Buying or selling a superyacht is one of the most significant transactions a yacht owner will undertake, involving far more than just negotiating a sale price. Andrew Charlier, Head of Yachts and partner in the Monaco office of international law firm HFW - known for advising leading shipyards and high-profile yacht owners on some of the industry’s most complex and high-value projects - answers key legal questions that luxury yacht owners often have when buying or selling a luxury yacht for the first time.
What are the common legal red flags in second-hand superyacht transactions for buyers and sellers?
Assuming the key commercial terms are already in place, there are a few legal considerations worth highlighting. First, it’s essential to know your customer, so all the standard KYC and due diligence checks need to be completed - without them, the transaction can’t move forward, and you could face issues later. Another consideration is sanctions and compliance. Banks, brokers, lawyers and other professionals are under strict obligations, and buyers or sellers connected to sanctioned jurisdictions will struggle to complete a deal.
The biggest risks are issues with title and encumbrances. Buyers need to be confident that the seller actually owns the yacht and has the authority to sell, and that there are no outstanding mortgages, maritime liens or claims that could carry over. Confidentiality can also be a source of tension. Some sellers want to protect their privacy by limiting who knows the yacht is on the market, while buyers naturally want as much information as possible. This needs careful management from the outset.
Finally, yachts are often sold through sales brokers. While most are experienced professionals, misunderstandings can arise if communication between buyer, seller, brokers and lawyers is not well managed. Clear roles and responsibilities should be set early to avoid friction.
Yacht sales are documented through contracts called a Memorandum of Agreement (MOA) and a Purchase and Sale Agreement (PSA) - what are the differences?
In Europe, yacht sales are typically documented using the MOA, created by MYBA. In the US - especially in Florida - the equivalent is IYBA’s PSA form. When it comes to second-hand yacht sales, this sometimes leads to a bit of a “battle of the forms” between Europe and the US. In recent years, though, the MYBA MOA form has become more widely accepted for international transactions taking place with a US nexus.
The key difference between both contracts comes down to what they allow the parties to do. Under the MYBA MOA, when the contract is signed and after they have put down a 10 per cent deposit, the buyer only has limited rights to walk away. They have the right to carry out both a sea trial and a condition survey after the sea trial, which is usually a few hours on the water at the seller’s expense. The buyer has a 24-hour, no-questions-asked right to withdraw and get their deposit back if the yacht doesn’t perform as expected or for whatever reason they wish to withdraw from the purchase.
The survey, which is the second thing to happen, works a little differently. It must be carried out by a qualified marine surveyor, and it only gives the buyer the right to withdraw if there are “defects” as defined in the MOA - basically, issues serious enough to justify rejecting the vessel. If the surveyor finds lesser defects, then the buyer has to proceed at the agreed price.
The PSA takes a different approach: the buyer is deemed to have rejected the yacht unless they give timely written notice of acceptance. So the buyer who wishes to proceed must ensure that their written notice is given by the relevant deadline in the PSA in order to keep the transaction on foot. From a seller’s perspective, that can feel less attractive - it’s effectively giving the buyer an option without firm commitment. But from the US point of view, that’s the norm: the buyer should be free to complete inspections, run surveys and then decide whether or not to move forward with the purchase.
Beyond a physical survey, what due diligence should a buyer insist on to ensure the yacht is legally secure?
From the buyer’s perspective, beyond the physical survey, is the question: Will I get good title, and will I truly own the yacht? Because yachts cross borders, flags, and tax regimes, transactions often involve multiple areas and jurisdictions of law (shipping, tax and compliance), and so specialist legal input is essential. Your lawyers will need to run through a series of checks to confirm the yacht’s registration, check for any existing mortgages or encumbrances and review the seller’s corporate authority. Most importantly, they’ll scrutinise the bill of sale - the document that actually transfers ownership - to make sure it’s valid and can be registered with your chosen flag.
