What Smart Buyers Do After They Complete Their Yacht Survey
Congratulations on making it through the survey of your yacht. At this point there’s still plenty of obstacles that can prevent us from reaching a deal but we’re going to assume we will be able to get there following the sea trial performance. We’ve put together a series of next steps designed to keep this seamless acquisition experience continuing on.
Prepare for Vessel Acceptance - Your purchase agreement states that once a buyer “accepts” the vessel which takes place after survey, there’s no turning back and the deposit will become non refundable. Ensure you are prepared to move forward once you sign your acceptance agreement.
Ensure Buyer LLC or Corp Is Formed - If (highly likely) you will be creating a company to purchase the vessel, ensure you’ve spoken to your accountant and attorney and are ready to form your new company as this can sometimes be a bit slow. If you’re buying the LLC that currently owns the vessel, you will be advised on this process following acceptance by the maritime attorney recommended by your broker.
Ensure Loan Is Approved - If you accept the vessel without securing financing, a loan that never comes through may result in forfeiture of your deposit or less than favorable financing terms. Ensure this is solidified upon conclusion of the survey.
Ensure Insurance Quote Is Obtained - Insurance will need to be bound ahead of closing and if you accept the boat before this is done, you might not be happy with the options presented so make this a priority to get this done ahead of acceptance.
Ensure Dockage Is Lined Up - Be sure the dock plan is solidified and won’t be an issue upon acceptance.
Plan Your Re-Negotiation - Once you receive the survey, be prepared to put your findings into a worksheet to determine the price, severity and actions to adequately negotiate and set precedence for the purchaser. Most of the findings discovered won't be negotiable but anything that can result in major financial risk to you or compromise safety is worth negotiating.
Plan Your Boat’s Name & Hailing Port - Start thinking about what you will name the boat and where it’s hailing port will be.
Share Your ID & Corporation Docs - Provide your broker with your drivers license and any documents relating to your company; EIN info, operating agreement and articles of incorporation so that closing won’t be held up.
Step 1: Prepare to sign the vessel acceptance - your yacht broker will ask you to sign off on a vessel acceptance document that will likely indicate the credit you’re seeking from the original purchase price or with steps the seller must take before closing, and possibly a combination of both. While this is necessary to move forward, this is also the point of no return in a transaction for if the seller also signs off on this document, your deposit will go hard, or become non refundable, unless in the event the seller fails to honor this obligations in the transaction. So prepare to take the next step with caution.
Step 2: Form LLC, Corporation or Trust. If you’re going to acquire the vessel with a vehicle besides your own name, begin formation now as it can take some time and we don’t want to delay closing unnecessarily on our end to incur penalty. It’s ideal to speak with your attorney and CPA on the manner but protecting your other assets, limiting risk, maintaining privacy and attractiveness at the time of resale may be imminent by structuring your purchase this way.
Step 3: Ensure Your Loan Is Approved. If you haven’t yet received your approval letter, gather your final documents and pressure the lender to provide approval immediately. The worst case scenario is if you find your loan isn’t approved, your rate is too high, or your downpayment requirements will be too steep, you want to find this out before you sign your acceptance.
Step 4: Ensure The Insurance Options Are Solidified. At this point you should know your annual premium, how long a captain will need to supervise your training, if your captain qualifies and if your hurricane plans are adequate. It would be unwise to learn the coverage cannot be bound or obtained leading up to the closing date.
Step 5: Ensure Dockage At Your New Slip Is Set Up. From fenders, electric, and everything between ask your captain or broker to ensure it’s ready to go. We’ve seen people take their boats to their new slips to find out the slip isn’t deep enough, another boat is in their slip and everything in between so definitely be proactive ahead of closing.
Step 6: Prepare For Re-Negotiation. Expect for many findings to come back following your survey and place them into a spreadsheet to determine how you will proceed. Being organized will not only help you to put forth a concise and organized re-negotiation but it will serve as a guide for issues to resolve at the beginning of ownership.
Step 7: Decide on The Boat’s New Name and Hailing Port. Coming up with the name and port is necessary for paperwork, getting your boat’s sign, and the clothes for your guest and your crew to wear. Consider having artwork or designs made up as well but this will be required to comply with coast guard regulations as well.
Step 8: Share Your ID & Corporate Documents with your Broker. If you haven’t been asked for it yet, it would be great to get your driver’s license, passport and corporate documents if you have them such as your articles of incorporation, operating agreement and tax id information so paperworks can be prepared with limited back and forth.
We’re hoping that we’re close to sending you home in your new yacht very soon and we’re positive that if we can settle these outstanding items, we will be able to get towards a smooth closing in the very near future. If you have any dilemmas at this time, please reach out to your yacht broker or our administrative team and we will do all we can to support you as we move forward together.