Seller’s Obligations Under the IYBA Purchase and Sale Agreement (PSA)

The IYBA Purchase and Sale Agreement (PSA) is one of the most widely used contracts for yacht transactions, particularly in the U.S. and international markets. Known for its balanced approach and efficiency, it outlines the obligations of both parties clearly, but for sellers, these responsibilities are especially important to understand before entering into an agreement.

Here’s a breakdown of what the seller is responsible for before and at closing under the IYBA PSA.

1. EXCLUSIVE COMMITMENT

Once the PSA is signed, the seller agrees not to sell or commit to sell the yacht to any other party while the contract is in effect. Additionally, if the yacht is sold privately within two years of contract termination, the original broker is still entitled to commission.

This exclusivity protects brokers and ensures that negotiations remain professional and transparent.

2. FREE AND CLEAR TITLE

The seller must transfer good and marketable title, free from all debts, liens, or claims. All encumbrances must be settled before or at closing, and the seller is required to provide proof of title at least two business days before the sale is finalized.

This gives the buyer confidence in ownership legitimacy and prevents post-closing disputes.

3. DOCUMENTATION AT CLOSING

At closing, the seller provides all documents necessary for a smooth and lawful transfer of ownership, including:

• Certificate of ownership and deletion certificate
• Corporate resolutions (if owned through a company)
• Power of Attorney (if represented by an agent)
• Any additional documents confirming clear title
• Wire instructions for payment

This step ensures compliance and finalizes the legal transfer of the yacht.

4. DISCLOSURE OF EXCLUSIONS

Any items excluded from the sale, such as artwork, personal belongings, or decorative elements, must be listed within five days of signing or before the buyer’s acceptance deadline.

If no list is provided in time, all items on board are assumed to be included in the sale. This clause prevents disputes about what stays and what goes once the yacht changes hands.

5. SEA TRIAL AND SURVEY ACCESS

The seller must make the yacht available for:

• Sea Trial (paid by the seller, including running costs)
• Condition Survey and Haul-Out (paid by the buyer)

This ensures the buyer can verify the yacht’s condition before making a final commitment.

6. CONDITION AFTER ACCEPTANCE

Once the buyer has accepted the yacht, the seller cannot use it before closing, except for necessary delivery arrangements.

If any damage occurs after acceptance, the seller must repair it if:

• The cost is below 5% of the purchase price
• Repairs can be completed within 30 days

If damage exceeds these limits, either party may terminate the agreement.

7. CLOSING CONDITIONS

At closing, the seller must:

• Deliver the yacht at the agreed location
• Ensure it remains in the same condition as during buyer acceptance
• Avoid consuming excess fuel during transport
• Cooperate with brokers to ensure proper commission payment

This phase marks the final exchange, title, payment, and possession.

8. TAXES AND APPROVALS

The seller is responsible for obtaining any governmental approvals needed to complete the sale and must cover all taxes, duties, or tariffs incurred before closing.

This prevents complications or unexpected costs after delivery.

9. RISK OF LOSS

Until closing, all risk remains with the seller. If the yacht sustains damage after the buyer’s acceptance (but before closing), the seller must handle necessary repairs, within the limits stated in the PSA.

Only once the final payment is made and ownership transfers does the buyer assume full risk.

10. DEFAULT CONSEQUENCES

If the seller defaults under the agreement, the buyer has several remedies:

• Recovery of all deposited funds
• Option to demand specific performance (forcing the sale) or seek compensation
• Payment of full broker commission, even if the transaction fails due to seller fault

This structure ensures accountability and fairness throughout the process.

FINAL THOUGHTS

The IYBA PSA provides a well-defined legal framework that protects both buyers and sellers, but it places clear responsibilities on the seller’s side. From title verification to transparency in documentation and delivery, these obligations ensure a fair, professional, and efficient transaction.

For sellers, understanding these commitments early on helps prevent delays, avoid legal risks, and build trust throughout the sale process.