Sailboat Sales:
Contract to Closing

Contracts are needed to clearly define the process of selling and buying a sailboat for both buyer and seller. The path to the closing table and your sailboat's new owner involves many steps and a proper sailboat listing's contract should act as a guide as you move from contract to closing.

Important contract points for sailboat sales

Understanding Your Contract

Once your sailboat's condition is dialed in and its listed price is right for the market, the goal of a contract will eventually be achieved. Making sure you read your contract to purchase in detail is important, as this is a legal document with terms and parameters to guide the process along but also to spell out buyer and seller roles. Almost all brokerage agreements contain commonalities for steps in the process.

Here are the important contact points to educate you on and pay attention to:

Price & Deposit

The signed buyers offer for your sailboat listing should include a deposit typically of 10% of agreed price. In todays world of digital signatures and ease of electronic anonymity make certain you have PROOF of deposit via a check or wired deposit into your brokers escrow account. Trust but verify!

Seller & Buyer Requirements

This is a complex section on the contract, but in its simple form these sections spell out the details of where a contract protects both the buyer and seller in case of default.

The buyer is responsible (PRIOR TO ACCEPTANCE) to make certain he’s able to buy and insure the vessel. He can’t have his deposit back after accepting the sailboat because his finance company decides he’s not a worthy credit risk or does not have enough experience to get insurance. A buyer needs to have those details in line before accepting.

As a seller, you need to make sure (PRIOR TO CLOSING) you have a sailboat listing without liens for monies owed to third parties, information on security interest, if financed, and - in its simple understanding - a sailboat that can be sold and re-titled legally. This step is where having documents ready ahead of time is a must. Issues that have derailed or slowed a closing can be divorce, estate sales, liens that were paid but not properly recorded etc. The time to pull out your USCG Documentation or State Title and share with your broker’s closing department is immediately at contract not two days before your closing date. As a seller, make sure any issues being able to close are worked on early in the process.

Survey/Sea Trial Obligations

In its simple form, the buyer is paying for the inspection and expertise of the surveyor. The seller is making the sailboat available and assuming the risk of that process. As the seller, it's still your sailboat - and while you may run it yourself, hire a captain, or entrust your broker to run it - all the risk associated with a mechanical failure or the fuel burned at survey is the seller's obligation. See our Survey & Sea Trial Process section to fully understand this most vital step.

Acceptance of Vessel

Of all the terms and topics in a sailboat agreement this is the most important to understand. A buyer’s right to walk away or cancel the sale prior to this point is fairly indisputable. The ACCEPTANCE DATE means that by the date indicated the buyer will survey/sea trial the vessel and give the seller one of three typical signed agreements.

Full or Clean Acceptance

This means there are no concessions on price or fixes that need to be performed by the seller. This means the buyer is ready to close and the deposit is forfeited should closing not occur.

Conditional Acceptance

This means due to issues at survey/sea trial the buyer is seeking repairs to be done or a cash concession in the price. If repairs are to be done it means another period of time and another re-inspection or sea trial to prove the repair for a final sign off. If a concession on price then it simply is negotiated and agreed then onto the closing process.

Exclusions To The Sale

Your sailboat has been photographed, listed and viewed by the buyer. On the day or survey many times its assumed what’s on your yacht is what’s included on your yacht at closing. The issue that arises is personal items that have not been cleaned off, extra sails, handheld devices, EPRIBS, Dinghy’s may in the sellers mind not be conveying but in the buyers mind part of the boat. Make certain you not only provide the information to your broker but specify IN WRITING what is not included.

After Acceptance & Force Majeure

After your boats accepted DO NOT USE IT as you are contractually not allowed to. The buyer has signed that he will accept your boat in its condition at survey and if you take that one last weekend cruise and hit a log you have now given the buyer a reason and legal out not to close on the sale. Of course sellers may be aboard to remove personal effects as you still own the yacht but you should not leave the slip. Doing so is clearly a risk not worth taking. The term Force Majeure deals with all the natural events that could occur outside of buyer and seller control after contract, acceptance and before closing. A neighboring boat could catch fire, a hurricane, failed bilge pump sinking the boat etc. While rare these will occur and this section should spell out the rules for these occasions. Read it and hope you don’t need to apply it but its happened especially in the hurricane season.

Contract Closing

A sailor's two happiest days are the day their sailboat is purchased and the day and the day the sailboat is sold. While selling a sailboat is akin to selling a home, many times the closing occurs remotely with buyer and seller not gathered around the closing table. That’s due to the appropriate documents, in most cases, not being signed by buyer and seller, but instead different documents are signed by each. If financing, there will be obligations that are different than in a straight cash purchase. Your brokers closing department should lay this step-by-step process out. However, the closing on a sailboat listing is technically to be done by the date agreed on and occurs when the BUYER'S paperwork has been executed correctly, the SELLER'S paperwork has been executed correctly, and SELLER/ESCROW AGENT has received wired funds or been provided electronic proof of loan payoff. Buyer paperwork, seller paperwork & confirmation of all funds = SOLD.

“Communication on all sides of a sailboat makes for a smoother transaction from start to finish.”

My Sailboat's Listing Value

Learn Your Sailboat's Listing Value in Today’s Market

You will receive a report with sold comps, active comps, and become an educated seller on how to best position your sailboat to sell, not sit. 

“Sailboat listing contracts are important as this is a complex transaction and they act as a guide to the process. Read them, understand them.”

LISTINGMYSAILBOAT.COM is dedicated to educating sellers who are thinking about listing or actively selling a sailboat.
Knowledge is power & this education is powered by Knot 10 Yacht Sales.

© 2018 Knot 10 Yacht Sales - All rights reserved. Design by Kohn Creative