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Don't Let a "Demise Charter" Lead to Your Demise!

5/7/2015

8 Comments

 
It has come to our attention that some charter operators will tell prospective guests that they don't have to comply by the US Coast Guard's Inspected Passenger Vessel regulations by offering a Demise or "bareboat" charter. The scam works something like this:

The operator leases you and your party a boat for the afternoon. It's your private pleasure boat now, and not subject to passenger limit regulations. Then the operator has you hire them as the crew for your "private charter".

But for this to work, YOU, the customer have to assume full control and responsibility for the vessel. You have to pay for the fuel, you have to pay for all of the food and beverages, and you have to pay for the crew, etc.

And (and this is a *big* and!) if anything goes wrong, YOU are legally liable for it. That's right. If anything goes wrong, someone gets hurt or worse, a collision, whatever .. it's on you, the customer. Remember, you did a "bareboat" charter. You signed a contract saying you are in full control of the vessel. 

That's a scary thought, isn't it? You go out for an afternoon of fun with your friends, something happens, and now you're on the hook for damages!

Fortunately, the US Coast Guard got wise to this a while back, resulting in the Passenger Vessel Safety Act of 1993. The Safety Act closed the Demise/Bareboat charter passenger count loophole by statutorily defining *any* charter with a crew provided, carrying more than six (6) passengers, as a Small Passenger Vessel (SPV) and as such, subject to USCG inspection requirements, regardless of who has control of the vessel or who's paying for the fuel. 

Unfortunately, abuses of the "Demise" charter scam continues. Operators using uninspected vessels continue to offer their services, telling prospective clients that "those rules don't apply, because this is a private charter." 

What they're not telling is that the loophole was closed more than 20 years ago, that the charter they're offering is illegal, and that if anything goes wrong on a Demise aka "bareboat" charter, it's the customer who's legally and financially liable. 

Caveat emptor, my friends! If you have a group of 7 or more people, make sure you're doing your trip with an Inspected Passenger Vessel, and if the charter operator starts using words like "demise" or "bareboat charter", don't walk - run in the other direction! 

*Originally posted by Sailing Montauk
8 Comments
Drew link
8/5/2015 07:58:40 am

I don't really see how you being held responsible for crashing the boat is a scam. If you crash a boat then you are responsible. It definitely doesn't sound like a good deal for the customer though so I would still stay clear of that kind of rental. Thanks for the heads up!

Reply
Laura
11/14/2015 11:18:41 am

Hi Drew,
Thank you for your comment. The "scam" involves charter companies disregarding USCG rules. Most of the time, the charterer doesn't know the rules and is none the wiser until/unless something happens. Any boat can operate as a 6-pack uninspected passenger vessel but we routinely see vessels we know to be chartered loaded with more than 6 passengers, and oftentimes, more than 12.
Laura

Reply
Amber Charter link
8/8/2017 05:17:07 am

these are some very intresting point which could be quite helpful to know.

Reply
Bobbi M link
2/13/2021 07:01:54 am

This is a greatt post

Reply
seafariyachtcharters link
8/5/2021 06:30:27 am

From commercial point of view, it is the moral responsibility of the seafarers to ensure that the ship owner profits from the ship operation.

Reply
Ratty
8/14/2021 05:55:56 pm

There has been a lot of enforcement since this article was first published. The key is the combination of (1) you rent the boat and (2) you "hire" the owner as crew. That precisely defines it as a "passenger vessel." If it's a legitimate bareboat charter -- among other things, the "renter" hires the captain and crew -- it's a "recreational vessel" not a "passenger vessel." There are other rules and a number of Coast Guard "guides" or "tips".

Reply
Mr.Gregg Powers
6/10/2022 01:18:52 am

As long as there is recreational bareboat charter agreement signed and present if boarded. Make sure that charterer pays 3rd party captain (licensed or not) approved by owner of course. Charterer pays for insurance and fuel it's 100% legal up to 13 people including charterer(NO COI) Collect names of all passengers for bareboat agreement prior to charter. These rules are old and stupid. More people die on state and interstate highways every month than from illegal charters in the last 100 years.

Reply
Ratty
6/13/2022 11:18:46 am

These rules are from 1994. Boats are not like cars, where nearly every adult has a license and regularly goes 70 mph. The problem with passenger vessels and recreational vessels carrying passengers is that the passengers are largely ignorant in how to operate the vessel and rely on the qualifications and skill of the operator. It's a lot more analogous to flying an airplane. If you wanted to use ground transportation as an analogy, the closest ones are "common carriers" (railroads, buses, licensed taxicabs) where the law has long recognized passengers are owed heightened duties of care. Boat Ubers are not a legal thing.

Reply



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