What type of yacht charter agreement and contracts should i expect when purchasing a yacht?
Now, let’s go trough the different type of yacht charter agreement and contracts.
For all of the yacht purchasing solutions, some form of contract should obviously be expected. As each programme offers different benefits and limitations it is impossible to cover everything here, but below are a few key points to definitely check out:
1. Shared Access Programmes
Contracts and agreements for shared access programmes or boat clubs typically specify the membership fees and exactly what access is included within this membership fee.
It should also make clear the costs of additional access (if available), how priority is awarded for availability as well as any additional financial liability in case of accidents or damage.
2. Co-Ownership Syndicates
Contracts and for Shared or Fractional Ownership syndicates should clearly detail what % share the co-owner has and how much access to the boats(s) is included and how that will be managed and prioritised.
It should outline what equipment is on the boat and what the division of responsibility is between the syndicate manager and each owner in terms of arranging:
1.) Suitable insurance
2.) Booking berthing
3.) Planning and overseeing maintenance
4.) Paying for regular maintenance often via levy
5.) Covering minor costs such as replacing lost cutlery
6.) There should also be details on exiting the syndicate
If a new boat is being purchased, it should be clear on what equipment will be included, what customisation options are selected and if there are any additional importation, delivery or commissioning fees to be paid on top of the purchase price.
3. Charter Ownership Programmes
Charter Ownership Programmes sound simple, but the financial arrangements behind them are usually very complex. Contracts and agreements therefore should make the financial arrangements explicit. In most cases, the buyer only takes ownership at the end of the programme so the rights and responsibilities of the buyer during the contract should be clear;
1.) First of all, the amount of access (usually in weeks).
2.) Second, Whether they sail only a specific yacht or can choose from a range of different yachts.
3.) What input the owner has to decision making.
4.) Last but not least, possible liabilities in the event of boat damage as well as the financial implications of exiting the contract before it is completed or in the event of the Charter Operator defaults.
4. Charter Management Agreements
Due to the tailored nature of many Charter Management agreements, there is an extremely wide variation in terms. The biggest areas to consider are Charter Operations & Maintenances Support. Who is responsible for what activities eg cleaning before and after a charter, handovers, fixing minor faults, replacing lost items and consumables as well as arranging and paying for regular maintenance.
It should also be agreed what decisions the charter business can take without needing to consult the owner and payment terms. For example who pays for what, how and when is charter income paid to the owner, it the owner share calculated before or after deductions and taxation.
Still thinking about what type of yacht ownership to choose? Then please read our article on the different types of ownership. It will give you the perfect overview of all the solutions available.