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What to buy? – Choosing the right vessel to buy will largely depend on your budget, lifestyle and the intended use of it. You may be an experienced seaman, a complete beginner new into the world of yachting and looking to buy a boat either for private use or to operate commercially. Whether you are starting from scratch or perhaps a boat purchase is something you have been considering for some time, use the YachtingLawyers Buying a Boat Guide as a useful starting point to guide you through the process.
New build – You may be buying a boat for private use or to operate it commercially. Whether you are buying direct from the boat builders / manufacturers or through a yacht broker / agent or perhaps ordering the construction of a new yacht or stock boat we would always recommend consulting YachtingLawyers in advance of agreeing the sale. There are often complex legal requirements and contractual law issues surrounding the sale and taking advice before you commit yourself will help to ensure your investment is protected.
5 things to be aware of when buying a new boat:
Second hand market – Buying a boat can be one of the most single expensive items ever purchased and often money is exchanged informally, under a simple verbal contract. It is not until something goes wrong that parties wish they had gone along the legal route from the outset, resulting in an expensive and unnecessary lesson to learn. Use YachtingLawyers for an informal, no obligation discussion before you commit to a sale to avoid many of the common mistakes made.
Top 5 tips for buying a second-hand boat:
Checking Seller’s Title – When buying a boat you want to make sure that the seller owns the boat and therefore has the right to sell it, and that the boat is free of any charges and liens, such as mortgages, loans and interests from 3rd parties (e.g. outstanding marina fees). When investigating title, checking the UK Ship Register is a good starting point. Contact YachtingLawyers we can carry out this investigation and obtain searches on your behalf.
Although registering your vessel is strongly recommended there is no legal requirement for boat owners to register their boat on the Register of British Shipping so if the vessel you’re buying is unregistered, this makes investigating title more difficult.
Top Tips for checking seller’s title on unregistered boats:
If you are buying a new boat you should always receive a Builder’s Certificate from the boat builder when buying. With second hand boats you will receive a Bill of Sale as evidence of the sale contract. Contact YachtingLawyers: we can prepare a Bill of Sale for you and negotiate and prepare a sale agreement on your behalf.
Buying abroad – outside of the EU – If you are thinking of buying a boat abroad, enlist the help of YachtingLawyers to help guide you through the process. We can liaise with the seller / broker and reduce the risks involved in buying a yacht overseas. One of the main risks is getting the seller to warrant that the tax and duties of the territory in which the yacht is being purchased have been paid. You will also need to be aware of any tax free temporary importation rights for yachts being brought outside of the EU.
Buying abroad – in the EU – When buying a boat within the EU, one of the main considerations is VAT. As a buyer you will want to be satisfied that the VAT on the yacht has been paid to ensure you are not landed with VAT demand when your vessel is in the EU. In the absence of the seller being able to prove the VAT status of a vessel, use this to re-negotiate the price, or insist on an indemnity from the seller. Contact us at YachtingLawyers to find out more.
Joint or Multiple ownership – If two or more persons buy a boat together, an important consideration will be the issue of ‘survivorship’ and what happens to the deceased owners share in the vessel in the event of their demise. As well legal issues, there will also be the practical aspects of managing, operating and maintaining the boat, all of which should be agreed in writing prior to the vessel purchase. Contact YachtingLawyers we would be pleased to advice on joint/multiple ownership and prepare a legally binding agreement which sets out the owners’ respective interests in the vessel.
Raising Finance – There are many ways to finance a boat, from the traditional to the more innovative. Traditional sources for purchasing new and second-hand boats are typically loan or mortgage arrangements with banks and finance companies, which will be subject to you making a successful loan application. Key things to be aware of when entering into a finance arrangement with a lender include:
When dealing with high value loans, some of the banks and large marine financiers take a mortgage over the boat. This is known as secured lending and the lender will often insist on the boat being registered on Part 1 of the UK Ship Register. By registering the vessel, not only does the lender use the vessel as security against the debt, they will also be able to register their interest against the vessel. We strongly recommend taking legal advice before taking out a loan or mortgage on a vessel. Contact YachtingLawyers to discuss your marine finance requirements with us and we can guide you through the process. We offer introductions to our network of trusted marine financiers, and we’ll manage the relationship to help you find a finance arrangement that suits you.
Taking out insurance – Taking out insurance for your vessel is vital for the protection of your boat, its passengers & crew, other vessels and any claims made against you by 3rd parties. Before choosing an insurer, consider the options very carefully and always use a recognised and reputable marine insurance company, be wary of cheap quotes! The type of insurance you need depends largely on the type of boat you have, how it will be operated and where the boat will be used, for example non-tidal waters, coastal cruising, full-coastal and sea-going cruising. Make sure the insurance covers the value of the boat (including contents) and its liability for collusions or injuries at sea. Depending on the size of the boat you may want hull coverage and protection indemnity coverage (P&I). Contact YachtingLawyers for help & advice regarding your vessel’s insurance arrangements.
Obtaining a survey – Although the boat may look like it is in good condition, carrying out a survey before purchasing a vessel is always advised. Any offer to purchase a boat should always be made subject to a satisfactory survey and in some cases a sea trial. The type of survey required will depend on the boat (age, condition, date of last survey etc), and to some extent the value. It may be that a hull survey is required, or a full survey to include the rig, sails and engine and the equipment on board. If the engines form a substantial part of the value of the boat, you may want to consider having a separate detailed engineers report. Or if there are particular technical aspects which you require verification on, make sure to instruct the surveyor on these aspects. A surveyor’s report will provide some level of guarantee about the vessel since he will be legally liable for the costs of remedying any defects that he has negligently missed. 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.
Top tips for instructing a surveyor:
Moorings – When buying a boat, where to keep it will always be a consideration. Depending on the size of vessel you may be able to keep it in a boat storage lock-up, sailing club, or even on a trailer at home. Owners wishing to keep their vessels in a marina should contact YachtingLawyers to be guided through finding suitable berthing options in required locations.
We also advise on obtaining leisure moorings and berth holders licences. Moorings are available from local authorities and private landlords, YachtingLawyers work alongside various associations to be able to assist you in your search and get the best advice on locating and purchasing moorings throughout the UK.