Buying or selling a boat: key clauses to consider in the boat purchase agreement

The BPA should accurately describe the boat that is the subject of the transaction. You would expect the BPA to include things such as the boat’s name, its official number, the hull identification number, make and model, builder details, engine specifications and the length and tonnage.

Clearly identifying the boat in the BPA means there is less chance of confusion as to the specifics of the boat.

The BPA should provide clarity as to the purchase price and how payment will be made. Often a deposit is paid when the agreement is signed, with the balance payable on completion.

The BPA would also be expected to determine how the deposit is held (whether as agent or stakeholder), the circumstances in which it can be returned and when it may be forfeited.

A buyer will want to inspect the boat prior to committing to the purchase. The BPA will often make the purchase conditional on a satisfactory survey and sea trial being completed prior to purchase. It would often set out:

• the time frame for carrying out the survey

• the buyer’s right to conduct a sea trial

• the buyer’s options following the sea trial and survey

A dispute will usually happen when a survey identifies defects. A BPA can establish the process for dealing with such issues. It might be that the BPA allows a buyer to proceed with the purchase, alternatively, the buyer might be able to reject the boat.

The buyer might be entitled to request that the defects are remedied prior to the purchase or seek a reduction of the purchase price. The specific terms are usually heavily negotiated between the parties and requires clear legal drafting.

The BPA must ensure that the buyer is receiving good title to the boat. Sellers are often expected to give contractual assurances that they own the boat, they have authority to sell it and that ownership will pass when the boat is sold.

It also is likely that the seller will give a warranty that the boat is being transferred free from mortgages, charges and any other encumbrance.

The BPA will deal with what happens if the boat suffers damage between signing of the agreement and completion of the transaction. This is to ensure that both parties understand who is responsible for any damage to the boat should an unexpected event occur before ownership is actually transferred to the buyer.

A successful boat transaction is about much more than agreeing a price; buyers ultimately need confidence that the seller can prove ownership, that the vessel is free from financial encumbrances and that all necessary documentation is in place. Sellers, meanwhile, benefit from ensuring that title documents, VAT records and registration paperwork are available and organised before a buyer is found.

Whether you are buying or selling a boat, early legal advice can often help identify potential issues before they become obstacles, making the transaction smoother, faster and more secure for everyone involved.