Yacht Sale and Purchase: Title Due Diligence, Mortgage and Closing

Buying a yacht resembles no other acquisition. The asset is movable yet subject to publicity, it flies a flag that is not always that of its owner, it may be encumbered by securities invisible to the naked eye, and the place of its delivery determines its tax treatment. The transaction is therefore prepared upstream, on documents, not at the moment of signature. This page addresses securing the deal; disputes arising once the vessel is delivered are covered on our page on yacht disputes.

Verify title before discussing price

Every vessel registered in French territory, including those under construction, is entered on a register maintained by the administrative authority designated by order of the minister responsible for the sea (article L. 5114-2 of the Transport Code, in force since 1 January 2022). For each vessel a record is established stating in particular the particulars identifying her, the name of the owner or, in cases of co-ownership, all co-owners with the number of their shares or quotas, and the rights encumbering the vessel (article L. 5114-3). It is that record, and not the seller’s representations or the broker’s brochure, which establishes who owns the vessel and what weighs upon her.

The equivalent search abroad, on the register of the flag concerned, is indispensable as soon as the yacht flies the Maltese, Cayman or any other foreign flag, which is the case for most large units. It covers the chain of ownership, mortgage registrations and the existence of maritime liens, the latter having the disagreeable characteristic of following the vessel into the buyer’s hands without any prior publicity. A buyer who does not search for them discovers them on the day a creditor of the former owner has his vessel detained in port.

Ship mortgages: a regime rewritten on 1 May 2026

Practitioners working from older precedents must update their references. Order no. 2026-265 of 8 April 2026 recodified the law of ship mortgages at articles L. 5114-6-1 to L. 5114-6-10 of the Transport Code, in force since 1 May 2026. Article L. 5114-6-1 confirms that French-flagged vessels may be mortgaged, save those registered under point 3 of article L. 5112-1-3, that they may be charged only with conventional mortgages, and that the mortgage must be constituted in writing on pain of nullity. Article L. 5114-6-2 reserves constitution to the owner or to an agent holding a special power of attorney, which invalidates signatures given by a manager of a holding company without express authority.

Co-ownership calls for particular vigilance. Under article L. 5114-6-3, each co-owner may mortgage his undivided share, whereas the manager may mortgage the entire vessel only with the consent of a majority of interests representing three quarters of her value. Acquiring shares in a jointly owned unit therefore requires verifying not only the registrations encumbering the vessel, but those affecting the shares themselves.

Contract, escrow and sea trials

International practice relies on the MYBA forms, which organise a now standard sequence: signature of the contract, payment of a deposit into escrow, survey and sea trials, acceptance or rejection within a short period, then closing with delivery of documents and transfer of registry. Each stage deserves to be negotiated rather than accepted, particularly the conditions under which the buyer may reject the vessel after trials and recover his deposit, and the treatment of defects revealed by survey but considered minor by the seller. Whatever form is used, article L. 5114-1 of the Transport Code requires writing on pain of nullity for any instrument transferring ownership of a registered vessel.

There remains the tax and customs dimension, which often dictates the place of signature and delivery: the VAT regime applicable according to the buyer’s status and the place of delivery, the vessel’s customs status vis-à-vis the territory of the Union, and the consequences of declared commercial operation. These questions are settled before signature, never after. A delivery arranged for reasons of calendar rather than of tax regime is the most easily avoidable expense of the entire transaction.

Based in Paris, the firm acts in all French ports, from Le Havre to Marseille and from Nantes-Saint-Nazaire to Antibes, as well as before the Chambre arbitrale maritime de Paris, and works in English with shipowners, P&I clubs and foreign counsel.

Typical cases handled

The situations below are illustrative, anonymised scenarios. They show when the firm steps in and what the work consists of.

An undischarged mortgage found before closing

The registry search reveals a mortgage registered in favour of a foreign bank. The firm obtains the release before delivery of the bill of sale and secures the escrow.

Uncertain VAT status of a 24-metre yacht

The seller cannot prove payment of VAT. The firm assesses the customs risk, negotiates a warranty and structures temporary admission.

