Understanding Buyer Responsibilities Under the IYBA PSA
Buying a yacht under the IYBA PSA requires clear compliance with defined obligations. These responsibilities protect both the buyer and seller and ensure a smooth, professional transaction. Knowing what’s expected helps buyers act efficiently, manage risks, and build trust with brokers and sellers.
1. PAY THE DEPOSIT
Immediately after the seller signs the PSA, the buyer must pay a 10% deposit within the specified number of business days (typically 3–4 days).
- Funds must clear into the Selling Broker’s escrow account before proceeding with inspections.
- Timely payment secures the vessel and confirms the buyer’s commitment.
2. ARRANGE TRIAL RUN AND SURVEY
The IYBA PSA gives buyers the right to inspect the yacht:
- Trial Run: Costs covered by the seller
- Survey and Haul-Out: Costs covered by the buyer
The buyer is responsible for selecting the surveyor and defining the inspection scope. Inspections should be completed as soon as practicable to avoid delays in closing.
3. DECLARE ACCEPTANCE OR REJECTION
After inspection, the buyer must provide written notice on or before the Accept/Reject Date:
- Accept the vessel
- Reject the vessel
- Accept with conditions (if agreed)
Failure to respond by the deadline is treated as a rejection, emphasizing the importance of timely decision-making.
4. PAY THE BALANCE
Once the vessel is accepted, the buyer must pay the remaining balance of the purchase price on the Closing Date, either directly to the seller or via the Selling Broker. Prompt payment ensures a smooth transfer of ownership.
5. TAKE DELIVERY
The buyer must take delivery of the yacht at the agreed location.
- Fuel consumed during the trial run or transfer is excluded from delivery obligations.
- Coordinating logistics in advance avoids unnecessary delays and confusion.
6. HANDLE TAXES AND APPROVALS
The buyer is responsible for all applicable taxes and approvals:
- Sales or use taxes related to the purchase
- Indemnifying the seller and broker against any tax claims
- Securing any governmental approvals or licenses necessary to complete the transaction
Planning ahead prevents unexpected costs or regulatory delays.
7. RISK MANAGEMENT
Under the IYBA PSA:
- The buyer assumes no risk prior to closing
- If the yacht is damaged after acceptance but before closing:
- Seller must repair if costs are under 5% of the price and can be completed within 30 days
- For more significant damage, either party may terminate the deal
This ensures clarity on liability and protects the buyer from unforeseen issues.
8. RESPECT TIMELINES AND PERFORMANCE
Strict adherence to timelines is critical:
- Failure to perform (e.g., not paying the balance or not closing on time) can result in:
- Loss of deposit (50% to seller, 50% to brokers)
- Release from further obligations
- Potential liability for unpaid expenses
Meeting deadlines ensures a professional transaction and preserves relationships.
FINAL THOUGHTS
The IYBA PSA provides a clear framework for buyers, balancing protection with responsibilities. From deposits and inspections to acceptance, balance payment, delivery, and taxes, understanding and meeting these obligations is essential for a smooth yacht purchase.
Professionalism, preparation, and timely action not only safeguard your investment but also enhance your reputation as a reliable buyer in the global yacht market.
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FAQ
The buyer must pay a 10% deposit within the specified number of business days after the seller signs the PSA, typically 3 to 4 days. Funds must clear into the selling broker’s escrow account before inspections can proceed. Timely payment secures the vessel and formally confirms the buyer’s commitment to the transaction.
The buyer is entitled to a trial run and a condition survey with haul-out. The trial run costs are covered by the seller, while the survey and haul-out are paid for by the buyer. The buyer is responsible for selecting the surveyor and defining the scope of inspection. Inspections should be completed as soon as practicable to avoid delays to the closing timeline.
Under the IYBA PSA, failure to provide written notice of acceptance or rejection by the agreed deadline is treated as a rejection. This makes timely decision-making a formal obligation rather than simply good practice, missing the deadline forfeits the buyer’s right to accept the vessel on the agreed terms.
The buyer assumes no risk prior to closing. If the yacht sustains damage after acceptance but before closing, the seller is responsible for repairs provided the cost falls below 5% of the purchase price and can be completed within 30 days. If damage is more significant and exceeds either threshold, either party has the right to terminate the agreement.
If the buyer fails to meet their obligations, such as not paying the balance or not closing on time, the deposit is forfeited, with 50% going to the seller and 50% to the brokers. The buyer is released from further obligations but may remain liable for any unpaid expenses. These consequences underline the importance of financial readiness and strict adherence to the agreed timeline.
The buyer is responsible for all sales or use taxes related to the purchase, must indemnify both the seller and the broker against any tax claims arising from the transaction, and is required to secure any governmental approvals or licences necessary to complete the deal. Identifying and planning for these obligations well in advance of the closing date is essential to avoid unexpected costs or regulatory delays.
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