruising!
Once you have established your exact phase-out date in agreement with your charter company, arrange to take your boat on a 1-week cruise if you can, or at least for 3 or 4 days. Schedule that cruise to take place about 1 month before that phase-out date, and at any rate, after the last charter. Not less, because if you find some significant problems, the charter company will need time to get the parts, and fix them.
Gather information
  • Be very organized about this. Make a detailed digital and paper trail of all the information below, properly organized. Take as many pictures as you can.
  • Get all you can about the typical problems your boat may show after 5/6 years. For example, is your boat prone to osmosis?
  • Ask your charter company to give you the updated maintenance log of the boat. Among other things, check if there is any recurrent problem. Was there an accident/grounding causing a structural issue? If so, it has not been properly fixed, otherwise why would it repeat, right?
  • Tip: Obtain and read the charterers' check-out or debriefing questionnaires as far back as you can.
  • Tip: Are you already in possession of all the boat manuals? They were given to you when the boat was delivered to you. If not, get a hold of them, presto.
  • Try to establish contact with other owners in your charter company (via personal contacts or Internet newsgroups) and see if anybody is willing to share their phase-out experience with you. You will get invaluable information.
  • Get your Management Contract out of its dusty folder and check all the phase-out clauses. We can only hope they are well defined!
  • Some companies provide owners with a "Phase-Out Manual". Get your hands on it.
  • Dig out the long inventory list you received at your boat delivery. You know, all the boat equipment: Lines and sheets, tools and spares, first aid kit, charts & navigation tools, flags, fenders, life jackets, linen & galley equipment, etc...You get the idea. You see, things tend to disappear from boats at charter bases. Usually not because of theft, but because of "cannibalization" from one boat to another by the base personnel. Anyway, all items that were on the boat when she was commissioned should be there, and in working order. If not, they should be replaced because this is stuff that you paid for. Simple.
  • If you intend to upgrade/add some items on your boat, things like a spinnaker & gear, storm sails, solar panels, life raft, EPIRB, radar, water maker, wind generator, etc.: Ask your charter company if they would agree to buy and install those on your boat during the phase-out work. This would be done at your expense, of course, but perhaps at a preferred cost? This could be a time and money saver.
  • If your boat is in the Caribbean and you are bringing her home in the USA, make a list of the compliance items requested by the USCG and the US Authorities (Customs, taxes, etc.) in general. One of the main requirements is the connection of the holding tanks.
  • Check up on insurance needs and options well in advance (6 months).
  • Lastly and importantly, obtain the name of a good surveyor in your boat's geographical area. Again, a recommendation by another owner is the best way for this.
Start scheduling the phase-out
  • Say, 2 to 3 months before phase-out starts, work on booking a haul-out schedule. Although precise dates for a haul-out are difficult to schedule, a rough plan will help. For example, a bottom survey 6 months ahead of phase-out is not a good idea—too early—so get one organized about 3 months before phase-out, at the end of your cruise. 
  • Choose and line up the surveyor. If your boat is in the Caribbean, simply finding one (let alone a good one) in some areas can be a little bit problematic.
  • We highly recommend you make the haul-out and survey happen at the end of your sea trial cruise and in your presence.
  • If you intend to keep your boat for personal use or will bring her back home, you will need to shop for a delivery company—unless you intend to sail her home yourself.
  • If your boat is in the Caribbean, and you intend to ship out some extra equipment onto her, allow plenty of time. Caribbean Customs are not necessarily efficient or helpful. For example, getting stuff to St. Lucia one month ahead of the time it is needed is not too soon.

The Phase-Out Stage

The Sea-Trial
  • As suggested above, spend at least 3 or 4 days (1 week is best) cruising on your boat and go over everything yourself. We mean everything. Why do this, you might say, since the boat is going to be surveyed anyway? Well, it is always good and informative to conduct your own inspection for cosmetic and usability items. More if you have the necessary technical knowledge. And it can usefully complement the surveyor's work.
  • Even if you are not an expert (don't be embarrassed, most of us are not), you probably know your boat pretty well, so check everything you know and use your common sense. Do this in a systematic way, for example starting on deck first, from the bow working your way back to the stern. Then go down below and do the same. Lastly, go snorkeling along and under the hull and note everything that looks suspect to you.
  • Of course, take abundant notes. Use a laptop to sort the records and generate a "punch list" printout, (you can use our suggested punch list) which the surveyor and the base/maintenance manager will be able to work out off. That list, added to the survey, will become your main working document. You will check off the items that are completed as the phase-out goes along. Personally, I use an iPad on my boat to take notes, which I download later on my computer back home.
  • Inventory the boat. You may want to mark your sails and photography the inventory. Write down model and serial numbers of all equipment, especially if that equipment is not attached to the boat. Start this process as early as possible. 
The Survey
If you have correctly programmed your phase-out procedure, you have scheduled the haul-out and survey at the end of your cruise or shortly thereafter. Needless to say, make your best efforts to be present for this. If you cannot, surveyors take lots of pictures. so photos of problem areas can easily be sent to you for your own inspection. A thorough survey takes the whole day and is composed of the following:
  • Complete hull inspection during haul-out, with detection of possible blisters, delamination and structural issues if the boat went aground.
  • Complete exterior inspection including deck flex, leaks, mast, rigging (the surveyor has to go aloft for this purpose) and sails, etc.
  • Complete interior inspection with test of all electric panels and systems, refrigeration system, detection of potential leaks, etc.
  • Complete engine run-up and check-up (starting with a cold engine) with sea trial for verification of gear engagement, misalignment or vibration of the propeller shaft, etc.
    NOTE: Your boat surveyor may not necessarily be an engine/diesel surveyor. If so, it is a good idea to hire a specialized engine surveyor. It is well worth the cost.

