Understanding Italian law yacht construction mortgages

In the context of newbuilding projects, shipbuilders often provide refund guarantees (RG) to secure the repayment of instalments in case of early termination of the shipbuilding contract (SBC). However, most Italian builders propose, as an alternative approach, to transfer title (ToT) over the yacht during construction; similar practices are adopted also by some Dutch and German shipyards. If this was accepted by the buyer and his financiers, most lenders would request to register a mortgage over the yacht under construction in lieu of an assignment of the benefit of a refund guarantee. In this article, we will explore the legal framework, the construction mortgage registration process, and the main issues of enforcement of construction mortgages in Italy.