Before You Sign: 5 Critical Clauses to Scrutinize in a Yacht Purchase Agreement

The journey to yacht ownership is exhilarating, filled with visions of open water and serene sunsets. For many, this journey begins by exploring the vast market, which includes outstanding pre-owned vessels, such as the many high-quality Used Jeanneau yachtsfor sale. However, before you can cast off, you must navigate the crucial legal process of the purchase. The cornerstone of this process is the Memorandum of Agreement (MOA) or Purchase and Sale Agreement. While your broker and maritime lawyer are your indispensable guides, a personal understanding of the contract's key clauses is your ultimate protection. Scrutinizing the fine print ensures your investment is secure and your dream doesn't turn into a legal nightmare. Here are five critical clauses that every prospective yacht buyer must analyze with professional diligence.

The "Subject To" Clauses: Your Safety Net

This is arguably the most important section for any buyer, as it builds your exit ramps into the contract. These "subject to" provisions, or contingencies, make the entire agreement conditional upon the satisfactory outcome of key events. The two non-negotiable clauses are "subject to survey" and "subject to sea trial." A well-drafted agreement should state that the vessel's acceptance is conditional upon a survey and sea trial that are "to the buyer's sole and complete satisfaction." This specific language is vital; it gives you, the buyer, the absolute discretion to walk away if you are unhappy with the results for any reason, without needing to prove a "material defect." Vague wording that limits your rejection right can trap you in a deal for a vessel with numerous smaller issues that, while not "material," collectively diminish its value and your enjoyment. This clause is your primary tool for either renegotiating the price based on survey findings or retrieving your deposit and terminating the deal without penalty.

The Inventory Clause: What’s Included, and What’s Not

A yacht is more than just a hull and engine; it is a complex collection of equipment, from sophisticated navigation systems and safety gear to tenders, water toys, and galley appliances. The inventory clause and its corresponding schedule are critical for defining exactly what you are buying. Never rely on a verbal agreement or a vague statement like "sold with all gear aboard." A proper agreement will have a detailed, itemized inventory list attached as an addendum. This list should be created and agreed upon by both buyer and seller early in the process. Equally important is a list of "Excluded Items." The seller may wish to keep personal effects, specific artwork, or sentimental items. Explicitly listing these exclusions prevents any misunderstanding or dispute on the day of closing. Before signing the final acceptance documents, you or your representative should physically go through the yacht and check that every included item is present and every excluded item has been removed.

The Acceptance and Rejection Protocol

Flowing directly from the "subject to" clauses, the acceptance and rejection protocol outlines the precise procedure following the survey and sea trial. This clause dictates the timeline you have to make your decision, typically a period of 48 to 72 hours after the survey report is received. It should clearly specify how you must deliver your notice of acceptance or rejection—usually in writing to the broker or lawyer. The most critical component of this clause is what happens upon rejection. It must state unequivocally that if you reject the vessel in accordance with the agreement, your full deposit held in escrow will be returned to you immediately and without any claim or holdback from the seller. Furthermore, a robust clause will outline the process for renegotiation. Should the survey reveal defects, this section provides the contractual framework for presenting a conditional acceptance, which might propose a price reduction or require the seller to remedy specific faults to your surveyor's satisfaction prior to the final closing.

The Title and Encumbrances Warranty

This clause provides a fundamental legal protection: the seller's guarantee that they are transferring clean and clear title. The seller must warrant that the yacht is free from all liens, mortgages, claims, and encumbrances. These "encumbrances" can include a ship's mortgage, outstanding yard fees for repairs or storage, unpaid crew wages, or even maritime liens from a previous incident that you are unaware of. A maritime lien follows the vessel, not the owner, meaning you could inherit the previous owner's debts. To protect you, the agreement must obligate the seller to pay off all debts and deliver proof, such as a Deletion from Registry certificate and a formal abstract of title or lien search. Your lawyer will verify these documents, but the contractual promise from the seller is the foundation of this protection. Without this warranty, you risk buying a significant financial liability along with your new yacht.

The Closing and Delivery Clause

This clause orchestrates the grand finale of the transaction. It sets a firm date, time, and location for the closing. The location is not just a matter of convenience; it can have significant tax and registration implications, so it must be chosen with legal advice. The clause will detail the "Protocol of Delivery and Acceptance," a key document signed at the handover. By signing it, you confirm that the vessel has been delivered in the agreed-upon condition, the inventory is correct, and you formally take ownership. This protocol triggers the final steps: your lawyer will authorize the release of the purchase funds from escrow to the seller, and the seller will hand over all essential documentation. This includes the signed Bill of Sale, original registration certificates, equipment manuals, maintenance logs, and any necessary customs or tax forms. This clause ensures a smooth and orderly transfer of both the physical asset and its legal identity.

Ultimately, a meticulously drafted purchase agreement is the bedrock of a successful yacht acquisition. While the process can seem complex, focusing on these five critical clauses will empower you to protect your significant investment. By pairing your own diligence with the guidance of a qualified maritime lawyer, you ensure that the path to ownership is secure and transparent. This careful legal groundwork is what transforms a daunting transaction into the beginning of a wonderful adventure, whether you are commissioning a new build or choosing from the excellent Used Jeanneau yachts for sale to begin your life on the water.