What clauses help limit post-sale liability for buyers and sellers?
Both the MOA and PSA contain exclusion clauses which make clear that the seller gives no warranties about the yacht’s condition beyond what is expressly written into the agreement. The two exceptions are: the yacht’s title - the seller must guarantee they have the right to sell; and debt-free status - the yacht must be delivered free of mortgages, liens, and other claims.
Sometimes, buyers ask for a personal guarantee from the seller on these points. Sellers often resist, as it creates ongoing exposure, but it remains one of the strongest protections for a buyer. For sellers, the key protection is to rely on these exclusion clauses. Once signed, they prevent buyers from pursuing claims based on pre-contract statements or broker promises, unless they’re specifically written into the agreement.
How do I check if there are outstanding mortgages or liens on the yacht?
Start by ordering a transcript of registry from the flag state. It confirms current ownership and lists any registered encumbrances (e.g., mortgages). The seller should disclose these upfront, but the transcript is your backstop before funds move. If a mortgage exists, make sure closing mechanics are set so it’s discharged before or at completion. This usually involves coordination between the seller, buyer and lender (the bank). The buyer’s purchase price is used to repay the lender, the mortgage is released, and any remaining funds go to the seller.
Having the transcript is critical. If the seller forgets to mention a mortgage, the transcript will reveal it before the buyer pays. Without this check, the mortgage would remain attached to the yacht, meaning that the buyer would not receive a clean and unencumbered title. Relying solely on the seller’s warranty would be risky in such a situation.
The MOA will typically require the seller to pay off and discharge any liens before closing and provide the buyer with documentation to confirm this. If anything is missed, the buyer should seek an indemnity to cover any remaining risk. Without taking these precautions, the buyer is essentially relying on the seller’s warranty alone, which may not provide adequate protection.
Remember: transcripts won’t capture unregistered maritime liens (e.g., crew, fuel, port fees), so pair the registry check with targeted no-lien statements and other due diligence confirmations.
What about outstanding liens or maritime liens?
Through the MYBA MOA form the seller has to warrant clear title and freedom from liens — but enforcing these warranties, if needed, can be tricky. Many yachts are held by single-purpose offshore companies that are dissolved soon after sale, leaving buyers without recourse. To address this, the MYBA MOA recommends a personal guarantee from the beneficial owner of the seller company. If a lien is identified during closing, the buyer may require the seller to settle it - or to provide an indemnity - before going ahead.
It’s also worth understanding the special concept of maritime liens, which, although they are related to, are different from ordinary liens. They can arise automatically, and they usually survive a change of ownership. Common maritime liens include unpaid crew wages, port fees, fuel bills, or shipyard invoices, and can lead to problems.
This is why due diligence on liens is so critical in yacht transactions. You want to do everything possible to identify and deal with them before completion, so you don’t inherit someone else’s problems.
What is the difference between buying a yacht and buying the company that owns it?
Sometimes a buyer considers purchasing the company that already owns the yacht, rather than the yacht itself. At first glance, this can seem simpler - especially if the company structure works well, perhaps with a charter operation already in place.
But there are risks. Buying the company means taking on all its liabilities - tax, accounts and any hidden obligations - not just the yacht. For that reason, most buyers ultimately decide it’s cleaner to set up their own structure and purchase the yacht as an asset. That said, there are circumstances where taking over the existing company makes sense, and it does happen.
What are the main warning signs in a yacht’s registration history, and are there particular flags or jurisdictions that cause recurring legal complications?
When it comes to registration history, it’s not just about whether the seller currently has title, but also about the chain of ownership over time. On yachts that have changed hands several times, you will need to carefully check the recent ownership history, which means reviewing past documentation, tracing previous owners and making sure there are no gaps or issues that could affect legal title. Essentially, you’re ensuring that the yacht’s chain of title is clean and undisputed before proceeding.
