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to “Bristol” condition2 the fair market value of the Feadship
would increase to $3.2 million, and that replacement of the
Feadship purchased by petitioner with a brand new Feadship of the
same size would cost petitioner $8.7 million. Like the first
survey, however, this second survey was incomplete in that the
Feadship was not removed from the water and the hull was not
inspected. Also, the second survey did not reflect an estimate
of the restoration costs of the Feadship to Bristol condition.
As of the May 29, 1990, closing of petitioner’s purchase of
the Feadship, petitioner still had neither inspected nor seen the
Feadship. Also, petitioner was not present at the closing.
To assist with his purchase of the Feadship, petitioner
obtained a secured bank loan for $1 million. Petitioner paid the
proceeds of this loan toward the purchase price of the Feadship.
For a number of months after petitioner’s purchase, the
Feadship remained in Florida in the control of Mogul at the
facilities of Boats, Yachts & Ships.
In July of 1990, petitioner was in Florida and saw the
Feadship for the first time and realized that the interior and
exterior of the Feadship were in extremely poor condition.
Despite being aware of the condition of the Feadship, petitioner
2 Bristol condition refers to a yacht as being in very good
condition, with the varnish, paint, engines, and general
condition in a condition as good as or better than that of a
first-class hotel.
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