Owning a yacht with others falls under a special regime, the co-ownership of vessels in Articles L. 5114-30 and following of the Transport Code, and not under the joint ownership of the Civil Code. Two default rules surprise almost every buyer: all co-owners are deemed to be managers until a published decision appoints one, which makes them liable without limit and jointly and severally for the vessel’s debts; and each may sell his share to whomever he chooses, the law providing no right of pre-emption.
Four friends buy a forty-five footer together. Each puts in a quarter, and nobody signs anything beyond the bill of sale. The first year goes well. In the second, one wants to renew the rigging, another thinks the expense absurd, a third charters the boat for a few weeks without telling the insurer, and the fourth wants out and has already found a buyer resident outside the Union. Not one of those four situations is dealt with by the bill of sale, and all four are settled in advance by an agreement of a few pages.
A special regime, not the Civil Code’s joint ownership
Owning a vessel with others is governed by Articles L. 5114-30 to L. 5114-50 of the Transport Code, which organise the co-ownership of vessels, known as copropriété quirataire. That regime does apply to a pleasure boat, Article L. 5000-2 of the same code defining a vessel as any floating craft built and equipped for maritime navigation in trade, fishing or pleasure. And Article L. 5114-1 requires, on pain of nullity, a written instrument for any act creating or transferring ownership of a registered vessel.
The difference from joint ownership under Article 815 of the Civil Code is structural. Where joint ownership operates by unanimity and allows each owner to force a division at any time, co-ownership of a vessel operates by a majority of interests and organises exit through its own mechanisms. It should also be known that the co-ownership does not own the vessel: the Court of Cassation holds that the vessel is not an asset of the co-ownership but belongs to each co-owner in proportion to his share (Cass. Com., 19 December 2018, No 17-20.122). Each shareholder therefore has standing to sue personally.
All managers by default, therefore all liable without limit
This is the most expensive trap and the easiest to avoid. Article L. 5114-32 provides that all co-owners of the vessel are deemed to be managers, unless a decision to the contrary is published. And Article L. 5114-38 makes co-owner managers liable without limit and jointly and severally for the debts, notwithstanding any agreement to the contrary. Absent a published decision appointing a manager, each therefore answers for the whole of the vessel’s debts, whatever the size of his share.
Article L. 5114-39 allows non-managing co-owners to limit their obligation by agreement to the extent of their interests, but Article L. 5114-41 makes such agreements enforceable against third parties only if they are published. Appointing a manager, publishing the decision and publishing the limiting agreement is therefore the first act of asset protection, before any discussion of the usage calendar. Note also that any contractual limitation of the manager’s powers has no effect as against third parties, under Article L. 5114-33.
Decisions, the minority and deadlock
Decisions relating to operation are taken by a majority of interests, each co-owner having voting rights corresponding to his share, and agreements to the contrary permitted by the text must be in writing on pain of nullity (Article L. 5114-30). Mortgaging the vessel escapes that rule and requires a majority representing three quarters of the value of the vessel (Article L. 5114-34). Expenses are shared in proportion to interests, with an obligation to meet the manager’s regular calls for funds (Article L. 5114-31).
The minority is not without recourse, but the recourse is narrow. Article L. 5114-36 gives it an action in court within three years, notwithstanding any clause to the contrary; annulment nevertheless requires the decision to be contrary to the general interest of the co-ownership and to have been taken for the sole purpose of favouring the majority, two cumulative conditions rarely met. In case of genuine deadlock, Article L. 5114-35 allows the court, on the application of a co-owner, to appoint an interim manager, to order the sale of the vessel by auction, or both.
Getting out: transfer is free, except where the flag is lost
Article L. 5114-42 provides that each co-owner may dispose of his share. There is therefore no right of pre-emption, no approval right and no statutory right of withdrawal for the benefit of the other shareholders: the neighbour on the pontoon may find himself partnered with a stranger overnight. The transferor moreover remains liable for debts contracted before the transfer is published. The only withdrawal organised by the law, in Article L. 5114-45, is reserved to a co-owner who is a member of the crew and has been dismissed.
One statutory lock does exist, and it is powerful: Article L. 5114-43 subjects to the authorisation of all the other co-owners, notwithstanding any clause to the contrary, any transfer which would cause the vessel to lose its French flag. The sale of a share to a buyer who is not a national of the Union may therefore be blocked by a single shareholder. Outside that case, it is for the agreement, and for it alone, to organise the pre-emption and approval rights the law does not provide.
The holding company: the real alternative, and its flag constraints
A property-holding civil company is excluded, a vessel being movable property. That leaves the ordinary civil company, the limited liability company and the simplified joint stock company. Interposing a legal person removes the unlimited joint and several liability of Article L. 5114-38, which is specific to co-ownership of vessels, and replaces the transfer of shares in the vessel with a transfer of company shares, which is more flexible and easier to control in the articles by approval and pre-emption clauses.
The trade-off lies in governance, accounting and the treatment of the members’ private use, which must be invoiced or accounted for as such on pain of a tax assessment. Above all the flag conditions must be checked; they are no longer in the Customs Code, Articles 217 to 219 having been repealed in 2022, but in Articles L. 5112-1-1 and following of the Transport Code. The vessel must belong at least half to eligible persons, and Article L. 5112-1-5 requires natural persons not resident in France to elect domicile there, a condition which, in a co-ownership, applies to each of the managers.