Change of flag and financing

The buyer wants Maltese registration with bank financing. The work bears on the sequence: deletion, registration, mortgage and release of funds.

Buying a yacht for charter

An investor buys a thirty-metre yacht to run it in charter for part of the year and use it himself for the rest. The sale contract is the same as for private use, but everything around it changes. The VAT treatment on acquisition and on charters depends on the actual commercial use and on the operating structure; commercial registration imposes safety and manning standards that a vessel built for pleasure does not necessarily meet; the crew falls under maritime employment law as soon as the vessel is operated; and the owner’s private use must be organised so as not to jeopardise the commercial regime. We structured the operating company, checked the vessel’s compliance with the requirements of the intended commercial register before signing, drafted the management agreement with the management company and calibrated the charter contracts on the MYBA form. The usual order of operations was reversed: structure first, signature second.

Two pages complete this one. Our pre-acquisition due diligence page explains what is checked before the deposit is paid, and why a mortgage search alone is not enough. Our page on disputes with yacht brokers covers commission, mandate and deposit.

Frequently Asked Questions

How can one check that a yacht is free of mortgages?

By obtaining a certificate from the register of the flag State, dated as close as possible to closing, and by reading it against the vessel’s history rather than on its own. A French registered yacht is searched at the competent register; other flags issue a transcript of registry showing the owner and any encumbrances. The point of the exercise is timing: a mortgage registered the day before completion will not appear on a certificate obtained a month earlier, which is why the search is repeated immediately before the funds are released. Where the yacht has changed flag, the previous register is checked for entries never discharged.

Who may grant a mortgage over a yacht?

The registered owner, and only to the extent the register records that ownership. Where the yacht is held through a company, the person signing must have authority under the company’s constitution, and that authority has to be evidenced by corporate documents rather than asserted. A mortgage granted by someone who is not the registered owner, or by a director acting beyond his powers, is a defect that surfaces at the worst possible moment, when the lender enforces or the buyer resells. For a buyer, verifying who can sign is part of the title work, not a formality left to the closing day.

Can a yacht sale be concluded orally?

Agreement can be reached without formality for most pleasure vessels, but the sale will not be effective against third parties until it is put in writing and registered where the flag requires it. Relying on an oral or purely electronic agreement creates two distinct risks: a seller bound earlier than intended, and a buyer whose ownership the register does not recognise, which blocks resale, insurance and any later mortgage. The usual structure is an offer, a memorandum of agreement, a survey and sea trial, then a bill of sale and registration. Each step carries its own conditions, and skipping one rarely saves time.

What is escrow for, and how is it secured?

Escrow holds the deposit and then the balance so that neither party has to rely on the other’s good faith at completion. It protects the buyer against paying before title passes and the seller against delivering before payment is received. Security comes from the identity of the escrow agent and from the wording of the instructions: who may release the funds, against which documents, within what time, and what happens if the sale fails. Escrow held by a party’s own broker, on terms allowing release on that broker’s instruction alone, offers far less protection than the arrangement appears to promise.

What should the bill of sale contain?

The identification of the vessel and of the parties, the price and its payment, the date and place of delivery, the condition in which the yacht is transferred, the warranties given and excluded, the governing law and the forum. It should also record the inventory, tenders and equipment included, which is the most frequent source of argument after closing. Where a mortgage is discharged out of the proceeds, the deed and the discharge are coordinated so that the buyer never owns an encumbered vessel. A form drafted for one flag and reused for another is a familiar source of difficulty.

Does the place of delivery have tax consequences?

Yes, and they can exceed the negotiating margin on the price. Delivery inside the customs territory of the European Union, delivery outside it, and delivery of a yacht already placed under a suspensive procedure do not produce the same VAT and customs position, and the yacht’s VAT status has to be documented for any resale. Union Customs Code procedures such as temporary admission carry conditions on the owner, the use and the duration, and losing the benefit of one retrospectively is expensive. Place and manner of delivery are therefore negotiated with the tax position in view.