Complete Guide to Understanding the Closing Process when buying or selling a boat or yacht
The final step in the process of buying or selling a boat or yacht is the yacht sales closing. If you are using a professional yacht broker, which is highly recommended, he or she will likely have a dedicated closing specialist or team of specialists to handle all aspects of the closing. In this article we will break down the steps involved in closing and explain the paperwork necessary to complete the transaction.
Yacht Sales Closing: Acceptance of Vessel
After the survey and sea trial have been completed and the buyer and seller have finalized any negotiations, the buyer will need to sign the Acceptance of Vessel Form. This document states that the buyer is accepting the vessel “As Is, Where Is” and officially starts the closing process. Before a buyer can sign this form, any work that was to be performed on the vessel by the seller must be completed and verified. Once the Acceptance of Vessel form is signed, the buyer has made a legally binding contract to move forward and complete the close of the purchase. If the vessel is being accepted under conditions that must still be met, then a Conditional Acceptance of Vessel form will be required, and should specifically list the conditions that must be met. When a Conditional Acceptance is in effect, a portion of the proceeds may be held in escrow even after the closing is completed, if the conditional items have not been completed.
If the seller rejects the vessel then they will need to sign the Rejection of Vessel Form. This document relieves the purchaser of the vessel from any obligations in the Purchase and Sale agreement and will typically be signed if a vessel fails survey or other faults or defects are found that caused the buyer to want their deposit returned. The Purchase and Sale Agreement is signed as part of the initial offer when purchasing the vessel. If during the course of negotiations any changes need to be made to the Purchase and Sale Contract, then an amendment form must be signed by both parties.
Closing Statement and Bill of Sale
During the closing process, each party will receive a Statement of Closing and Bill of Sale. The Statement of Closing will outline the trail of funds and the Bill of Sale serves as the legal document that the sale has taken place.
State Registration and U.S. Coast Guard Documentation
As part of the closing process, the brokerage company handling the sales transaction will need the original state registration, title and if applicable, the original U.S. Coast Guard Documentation form.
Note that original signatures will be required on most closing documents, with some also requiring a notary. Additional closing fees may apply, including U.S. Coast Guard Documentation Fees, wire transfer fees and courier service fees. You should request this information from the brokerage firm handling the closing transaction.
Proof of Insurance
Before the finalizing of the transaction, proof of insurance will be required. If the vessel is being kept in a marina or yacht club, that organization will need to be named as additional insured.
Release of Liens
Before any vessel can be transferred to a new owner, all loans or liens must be paid and satisfied. This verification is part of every closing process to ensure that the new owner has clean title to the vessel.
Funding the Purchase
Once all forms and documents are completed, funds will need to be wire transferred into the escrow account at the brokerage company. Checks, cash and ACH transfers will not likely be accepted. If a buyer is using financing as part of the purchase, a representative from both the brokerage firm and the lender will coordinate the wire transfer of funds.
Transfer of Ownership and Possession
When all required documents have been completed, signed and received by the respective parties, and wired funds have been received into the sellers account, the buyer is now the official owner and has possession of the vessel.
Like any large financial transaction, it can feel daunting, confusing and stressful. But it is a relatively simple process that occurs many times each day. With the right team of yacht brokers and their support specialists, you can rest assured that the transaction will be completed efficiently and with the utmost professionalism.
If you are in the Naples, Marco Island or Fort Myers area of Southwest Florida, please explore our Brokerage Services Page to learn more about how we can assist you with the purchase or sale of a boat or yacht. We would be glad to help.
*Disclosures: Captain Frank Lecardo is a Licensed Yacht Broker in the State of Florida and is affiliated with Knot 10 Yacht Sales. License information available upon request. Naples School of Boating LLC is NOT a brokerage firm and does not engage in the purchase or sale of vessels. All brokerage transactions are completed through Knot 10 Yacht Sales and are subject to their policies, procedures and commission rates. Fees and commission rates are available upon request. For more information please visit Knot 10 Yacht Sales or Contact Us with any questions.