Buyer due diligence · All · 12 min read
Red Flags in a Yacht Purchase Agreement
Spot vague survey standards, missing engine-hour reps, and one-sided default clauses before you bind a $300,000+ fiberglass purchase.
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Contingencies and deadlines
A $320,000 purchase should include financing contingency through lender commitment letter date and survey/sea trial acceptance within 10–15 calendar days of effective date—without both, you may forfeit $32,000 deposit on a 10% non-refundable clause.
Red flag: 'buyer accepts survey unless major defect' without defining major as >2% of purchase price ($6,400 on $320,000) or specific systems (engines, moisture, steering).
Financing contingency should reference simple-interest marine contract approval, not just 'loan approval'—retail installment rejections differ from unsecured denials.
If seller refuses extension when lender needs Abstract of Title, treat that as default risk—cost of lost rate lock can exceed $1,000 per week on jumbo marine notes.
Deposits, escrow, and open work orders
Non-refundable deposits above $25,000 without staged release (survey pass, sea trial pass, clear title) shift all risk to buyer.
Escrow holdbacks for open work orders should name dollar amounts tied to invoices—$18,000 engine service at authorized dealer held until hour meter and oil analysis confirm completion.
Reject language where seller selects the surveyor and haul yard without buyer approval on a $400,000+ yacht—conflict of interest on moisture readings.
Require separate sea trial acceptance paragraph: passing survey does not auto-pass sea trial if WOT or transmission slip issues appear underway.
Default, attorney fees, and documentation
One-sided attorney fee clauses (>15% of purchase price in some brokerage forms) can add $45,000 exposure on $300,000 deals—cap or mutualize.
Documentation and title delivery dates must align with lender wire—USCG documentation recording delays of 15 days can trigger seller default if dates are absolute.
Personal property schedules ( tenders, electronics) need serial numbers—$40,000 tender missing HIN on contract complicates insurance and registration.
Avoid 'as-is where-is' without survey access; even as-is deals should allow full survey and sea trial or price the risk explicitly.
Sources
- SAMS — Survey standards — Society of Accredited Marine Surveyors
- NMMA — Boat buying resources — National Marine Manufacturers Association
Questions
Is 10% deposit standard on yachts?
Common but negotiable—many buyers stage 5% at signing and 5% at survey acceptance with escrow agent.
Can seller keep deposit if financing fails?
Only if you waived financing contingency; otherwise failure to obtain commitment on approved terms returns deposit.
Should open work orders close before signing?
Prefer holdback escrow over seller promises—yard invoices paid from escrow when work verifies on sea trial.