Unfortunately, purchasing a vessel is more like purchasing a home than buying a car off the lot. The larger the vessel, the more complicated her operational systems are and the greater need for thorough pre-purchase inspection by a qualified surveyor.
Yacht transactions also cover a wide variety of activities including the negotiation, purchase and sale of a yacht, corporate ownership, yacht construction, chartering, inspection, and documentation. Whether it is your first time building, purchasing or selling a yacht or you are an experienced buyer or seller, it is imperative to have experienced counsel to help protect your interests.
Purchasing a yacht is a significant investment most of the individuals in the world cannot afford, and therefore can be unchartered territory for first time buyers who are not sure what questions to ask or steps to take: whether the vessel needs to be surveyed, are there any liens on the vessel, what documentation is needed, should I purchase the vessel as an individual or a corporation, what insurance do I need, what are the costs after purchase, how to store the vessel, etc. The attorneys at McLeod Brock have over 25 years of experience assisting vessel owners with issues involving:
- Vessel Purchases & Sales Agreements
- Charter Parties
- Livery and Rentals
- Rejection, Rescission and Revocation of acceptance
- Consumer Warranty and related claims
- Breach of Fiduciary Duty
- Broker Disputes
- Surveyor Disputes
The intended use of the vessel must be considered prior to purchase as there are differing ownership, documentation, insurance, and governmental inspection requirements depending on whether the vessel will be used commercially such as renting, chartering, carrying passengers or even entertaining business guests. The intended use of the vessel may also determine where the vessel may be operated and the nationality of its crew.
The larger the vessel, the longer the typical “break in” period after purchase during which all of the operational kinks are worked through and adjustments are made. This is sometimes referred to the “shakedown” period. In the vast majority of cases, the vessel owner, seller and/or warrantor are able to cooperatively work through this period without major conflict. Occasionally, however, the vessel simply never works correctly, or the break in period seems to never end resulting in buyer fatigue. When this occurs, the buyer may request the seller to take the vessel back. Unfortunately, returning a vessel is not as simple as returning the average consumer product although some of the same consumer protection statutes apply. Accordingly, buyers and sellers need to listen to what each other is saying and appreciate what is being communicated in the context of the laws governing rejection, revocation of acceptance and rescission of contract. Otherwise, a buyer may lose his opportunity to return a vessel that was not a perfect tender and delivered in a defective condition. Likewise, a seller may lose the opportunity to refuse the return of a vessel in a situation where the complaints of defect involve minor cosmetic items not impacting the use, operation or value of the vessel.
Although buying a brand new vessel or even commissioning the construction of a custom yacht of your own is often considered the pinnacle of yacht ownership, many buyers would rather avoid a “break in period” or a “shakedown period” and purchase a used vessel with a proven track record. In these transactions, yacht brokers may be involved who are governed by guidelines such as those established by the Florida Yacht Broker’s Association which govern broker duties and responsibilities to the buyer and seller. Frequently, the buyer and seller are represented by their own broker who can advise them and walk them through the process. Sometimes, however, a single broker will act in a dual capacity and represent both the buyer and seller which is not advised.
When purchasing a used vessel problems may arise when the vessel’s history and condition is not fully vetted before acceptance. It is imperative that the vessel’s operational history, log books, prior surveys, title history, hull and machinery, etc. be inspected by a qualified independent marine surveyor and that the vessel be sea trialed to confirm satisfactory operation.
Even the best surveyor, however, may not discover concealed defects resulting from prior collision, allission, grounding or even product defects. When these issues are discovered following delivery and acceptance of the vessel, issues arise regarding whether the broker, seller, and buyer knew of the prior collision, allission, grounding, etc. before the vessel was accepted. If proper due diligence was exercised by the broker, seller, and the buyer before delivery and acceptance, there may not be much that can be done if the vessel was sold “as is” which is common. However, where the seller or the broker knew of the problem and concealed it, or where the buyer knew or should have known of the problem had a proper inspection and survey taken place, litigation may result.
The attorneys at McLeod Brock have over 25 years of experience assisting vessel owners with issues involving Vessel Purchases & Sales Agreements, Charter Parties, Livery and Rentals, Rejection, Rescission and Revocation of acceptance, Consumer Warranty and related claims, Breach of Fiduciary Duty, Broker Disputes, and surveyor disputes.