Timeshare: a regime people assume applies only to real property
This is the most counter-intuitive point of the subject. The section of the Consumer Code devoted to timeshare does not cover buildings alone: Article L. 224-70 defines a timeshare contract as one, of more than one year’s duration, by which a consumer acquires for consideration the enjoyment of one or more immovable or movable assets, for residential use, for determined or determinable periods. A yacht with berths is a movable asset for residential use.
As soon as a professional, a yard, a broker or a fractional ownership operator confers on a consumer periodic enjoyment for more than one year, the whole protective regime applies: a prohibition on presenting the transaction as an investment, formalised pre-contractual information, fourteen days of withdrawal, extended to one year and fourteen days if the withdrawal form was not provided, and a prohibition on any advance payment during that period. An agreement between shareholders in a vessel, or between members of a company, with no professional and no consumer, escapes it: the dividing line is the capacity of the parties, not the nature of the asset.
Insurance, tax and running costs
Two articles of the Insurance Code govern the agreement. Article L. 173-14 provides that on a transfer or a bareboat charter, the insurance continues automatically for the benefit of the new owner or the charterer, subject to informing the insurer within ten days, the insurer being able to cancel within the month. Article L. 173-15 specifies that only the transfer of a majority of the shares triggers that mechanism: the transfer of a minority share does not. In practice, pleasure policies make cover conditional on the users being named, on their qualifications and on the navigation area, and a paid-for use recharacterised as a charter falls outside a private-use policy.
On tax, the former annual francisation and navigation duty has given way to the annual tax on maritime craft for personal use, in Articles L. 423-4 and following of the Code of Levies on Goods and Services. A foreign flag does not avoid it: Article L. 423-11 attaches to the taxable territory any craft whose owner is a natural person principally resident in France or a legal person having its seat there. Each shareholder being an owner in proportion to his share, the allocation of that tax and of the running costs, berth, winter storage, hauling out and crew, falls under Article L. 5114-31 and under the agreement.
What the firm does
The firm first settles the structure, co-ownership of the vessel or a company, by reference to the joint liability for debts, the flag constraints, the number of users and the tax position, then drafts the constitutive instrument and carries out the publication formalities without which the protective clauses are unenforceable against third parties. Appointing a manager and publishing both that decision and the agreement limiting the non-managers’ liability are the two steps that most often have not been taken.
It then drafts the agreement itself: the usage calendar and how it rotates, the calls for funds and what happens on default, pre-emption and approval on a transfer, the valuation method for a share, an exit mechanism where the law provides none, and the treatment of chartering and of insurance. Where a dispute has already arisen, it acts on the minority’s action under Article L. 5114-36, on the appointment of an interim manager or on the sale by auction under Article L. 5114-35. A first assessment is normally possible within a few days on the strength of the vessel’s papers and the documents signed between the owners.
Buying a yacht with others, or already deadlocked with a co-owner? Without a published decision appointing a manager, each of you answers for the whole of the vessel’s debts. The firm puts the structure right.
Frequently asked questions
Which law governs a yacht owned by several people?
Articles L. 5114-30 to L. 5114-50 of the Transport Code, which organise the co-ownership of vessels, and not Article 815 of the Civil Code on joint ownership. The regime applies to pleasure boats, a vessel being defined by Article L. 5000-2 as any floating craft built and equipped for maritime navigation in trade, fishing or pleasure. Decisions are taken by a majority of interests, not by unanimity.
Am I liable for the whole of the boat’s debts?
By default, yes. Article L. 5114-32 deems all co-owners to be managers unless a published decision appoints one, and Article L. 5114-38 makes co-owner managers liable without limit and jointly and severally, notwithstanding any agreement to the contrary. Non-managing co-owners may limit their liability to their interests under Article L. 5114-39, but that agreement is enforceable against third parties only if it is published (Article L. 5114-41).
Can a co-owner sell his share to anyone?
As a rule, yes. Article L. 5114-42 allows each co-owner to dispose of his share, and the law provides no pre-emption, approval or withdrawal right for the others. There is one exception, and it is powerful: Article L. 5114-43 requires the authorisation of all the other co-owners, notwithstanding any clause to the contrary, for a transfer that would cause the vessel to lose the French flag. Pre-emption and approval must otherwise be created by agreement.
Does the timeshare regime apply to a yacht?
It can. Article L. 224-70 of the Consumer Code covers immovable or movable assets for residential use, and a yacht with berths is such an asset. Where a professional confers on a consumer periodic enjoyment for more than one year, the protective regime applies: no presentation as an investment, formalised pre-contractual information, fourteen days of withdrawal extended to one year and fourteen days absent the withdrawal form, and no advance payment. An agreement between co-owners, with no professional and no consumer, escapes it.
What can be done in case of deadlock between co-owners?
Article L. 5114-35 allows the court, on the application of a co-owner, to appoint an interim manager, to order the sale of the vessel by auction, or both. A minority shareholder may also challenge a decision within three years under Article L. 5114-36, but must show both that it is contrary to the general interest of the co-ownership and that it was taken for the sole purpose of favouring the majority. A well-drafted agreement avoids reaching that point.
Further reading: francisation and registration of a vessel, ten checks before buying a yacht abroad, pleasure craft insurance and refusal of cover.
Written by Hervé Guyader, avocat at the Paris Bar, doctor of law. This content is general information and is no substitute for advice on your own matter.