    A good surveyor should be very methodical, and inspect the boat from aloft, then from bow to stern. He should make sure you observe and understand all the problematic items he discovers. Do not hesitate to ask him all the questions you'd like. However, try not to constantly interrupt his work as this could add a considerable amount of time to the survey.

    He should make his preliminary findings available in about 2-3 days, and give you a Final Report about a week later. A good report is very detailed, specific and long, with each issue illustrated by a close-up picture. 

    Lastly, you should ask him to make a couple of follow-up visits to determine the progress in correcting the faults that will be found. The small extra-cost is well worth it, especially if you are not on site yourself.

    Note about hull delamination: Quick bottom inspections can be done at the haul-out while the vessel is in the slings. However, moisture tests of the bottom laminates cannot be done as the hull will not be dry enough. So if you suspect your boat has this problem, you will have to let the boat dry long enough on the hard.

    After the Survey
    • At this stage, armed with the survey and your own list, you probably will have to negotiate with your charter company to determine the items that will be fixed at their expense, and those which won't.
      This is where your Management Contract and the concept of "fair wear and tear" come into play. If your contract is well defined in this area, part of this will be a no-brainer and the Company should fix obvious items without arguing: Hull delamination, torn sails or bimini, cracks in the rigging, broken electronics, leaks, malfunctioning refrigeration, missing inventory items, etc.
    • However, some other items will be in a gray area. For example, how do you define "fair wear and tear" on upholstery, cushions, sails, sheets and halyards, woodwork, and more generally in all cosmetic items? You guessed it, it's not easy, thus it becomes a matter of negotiation and fairness on behalf of the charter company and its representative, the Base Manager. If the charter company wants you to feel good about your ownership experience, chances are they will be gracious and give you new(er) sails when yours still have a year to go; or a new bimini; or new cushions; fix all the scratches, etc. You get the idea.
      If not, and if you feel the company is attempting to escape its contractual obligations, or simply to give you the runaround, you will have to decide how far you want to push to obtain satisfaction. We know of instances where owners have sued charter companies over a phase-out, but it is relatively rare. Which means, and that's the good news, in the majority of cases, departing owners are satisfied.
    • After both parties finally agree upon the "Big List", the idea is for you to do a lot of follow-up. For example, call the Base Manager (or whoever is in charge of your phase-out) once a week and discuss the progress in crossing off the list items. Be adamant to the respect of the work advancement schedule. However, bear in mind that, short of being there yourself (or a trusted representative) you can never be 100% sure of what is really going on!
      Once the majority of the List and/or major items have been completed, you may, for instance, contract again with the surveyor to visit your boat and check those items himself.
    • Finally, go back to the boat. Go out on an another sea trial and re-check every item on the List yourself. Especially if you have decided to bring the boat back home yourself. Look over every agreed upon item—big and small—on the boat before accepting her. We recommend that you plan at least a week to "accept" the boat since, we guarantee it, some items will probably need to be revisited. This takes time. Do not feel pressured because your phase-out date is getting awfully close: You will not get another shot at this after you sign off for the boat release! Insist that this A/C work correctly. Where is this downwind spinnaker which was part of your initial inventory? Why is this latch still leaking? Etc. If you are not satisfied, do not give up and insist for a release date postponement until you are.

    Finally, D-Day has arrived and you are ready to accept the release of your boat in your own hands. If you have followed our (modest) recommendations, there is a good chance your prized possession is now in better shape than most 4 or 5 year-old, owners maintained sailboats.

    This was one of the most dreaded moments in a charter boat owner life, and hopefully, you did very well!

    Contact us for more information or personal consultation.