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Fractional Boat Charter/OwnershipBy Capt. J. Michael Shea, JDThe other day a good friend asked me toreview a contract for a “time-slot” boatownership plan she saw at a local boatshow and was interested in procuring.SOUTHWINDS printed an article in October2004 on this new concept in boat ownership.Generally, I was impressed with thewhole idea. In this article, I am going tolook at this form of boat ownership from thelegal stand-point.To begin with, these are bareboat charters,as that term is used in the maritimelaw books.However, the trade calls it “fractionalsailing.” They are still bareboat charters sold for differenttime slots combined with different management contracts.Under this type of ownership, the person chartering the vesselis responsible for the boat for the duration of the charter,or, in this case, until it is returned. The charterer is responsiblefor any liability or damage the vessel causes or suffers,and the charterers are responsible for returning the vessel inthe same condition as they received it. What the two majorcompanies in the business have done is to take an old shippingprinciple and add a few things. It is similar to a “voyagecharter,” a type of bareboat charter where the charterercharters the vessel for one trip, usually to deliver a cargo.With one of the companies, Sailtime, the managers are morelike condominium managers: Someone else owns the vessel,and they manage it. In their program, the boats are owned byone of the members, who, like the other charterers, participatein the bareboat charter. The other major company in thebusiness, Pinnacle, is more like your standard time-slotcondo ownership, where they own the boats and lease themto the charterers. There is no member ownership in their boatgroups. For the member/charterer /owner, it does not makea lot of difference which one you pick.Pinnacle uses Jeanneau boats, and Sailtime uses Hunterboats. Here is how they work. Pinnacle buys and owns theboats they offer for charter. Sailtime has a member/ownerbuy a boat and then charters the boat from the owner to recharterto the members. In both cases, the companies handleall the insurance, slip rental and maintenance of the vessels.They also handle the scheduling of the owners for the use ofthe boats. One has 10 members/owners (charterers) per vessel,and the other has eight. Each member/charterer is givena stated number of days annually to use the boat and paysjust under $500 to just over $600 per month, depending onthe size of the boat, for the use of the vessel. Not bad, if youthink about it. That includes boat payment, slip fees, insuranceand maintenance.One of the Sailtime fleet Hunters. Photo by Mike Shea.The CostsThere are some up-front costs. It takes about $3,500 to$4,000 in up-front fees to get into the programs. This coverssurety deposits. Both companies require $1,500 and onetimeenrollment fees of $500 to $1,000. Then there is sailtraining and certifications. Each company has sailing certificationand familiarization-required programs of two tothree days to train the member on the sailing and use ofthe boats. Pinnacle has been in the business longer, butSailtime has more locations. They each have overseasoperations and some type of program to use a boat in oneof the overseas locations for a small fee and subject toavailability. After all is said and done, the member getsabout 30 to 42 days of sailing per year for between $ 8,000and $ 10,000, and that is not bad when you think about it,as most sailboat owners do not get to use their personallyowned boats that much.These companies have the scheduling down prettywell. You are given some major holidays, weekends andweekdays. The members/charterers are between eight and10 owners/charterers per boat and are allowed to tradebetween themselves as to times and dates. Both have programsthat allow the use of the vessel on short notice if noone signs up for the boat, and those short time usages arenot counted toward the owner/charterer’s allotted time. Ifyou live nearby the boat’s location, you could use it a lotmore than the allotted time.I have looked over both companies’ contracts and findthey are well written. However, if you have a dispute,Pinnacle requires the dispute be arbitrated in Chicago,while Sailtime allows suits in the state were the boat is located.I think it gets down to the little things each company hasto offer. There is some difference in the up-front fees, buthere again, not that much. It would not keep me from goingwith one over the other if I like their boat. The securitydeposits are the same for the two companies; $1,500. There38 January 2006 SOUTHWINDS www.southwindsmagazine.com