October 2009 - Florida Yacht Brokers Association, Inc.

By Clay Naughton of Moore & Company, P.A.
F lorida
law requires those seeking commissions or compensation
relating to the purchase or sale of a yacht to
post a bond or irrevocable letter of credit (“L/C”) with
the State of Florida. This instrument is supposed to serve as
security for a potential claimant should a transaction go
awry. Most yacht brokers and salespeople are fully aware of
the bond requirement because it is a prerequisite to the
issuance of their license by the Division of Florida
Condominiums, Timeshares, and Mobile Homes of the
Department of Business and Profession Regulation, (the
“Division”). But many may not know exactly how this bond
functions to protect a broker and, more importantly where
this bond does not protect a broker.
The Yacht and Ship Brokers’ Act requires brokers to post with
the Division a “good and sufficient surety bond or irrevocable
letter of credit, executed by the broker as principal, in the sum
of $25,000” prior to being issued a yacht brokers license.
Similarly, yacht salespeople, who are employed by brokers and
whose licenses must be held by a broker, are required to deposit
a $10,000 bond prior to being licensed.
The security must cover the entire license period, and new or
continued security must be delivered to the Division at the
beginning of each new license period. Even after the broker
or salesperson ceases to be a broker, the surety must remain
on deposit with the State for a period of 1 year.
The purpose of this instrument is to secure (a) broker compliance
with the terms of any written contract made in connection
with the sale or exchange of any yacht or ship and (b) non-violation
of the provisions of the Yacht and Ship Brokers’ Act.
Stated differently, a person will have a claim against a broker or
salesperson’s bond or L/C if they are injured by the fraud,
deceit, or willful negligence of any broker or salesperson or by
the failure of the broker or salesperson to comply with the
Yacht and Ship Brokers’ Act or other law..
In fact, if a claim is made to the Division, the Division can
enforce the provisions of the Yacht and Ship Brokers’ Act
by conducting investigations, administering oaths, subpoenaing
witnesses and compelling their attendance, taking evidence,
and requiring the production of any matter that is relevant
to the investigation, including the existence, description,
nature, custody, condition, and location of any books,
documents, or other tangible things and the identity and
location of persons having knowledge of relevant facts or
any other matter reasonably calculated to lead to the discovery
of material evidence.