Marine Sale & Purchase Escrow

Marine Sale & Purchase Escrow is a specialist escrow arrangement used in the sale and purchase of vessels such as ships and yachts. It involves a neutral third party holding funds and, where required, documentation until the agreed conditions of a marine transaction are met.

This type of escrow gives both buyer and seller confidence that money will only change hands when the terms of the sale are satisfied and protects against premature or insecure transfers of large sums.

Marine Sale & Purchase Escrow is suitable for buyers, sellers and their legal advisors involved in high-value vessel transactions, including commercial ships and large yachts.

It is particularly useful where significant funds are involved, where one or both parties are in different jurisdictions, or where there are inspection, title or regulatory conditions that must be satisfied before completion.

Escrow helps bridge gaps in trust and ensures neither side is exposed to undue risk while the transaction conditions are met.

Marine Sale & Purchase Escrow is typically put in place when the buyer and seller have agreed the terms of the vessel sale and are ready to exchange funds and documentation.

It is used at stages such as holding the deposit on exchange, handling the balance of funds at completion, or supporting additional conditions such as survey outcomes, delivery dates and regulatory compliance.

Because marine sales often cross borders and involve complex documentation, having an escrow arrangement in place before funds are paid helps ensure a smooth and secure transfer.

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Escrow involves holding real money, independently and in advance, so that payment does not depend on a future claim being accepted.

Bonds and insurance rely on a third party promising to pay later, subject to conditions, exclusions and their own financial capacity at the time of claim.

Marine sale and purchase transactions often involve large sums, complex documentation and parties in different jurisdictions. This can create risk for both buyer and seller.

Buyers may be concerned about paying a deposit or purchase price before they have title to the vessel or before conditions such as surveys and regulatory approvals are satisfied. Sellers may be concerned about committing to a sale without certainty that funds are available and will be paid on time.

Marine Escrow addresses these issues by holding funds independently until the agreed conditions of the sale are met. This reduces reliance on trust and helps prevent disputes about payment timing or entitlement.

The primary benefit of Marine Escrow is security. Funds are held by a neutral third party and released only when the agreed conditions are satisfied.

This protects buyers from paying too early and sellers from relying on promises of payment. It also provides a clear and predictable framework for completion, even where the transaction involves multiple steps or jurisdictions.

By using escrow, parties can focus on completing the sale rather than managing payment risk.

Benefits for buyers

For buyers, Marine Escrow reduces the risk of losing funds before ownership or control of the vessel transfers.

Deposits and completion funds are protected while surveys, inspections, flag state matters or regulatory requirements are addressed. Funds are released only when the agreed conditions are met.

This gives buyers confidence to proceed with the transaction without exposing themselves to unnecessary risk.

Benefits for sellers

For sellers, Marine Escrow provides confidence that the buyer has the funds available and committed to the transaction.

Funds held in escrow are ring-fenced and cannot be withdrawn unilaterally. This reduces the risk of last-minute payment issues or delays at completion.

Sellers also benefit from a clear process for release of funds once the agreed conditions are satisfied, supporting a clean and timely completion.

Benefits for Brokers & Advisors

For brokers and advisors, Marine Sale & Purchase Escrow provides a clear and neutral framework for handling funds during a transaction.

Using escrow reduces the risk of misunderstandings about deposits, completion funds or timing, which can otherwise lead to disputes or reputational issues. Funds are held independently and released only when agreed conditions are met.

Escrow can also simplify coordination between parties in different jurisdictions. Brokers and advisors can rely on a single, structured process for holding and releasing funds, rather than managing complex payment arrangements themselves.

This allows brokers and advisors to focus on progressing the transaction and supporting their clients, rather than managing payment risk or acting as an intermediary for client money.

Marine Sale & Purchase Escrow is most commonly used to hold deposits and completion funds in vessel transactions.

In a typical sale, the buyer pays a deposit into escrow once the sale contract is signed. The balance of the purchase price is then paid into escrow at completion, to be released when the agreed completion conditions are satisfied.

Escrow may also be used to hold additional sums, such as funds linked to rectification items, delivery adjustments or agreed post-completion matters.

Yes. Marine Escrow arrangements are often tailored to reflect the specific terms of the sale and the vessel involved.

For example, escrow can be structured to release part of the funds on delivery of the vessel and hold back a portion pending completion of agreed post-delivery works or documentation.

Escrow can also be combined with other arrangements, such as performance guarantees or insurance, where parties require additional comfort. Advisors often recommend this flexibility in higher-value or cross-border transactions.

All escrow arrangements are administered through the dospay digital escrow portal.

The portal provides a single place where authorised parties can view account balances, payment history and escrow status. It also supports the submission and tracking of information required for payments or releases, in line with the escrow agreement.

Using a digital portal reduces reliance on email chains and manual reconciliation. It improves transparency and creates a clear audit trail for payments and releases. Advisors often find this helpful when reviewing payment history or responding to queries during the life of the project.

In practice, Marine Escrow works by holding sale funds independently while the conditions of the transaction are completed.

The buyer pays funds into the escrow account. Those funds remain held while surveys, inspections, delivery arrangements and documentation are finalised.

Once the agreed conditions are met, the escrow agent releases funds to the seller in line with the escrow agreement. If conditions are not met, the funds remain held until the position is resolved in accordance with the agreed process.