There are lots of different reasons why people choose to flag a yacht in one place or another. In Europe, for instance, we’d usually distinguish between EU flags (like France or Italy, with Malta being a very popular choice) and non-EU flags, which, since Brexit, now include the UK and Isle of Man, along with long-standing favourites like the Cayman Islands and the Marshall Islands. Geography and even fashion play a part - some flags tend to be more popular in certain regions at certain times. That said, there aren’t really any flags that we would view as outright “red flags” from a legal perspective.
Where it does matter is with financing. Banks each have their own list of flags they’re willing to accept, and some they won’t for regulatory or risk reasons. Flag states are also ranked internationally based on inspections and compliance records - think of it like a “league table”, with some in the premier division and others further down.
For buyers, the practical question is usually whether to keep the seller’s existing flag or re-flag at completion. Sometimes the buyer sticks with the same flag, but frequently they change it to suit their own plans and circumstances.
How do you ensure VAT or import duties are properly settled in a yacht sale - and who bears liability if they’re not?
When it comes to VAT, there are really two separate but equally important questions to keep in mind.
The first is the yacht’s VAT-paid status. A yacht may be “VAT paid” if VAT was settled earlier in its life - for example, when it was first purchased from a shipyard. That status is significant because any yacht cruising in EU waters must either be VAT paid or benefit from a VAT exemption. A non-EU owner, for instance, can bring their yacht into the Med on a temporary VAT exemption and enjoy the season without issue, but an EU resident using a yacht privately will need to ensure VAT has been paid or otherwise accounted for.
This is why broker listings often make a point of stating “VAT paid” or “not VAT paid.” For EU buyers, VAT-paid status has a direct impact on value, because if the yacht is not VAT paid, they’ll need to account for VAT after purchase. Sellers, in turn, need to be ready to answer questions about status and provide evidence. VAT status also influences the place of delivery: a VAT-paid yacht will usually be delivered within EU waters, while a yacht that is not VAT paid is more often delivered outside the EU.
The second question is VAT on the sale itself, which is dealt with under the MYBA MOA. The contract places the risk of VAT on the transfer of ownership squarely with the buyer. This makes the delivery location a key point to consider, because if the deal is structured incorrectly and VAT becomes payable, the tax authorities will expect it to be settled. In practice, that can create headaches for both buyer and seller.
So VAT has to be addressed from both angles: the yacht’s existing VAT-paid status and the risk of VAT arising on the transfer of ownership in the transaction itself. Getting either wrong can cause significant problems, so both parties need to take care in planning, structuring and documenting the deal.
If the yacht is delivered in a different condition than described, or defects emerge after closing, what legal remedies exist?
Under the MOA, buyers have limited remedies because there’s no warranty as to the yacht’s condition. If defects surface after the survey, there’s little recourse. Sellers often disclose known issues upfront, which can be addressed in the contract, so the buyer goes in fully informed. Hidden defects are trickier, especially since condition warranties are excluded under the general terms of the MOA.
One protection is that after the sea trial and survey, the yacht remains at the seller’s risk until closing. This prevents changes in condition - like damage or use - between inspection and delivery. The MOA requires that the yacht be delivered at closing in the same condition as at the survey, giving the buyer some assurance despite the lack of broader warranties.
What are the legal implications and buyer protections when purchasing a repossessed or distressed yacht?
A repossessed yacht is often one being sold by a lender, usually following a loan default. In such cases, the lenders will have the right to take possession and sell a mortgaged yacht to recover what’s owed, typically through a judicial auction. One key advantage under maritime law is that the buyer generally acquires clean title, free of prior claims. Depending on the jurisdiction, the judicial sale process can also extinguish other potential debts or claims, providing additional legal protection.
A distressed yacht, on the other hand, simply means the seller is under financial pressure or wants a quick sale. While this can create commercial opportunities for buyers, it doesn’t usually raise legal issues.
Any errors or omissions are the author's alone. This article does not provide, or replace, legal, financial or tax advice.