Renting out a boat is not as simple as it sounds

Over time, I came up with a theory that South Florida drivers must loan their cars to strangers when they’re not using them. It was the best way I could explain why the interstates remain jammed up even after so-called rush hours.

While I have learned over the years that my theory is likely incorrect, there does seem to be a trend, likely spurred by the Internet, toward renting personal possessions to others. Among such items: people’s personal boats.
There’s really nothing new about boat owners offering their vessels for charter. It’s a business enterprise that has been around for centuries. Generally, contracts and insurance agreements assure that the voyage will prove either profitable and/or acceptable to all those involved.

However, the latest twist to this concept involves allowing potential boat users to rent a vessel (usually a small craft) when the owner isn’t using it — much like someone picking up your car and paying a few dollars to borrow it. Although these transactions allegedly take place with the assistance of a third party acting as a go-between, it remains unclear whether the vessel owner fully appreciates the risks in sending a personal boat out for hire.

No matter the term, renting out a vessel of any size is legally considered a charter party situation that’s generally governed under maritime law. The very term charter party actually has ancient origins, deriving from the Latin, charta partita. Historically, the completed contract (the charta) agreed upon by the ship owner and merchant was torn in half (partita), so no one could tamper with the agreement until the voyage was over and the two halves were restored. This alone shows the complications involved in renting out a boat to another.

Boat owners should know there are three types of charter arrangements: time charters, voyage charters and demise charters, also known as a “bareboat” charter.

A voyage charter is when the underlying vessel owner takes responsibility for the captain and crew, and the vessel is hired to get something or someone to a designated location. Think of a voyage charter as hiring a taxi or a delivery service.

In a time charter, the underlying vessel owner remains responsible for the captain and crew. The vessel is hired for a certain length of time and the renting party often determines the destinations the boat will go to before it returns to its homeport at a designated hour. Chartering a fishing or diving boat with a captain for the afternoon is a pretty good example of a time charter.

In a demise or bareboat charter, the renter becomes in effect, the owner of the boat from the time he or she takes control. If the vessel requires a captain and crew, they will be hired under a separate contract and the renter becomes liable for damage to the vessel — and possibly injury to any passengers (but, not always) — during the time of the charter. Think of bareboat chartering as akin to renting a car — except that the renter’s platinum card won’t pay for any collision damages.

As you can see, offering a boat for rent can become a rather complicated affair, though on the surface it may seem simple. As a friend of mine once put it, “Something is never a problem until there is a problem.”
Those who choose to proceed with the venture should keep in mind and voice several questions.

The first: What type of insurance is the renter carrying to use your boat? What kind of insurance does the third party go-between have to cover failures on their end? And finally, what kind of insurance do you personally have on the boat?

Will you be able to keep your policy — or even afford it — once your carrier learns that you’re offering out you vessel for charter? Understand that under the maritime doctrine called “utmost good faith” failing to inform your insurance carrier of this arrangement can result in their refusing to pay coverage, even on an occurrence unrelated to chartering.

Your next question: Are the written agreements between you and all these parties clear and concise, and do they really protect your ongoing interests as the boat owner? Moreover, it should be noted that even the bestconstructed agreements may not make you suit-proof.

Here’s an example: Let’s say a passenger of a boat renter has an accident and blames it on a faulty piece of equipment that they claim was poorly maintained or installed. As the boat owner, you will probably be one of the parties sued. Since the passenger may not have signed any agreements — particularly with you the owner — you want to make sure that your insurance covers such a contingency. Otherwise, your legal expenses could become quite expensive.

Other uniquely maritime concerns can include passengers or guests of your vessel’s renter carrying illegal substances onboard, or even being improperly documented foreigners, both of which could happen despite sound vetting efforts of any third party go-between. Either scenario could result in the confiscation of your vessel by federal authorities, and cast its return to your custody in doubt.

These above examples do not even include the prospect of ongoing maritime liens or losses due to the users’ negligence, which can also create a fine list of woes for the boat owner.

The take away is this: If you are a vessel owner considering renting your boat and see it as a “simple arrangement,” you just might want to reconsider, or at least do more research. It is very possible that putting someone else in the driver’s seat of your precious boat could result in something that really hurts.

Mark Ercolin is a maritime attorney based in Fort Lauderdale. The information offered in this column is summary in nature and shouldn’t be applied to specific cases or situations.