The vessel sale and purchase agreement continues to govern the transaction. It sets out the purchase price, delivery terms, conditions and remedies.

The escrow agreement sits alongside the sale contract. It deals only with how the deposit and completion funds are held and when they are released.

Release conditions in the escrow agreement usually mirror key steps in the sale contract, such as delivery of the vessel, completion of documentation or satisfaction of agreed conditions.

Only parties authorised under the escrow agreement can give instructions to the escrow agent. This is agreed at the outset and documented clearly.

Instructions are usually tied to specific events, such as the issue of a certificate, confirmation of a milestone or the occurrence of a payment default. The escrow agent checks that the instruction matches the agreed conditions before acting.

This approach ensures that payments are controlled, predictable and not dependent on informal requests or unilateral decisions by one party.

Only parties authorised under the escrow agreement can give instructions to the escrow agent. This is agreed and documented at the outset.

Instructions are usually linked to specific events, such as confirmation of delivery, completion of closing documents or agreement between buyer and seller.

The escrow agent checks that the instruction matches the agreed conditions before releasing funds. Informal requests are not accepted.

Below is a practical view of the steps that parties typically follow when using Marine Sale & Purchase Escrow.

1. ‍Buyer pays deposit into escrow
   Once the sale contract is signed, the buyer pays the agreed deposit into the escrow account.‍
2. Funds held while conditions are satisfied
   The deposit remains in escrow while surveys, inspections, regulatory checks and other agreed conditions are completed.‍
3. Buyer pays balance of purchase price into escrow
   At completion, the buyer pays the balance of the purchase price into the escrow account.‍
4. Confirm delivery and documentation
   The parties confirm that delivery has taken place and that the agreed closing documents have been completed.‍
5. Release funds to the seller
   Once the agreed conditions are met, funds are released from escrow to the seller.‍
6. Handle issues or disputes if they arise
   If there is uncertainty or disagreement, the funds remain held while the agreed process is followed.

Setting up a Marine Escrow account starts with understanding the vessel transaction and how funds are intended to move. This includes whether the escrow will hold the deposit only, the full purchase price at completion, or both.

Once this is agreed in principle, an escrow agreement is prepared. This document aligns with the sale and purchase agreement and sets out how funds will be held and when they can be released.

At the same time, we begin the account opening and onboarding process. These steps run in parallel so that the account is ready in time for deposit and completion.

The time needed to open a Marine Escrow account depends on the parties involved and the structure of the transaction.

For straightforward sales, account opening can usually be completed within a short period once the required information has been provided and the escrow agreement is agreed. Transactions involving offshore structures, multiple owners or international buyers may take longer.

Most delays arise from incomplete information rather than from the escrow process itself.

To open a Marine Escrow account, standard onboarding checks are required. These are similar to the checks required when opening a bank account or instructing a law firm.

This usually includes confirming the identity of authorised individuals, the ownership and control of the buyer and seller entities, and the source of funds for the deposit and purchase price.

We may also need basic information about the vessel and the transaction so the escrow account can be set up correctly.

The following information is typically required to open a Marine Escrow account:

• Details of the buyer and seller
• Identification information for authorised individuals
• Corporate documents showing ownership and control
• Source of funds information for the escrowed amounts
• Details of the vessel being sold
• Agreed deposit and completion structure
• Target dates for exchange and completion

Providing this information clearly and early helps ensure the account can be opened without unnecessary delay.

A Marine Escrow account is funded by the buyer.

The buyer pays the agreed deposit into escrow once the sale contract is signed. The balance of the purchase price is paid into escrow at completion, in line with the sale agreement.

In some transactions, additional sums may also be paid into escrow, such as amounts linked to post-delivery items or agreed adjustments. The funding approach is set out clearly in the escrow agreement.

Payments from a Marine Escrow account are made only when the agreed release conditions are met.

These conditions are set out in the escrow agreement and usually reflect key steps in the sale process, such as delivery of the vessel, completion of documentation and confirmation that agreed conditions have been satisfied.

When a release request is made, we check that the agreed conditions have been met before releasing funds in line with the escrow agreement.

If instructions are disputed or unclear, we will not release the funds.

Instead, the funds remain held safely in the escrow account while the parties follow the process set out in the escrow agreement. This may involve clarification, confirmation from an agreed third party, or the use of the dispute resolution process under the underlying contract.

This approach protects both parties. It ensures that money is not released prematurely and that funds remain available once the position is resolved.

If a party to the underyling contract becomes insolvent, we continue to operate under the escrow agreement.

Because the funds are held in escrow and not in the control of either party, they are protected from being used for other purposes. We will follow the agreed instructions and any applicable insolvency process, as set out in the escrow agreement.

In practice, this can provide greater certainty than relying on funds held directly by one of the parties, particularly where payment timing or entitlement is being considered as part of an insolvency situation.

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What happens if DOS & Co. becomes insolvent?

All escrow funds are segregated (kept separate from our own funds), safeguarded (protected by law from our own creditors) and kept liquid and unencumbered at the Bank of England. In the event of our insolvency, we have set aside regulatory capital that will be used by our administrators to 'unwind' our affairs - this will usually involve working with the parties to agree the identity of a new escrow agent who will 'step in' to carry out our obligations under the escrow agreement.