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How to buy a yacht

How to buy a yacht

You have decided to become a yacht owner! To go through a buying process in the right direction, you should identify clearly the following points:

- What kind of boat do you want: sailing yacht or motor yacht, new or used (with mileage), style and model, size, number of cabins, hull material (steel, aluminium, fiberglass), seaworthiness.

- How will you operate the yacht: Make short trips along the coast or make long cruises in the open sea for longer periods. For example, for short fishing trips or diving where the sea is no farther than 6 miles from the coast, it is better to take boats with a small draft, and with a platform for swimming. For longer trips to sea for long distances, you need to choose yachts from 10 to 50 meters with two motors.

- How long you are ready to wait: if you are willing to wait to get the desired model of the yacht, then you should consider the possibility of building a yacht.

- Where to put a yacht: to rent a parking lot for a long time on the Cote d'Azur is very difficult, as there is not enough places. Before buying a yacht, think about where you will put it.
1 / The most reliable and expensive way is to "buy" a parking lot. However, in France the purchase of a parking lot has its own specificities: the seashore belongs to the state, as well as the parking lots on it. You can purchase the right to use the parking for a certain period, for example, until the end of the concession period of the port (from 10 to 99 years). This right of parking use, amodiation, is given to an individual or a company, and this person becomes a shareholder or a shareholder of the marina.
2 / Renting a yacht will help you to solve the problem of parking in the summer.
3 / The acquisition of a parking space in Monaco has its own characteristics: you should be a permanent or a privileged resident of the Principality of Monaco or a member of the Yacht Club of Monaco.
4 / When buying a yacht, it is better for its delivery time be in spring, then you do not have to pay for its parking in the winter.

- At what price to buy a yacht: the cost of the boat is affected by different parameters:
1 / year of manufacturing and type of the vessel
2 / manufacturer - shipyard: a yacht from a well-known shipyard will cost much higher than a similar yacht from a less-known manufacturer. It is also important to know that if you live on the Cote d'Azur, the favour should be given to shipyards specializing in the Mediterranean and Atlantic seas and located in the "immediate vicinity" in case of any problem.
3 / technical equipment of the ship: for the motors yachts it is their power and life use (the number of hours on the engines), the level of navigation equipment, as well as the hull material.
4 / finishing materials: interior decoration and comfort facilities - the size and equipment of the cabins, additional rooms - bar, jacuzzi; accessories for yachts - tender, toys, etc.

- What are the costs after the purchase? Do not forget about annual operating costs: yacht maintenance, payment for parking, water, electricity and communications, crew salaries, insurance, fuel consumption during sea trips and, if necessary, management. The cost of maintenance is approximately 10% of the vessel value per year. The cost is lower at the beginning of the yacht use, when it is still new and has guaranties, and it increases with the following years of yacht use. It is recommended to do frequent maintenance and cleaning of the yacht in advance without waiting for something to break. It can be life threatening if a breakdown happens during your sea trip and it will cost much more than regular maintenance and repairs. Due to the fact that the yacht stays constantly in a damp environment, it is susceptible to corrosion, spoilage from sea salt, moisture and sun, so constant monitoring and maintenance is necessary. Do not forget that a yacht with a "transparent", reliable history of maintenance is more attractive in the secondary market and has a higher cost.

- How to finance the purchase of a yacht in the European Union. Is it possible to get a loan: to have an opportunity to get a loan or a lease in an European bank, you should pay taxes in the EU. You may also be required to own a commercial activity, assets (property) and a bank account within the EU so that a bank is comfortable with your credit guarantees.
Generally, European financial institutions with a nautical program propose a leasing solution, where you actually rent the yacht for up to 10-12 years with a purchase option at the end. This popular way of financing a yacht will require a 25 to 50% down-payment and the balance will be paid with monthly instalments. You will also benefit from VAT advantages, generally cut in half. 

- How to make a deal when buying a used yacht: after you have made your choice, you send the owner your price offer in writing. It will also be appropriate to indicate the validity of your offer. If the owner agrees with your price, the broker will ask you and the seller to sign an agreement - Mediterranean Yacht Broker’s Association Memorandum of Agreement (MYBA MoA), in which the terms of the deal and payment are indicated. This form of the agreement developed by the association of yacht brokers of the Mediterranean takes into account legal norms and practices and is used by all brokers.

The practice is that immediately upon signing the agreement you should make a down payment of 10% of the yacht cost that is transferred to the escrow account (you can choose whose account to use – one of your broker or your lawyer). The rest of the amount is paid after making the final purchase decision and after the boat survey. A survey or inspection is carried out by an independent expert; it is better when an expert is accredited in the country under the flag of which the yacht will be flagged; this will save your money on a survey that you should pass for certification in case of the new flag. The expert conducts a computerized check of the engines, as well as a test drive where it makes a sea trial at the full engine load to demonstrate that the boat's parts operate under stress. The yacht is usually lifted over the water and the integrity of the hull, screws are checked, and as well as the osmosis, the lining damage of yachts. In some cases, the samples of oil are taken for laboratory research. In a few days the expert will prepare the report based on which you can agree or refuse to purchase the yacht. Sometimes it is possible to adjust the price taking into account the expert's report. You should also check the yacht in the insurance company for the absence of claims from third parties.

- What documents are required when changing an ownership: when transferring the yacht from the previous owner, make sure that you have in your hands a previous registration certificate, insurance certificate, commercial certificate (for commercial vessels) and all boat operation instructions and certificate of compliance with EU standards. It is also useful to have all the history and bills of repairs and work on board. You receive an invoice or a bill of sale, which states that the yacht is exempt from any payments, taxes, etc. Bill of the sail is signed by a notary and the owner provides a certificate of the yacht withdrawal from the current registration: removal from the register, or the flag. To make a sea trip you can simply have in your hands Bill of the sail, which must be notarized and apostilled. You should also have in your hands the current insurance certificate. When transferring the right to the yacht the previous insurance expires. If you don’t have the new insurance you can be fined and prohibited to enter the port.

- How to register a yacht: Any yacht (new and used one) should be registered and flagged. Registration of a yacht implies granting her the right to sail under the flag of a state (the flag determines the yacht nationality). The main document for registration is Deletion Certificate, a document confirming that the vessel is not any more enlisted under the previous registry and is unflagged. When registering an ownership for a yacht, you should determine whether to have a private yacht or a commercial yacht. For example, a private yacht registered outside the European Union may be in the water areas of its member states for a total of 6 months a year. Using the scheme of temporary import, non-EU residents can extend this period up to 18 months. While a yacht with a commercial status for chartering (for leasing) can remain in the EU waters more than 18 months, and you can also benefit buying the duty-free fuel.

- How to get an insurance for a yacht: The insurance company will take into account such information as the yacht characteristics (manufacturer, the year of manufacturing, the yacht length, etc.), the short or long term use of the yacht as well as the geography of sailing, the nationality of the crew, the flag and even whether the boat is managed by some company or not. All these facts affect the cost of the insurance. When concluding an insurance contract, tenders and different types of water motorcycles, hydro cycles and jet skis should also be taken into account. You conclude a separate insurance contract for such yacht equipment.
Buying a yacht is not an easy process, and you should not go through it alone. It is better to trust professionals who know all the pitfalls of buying and selling yachts and help you to buy a yacht that meets your needs and expectations.

For more detailed and individual advice, please, contact our agency.