Once you and your buyer have agreed on a sales price, you may think the transaction is all over save for a handshake and the transferring of funds. Not true! As a wise man once said, “no job is complete until the paperwork is done.”
The paperwork involved in transferring the ownership of a luxury motor yacht can be very complex. If you are not working with a qualified broker, at the very least you should have your attorney help you with all of the necessary documents. If your boat is owned by a corporation, or more than one party, it is particularly important that you have proper legal advice before finalizing the sale.
At a minimum you will need:
- A Bill of Sale – be sure that you create a Bill of Sale that includes the agreed upon price, both your full name and the buyer’s full name. Be sure to include all addresses and get a valid form of ID from the buyer such as a driver’s license. The Bill of Sale also needs to include the make, model, type and size of the boat, all registration numbers, a list of everything on board that you are including in the sale, any repairs you have promised to make, and/or items that will remain “as is.” The Bill of Sale should also specify the rights and liabilities of both parties in the transaction.
- Receipt for down payment – If you take a down payment, in addition to the Bill of Sale, you should provide a written receipt specifying all of the above as well. If you have taken a deposit, make sure that the deposit is non-refundable, and specify that on the paperwork, so that you don’t take the boat off the market for an uncommitted buyer. You may need to stipulate the terms under which you are taking the deposit, and when and how it may or may not be refundable. For example: contingent on the outcome of the survey, or upon obligations to pay the balance by a given date, etc. Usually the standard deposit is 10% of the purchase price, but you are free to set any deposit amount you choose.
After drawing up the Bill of Sale/Sales Agreement, and accepting any deposits, set an agreed upon closing date with your buyer. This timeline should also be included in the Bill of Sale or Sales Agreement.
Payments and Transfer of Ownership
You should try to arrange for direct wire transfer of funds from your buyer’s bank to yours. If you cannot make such an arrangement, you need to receive payment in certified funds, either a bank check or certified check for both the deposit and the balance.
In a transaction of this nature, merely signing the back of the “pink slip” or the title isn’t enough. You also need to send a form to the boat registration agency specifying when, to whom, and for how much you sold your boat. Otherwise you may remain liable for accidents or liens caused by the new owner. They may also be other complicated pieces of legal paperwork that must be worked out depending on your vessel’s flag, where the transaction is taking place, your buyer’s country of origin, etc. etc.
As you probably have deduced by now, selling a luxury motor yacht is a lot more complicated than selling a car, a house, or another kind of boat for that matter. Again, avoiding paperwork pitfalls is where a competent broker will be worth his or her weight in gold.
Attempting to navigate the complex web of paperwork involved in such a high-end transaction on your own can be at best overwhelming, at worst cost you money, or compromise your sale entirely!
Your yacht broker on the other hand, will have extensive knowledge and experience in all of the legal aspects of a sale including, but not limited to: liens and loan payoffs, Bills of Sale, contracts, registration and tax issues, etc. Your broker can make the paperwork easy, and protect your interests from the initial offer through your closing.
Brokers are also familiar with some of the more complicated issues that can be involved in luxury yacht sales, such as corporate ownership and international taxation and registration issues. If you really stop and think about it, next to actually attracting buyers to your yacht, the most important role of your broker is to make the sales process as smooth and easy as possible for all parties.
Your broker is there to help your buyer as well. He or she may be able to help your buyer arrange for financing and also help to make all paperwork painless on the buyer’s side as well.
Just how bogged down could you get in the paperwork for a yacht sale?
Did you know in Florida alone, there are 23 different forms that are needed at the closing of a brokerage yacht? 27 for foreign-flagged vessels!
Wherever you are selling your boat, the local professional brokers will be well-familiar with all the paperwork requirements for their country, state, or province, from the initial offer to closing. Every state and every country has different documents required to complete a major yacht sale. Only by working with a qualified broker from the area, can you be sure that all documentation is up to speed.
Other Ways Your Broker Can Help
If you are working with a broker, he or she will also be responsible for keeping any deposit safe in an escrow account. This provides peace-of-mind for both you and your buyer.
Your broker is also there to arrange for a smooth and painless closing. Your broker will take on the responsibility of making sure that all paperwork is in, and has been properly executed, at your closing. The broker, and not you, will prepare the Bill of Sale/Sales Agreement, arrange for transfer funds, and file all necessary legal documents.
This holds true, and is especially important, even if you are selling a foreign-flagged vessel, or one that’s set up as a corporation, or any other special circumstances.
Once all the paperwork is done, all you need to do next is turn over the keys!
This Concludes our Series on Selling Your Yacht Fast. Watch for our next series: Your Motor Yacht Buying Guide.
It’s not always easy to stay on top of what’s new in motor yachts. If you would like to benefit from our expertise in these areas, or if you have any questions or comments about this blog post, do not hesitate to contact our Sales Specialists, or call us at (855) 318-6328.