Marine Sale & Purchase Escrow

The sale and purchase of ships and large yachts usually involve significant sums of money, complex legal frameworks, and cross-border regulations, making trust a particularly important factor for both buyers and sellers.  

Buyers will be concerned to ensure that they receive the vessel in the promised condition, free of encumbrances and compliant with international regulations.

Sellers, on the other hand, will seek comfort that their time is not being wasted, and that the funds they will be receiving are verified and not the proceeds of crime or terrorist financing, or otherwise being transferred in breach of international sanctions.

Experienced independent escrow agents like us, providing escrow services to the superyacht and ship sector, play a pivotal role in mitigating some of these risks, safeguarding funds and, if so required, verifying, storing and exchanging documentation.

By bridging gaps in trust, managing risks, and facilitating efficient transactions, we can provide peace of mind to all parties and their lawyers when it comes to yacht and ship deals.

Trust in marine sale and purchase transactions

The issues of trust in vessel sale and purchase scenarios can be magnified in cases where the buyer lacks a proven credit history, is reliant on third-party funding or one or more of the buyer or seller (or the vessel flag state) is from a jurisdiction with limited regulatory oversight.  

Escrow services address these concerns by introducing a neutral third party to manage deposits, documents, and payments between the buyer and seller, ensuring that the terms of the deal are met before money changes hands. This structure provides a reliable mechanism to bridge gaps in trust, allowing it to serve to secure yacht and ship transactions.

Benefits of a marine escrow to secure payments

Using an escrow transaction service offers numerous advantages that directly address the unique challenges of marine transactions.  

Chief amongst these advantages is payment security - we ensure that funds are held securely and released only to the seller when the agreed conditions are met - this can be for the deposit alone or for the full purchase price - protecting both parties from financial risks.

Where required, we can also collate and review critical documents, including bills of sale, registration certificates, mortgage releases and any required documents relating to international maritime regulations or insurance.

Escrow services typically charge a small percentage of the transaction value, which is more economical than alternatives such as letters of credit - our service is competitively priced and we will ordinarily match or beat any bona fide quotation on a like-for-like service.

Alternatives to marine escrow

Historically, alternatives to independent escrow have included using the brokers, marine lenders themselves or external documentation agents or lawyers.  With lawyers and brokers, one party might have concerns that the lawyer/broker works for the other - this is where the independence of an escrow agent can be so valuable.

Equally, lenders don't tend to like to hold deposits and may also not be interested in handling documents, while documentation agents may specialise in registration but may not have the regulatory approvals or facilities to be able to hold deposits or purchase funds for the parties.

While these alternatives fill the gap, they often lack the safeguards, impartiality, and expertise that a dedicated marine escrow service can provide to yacht purchasers and sellers.

Choosing a marine escrow provider

Selecting the right experienced escrow provider is essential to complete the success and security of a maritime transaction.

Parties will wish to verify that their agents have proven experience in escrow transactions and a track record of reliability.  If they are well-versed in vessel titling, documentation and international maritime regulations, that of course serves as a helpful addition and the parties will wish to be comfortable that their quotation includes all of the relevant work required of the agent.

Neutrality, in addition, will be of primary interest to the parties.  The agent must act as an unbiased intermediary, without favouring either party.

The parties and their lawyers will also be concerned to know that the proposed escrow agreement clearly outlines payment schedules, the conditions for the release of funds and the recourse that can be had in the event of disputes - by detailing these out at the beginning, ambiguities can be minimised and a conflicts can be avoided.

Finally, escrow providers should have robust data protection protocols to safeguard the sensitive information they are handling is properly protected; be regulated by the relevant authorities; and be able to demonstrate the safekeeping of the funds for the duration of their involvement.

Choosing us to act as your escrow provider

We are registered with the Financial Conduct Authority for the provision of payment services and have been providing escrow services from London, UK since 2020.  All pounds sterling we handle are held safely at the Bank of England, while our Euro and US Dollar transactions are all held at tier 1 banks, minimising any credit risk.

We segregate all funds separately from our own, and safeguard them in addition, so even in the unlikely event of our insolvency, the transaction funds would be safely protected from our creditors.  We are also Cyber Essentials certified, for comfort about our IT and data-handling systems and processes in place.

Our standard-form escrow agreements are tried-and-tested, but we are equally happy to work on escrow agreements put forward by the parties or their representatives, or to negotiate the terms of the escrow agreement based on the parties' particular requirements.

We offer free, no-obligation quotations and are equally happy to jump on a call to discuss your marine escrow requirements, wherever you might be in the process.  Accounts can generally be opened at short notice (once all of our necessary compliance steps have been completed), and we are happy to progress the settlement of the escrow agreement terms in tandem - in our experience, it is prudent to allow at least a week or so for the paying party to be able to complete the compliance requirements and for the escrow agreement to be settled if at all possible.