While building a new yacht offers the ability for customisation, an existing yacht has a track record and charter history and it gives the buyer the option of carrying out a refit to match your tastes and requirements, which is usually faster and more cost-efficient. However, a purchase is a complex process and the Stephenson Harwood's team has extensive experience and expertise advising on the sale and purchase of second-hand yachts.
The team can assist with all aspects of the transaction, such as drafting the purchase offer, negotiating the terms of the sale and purchase contracts, managing the completion meetings, payment arrangements and title registration.
Typically, when a buyer makes an offer to buy a yacht a detailed agreement known as a Memorandum of Agreement (MOA) is drawn up and signed by both parties. The MOA is often based on standard forms that will need to be adjusted to the transaction and ensure that position of the parties are adequately protected.
For instance, a buyer will want to make sure that the seller owns the yacht and therefore has the right to sell it, and that the yacht is free of any charges and liens, such as mortgages, claims and interests from third parties (e.g. outstanding marina fees or crew claims). Also, although the yacht may look like it is in good condition, carrying out a survey before purchasing a vessel is always advised. The type of survey required will depend on several parameters (age, condition, date of last survey etc), and to some extent the value and any material defects discovered in the surveyors report can be used to negotiate a reduction of the purchase price for repairs, or requesting seller to rectify matters at his own expense prior to completion of the contract or simply walk away from the deal.
On the other hand, the seller will want to make sure that he will be fully paid before title is transferred, that the payment he is going to receive from the buyer comes from legitimate sources and that he will not be exposed to reputation risk as a result of the transaction taking place. One of the main concern for the seller will centre on warranties and representations and the type of indemnities and remedies that the seller will have to provide; these are often areas of disagreement between the parties leading to lengthy negotiations.
At Stephenson Harwood we understand standard industry terms – and their drawbacks – and fully appreciate the risks faced by parties. Using practical, experience-based solutions, our lawyers are there to help you overcome obstacles as they arise.
