For a variety of reasons, an uptick in yacht-deposit disputes seems to be occurring. Some buyers are concerned about potential tariffs, for instance, and therefore the additional costs associated with yacht importation. Others, meanwhile, are taking much closer looks than ever at the contracts they’ve signed, questioning whether certain language lets them get their money back. Whatever the motivation, superyacht seekers need to understand which organization is behind their document: MYBA versus IYBA yacht contracts.
These two contracts govern most brokerage yacht and superyacht transactions. MYBA is the Mediterranean Yacht Brokers Association, while IYBA is the International Yacht Brokers Association. Each organization therefore also spells out deposit provisions. Though serving similar audiences, their contracts offer fundamentally different approaches to deposit protection. The same is true of a buyer’s ability to walk away from the transaction.
The IYBA contract, for instance, follows what maritime attorney Michael Moore describes as an “easy in, easy out” philosophy. It reflects a somewhat American perspective on transactions. Essentially, the contract allows buyers to walk away with their deposit intact if they reject the yacht by the specified acceptance date. Additionally, the IYBA contract typically stipulates that if buyers don’t accept the yacht by the acceptance date, they’re automatically deemed to have rejected it. Here, too, buyers can reclaim their deposit.
By contrast, the MYBA contract presents significant challenges to deposit recovery. Under this contract, in fact, buyers find themselves navigating complex interpretations of what constitutes valid rejection grounds. The MYBA standard introduces two particularly problematic issues: firstly, whether rejection is based on the opinion of “qualified marine surveyors” (which the seller can dispute), and secondly, whether the vessel meets an ambiguous standard of “operational integrity.” Moore notes no universally accepted definition of “operational integrity” exists in maritime law or arbitration rulings. This makes these cases particularly contentious and expensive to resolve.
Interestingly, the two contracts actually share common ground, in two ways. Firstly, they each have a clause governing additional terms. “This is actually the document that changes everything,” as Moore says, since it specifies what’s included and what’s not. The other common ground is concerning, though: The selling broker holds the deposit. Other industries employ neutral third-party escrow agents, but not yachting. Instead, yacht brokers with a direct financial interest in the transaction’s outcome typically hold the funds. This represents an inherent conflict of interest, as brokers stand to earn their full commission if the sale proceeds and half if the deposit is forfeited. Further complicating matters, “The person holding that deposit may get conflicting instructions from the seller and the buyer,” Moore explains.
For prospective yacht buyers, understanding the nuances of MYBA versus IYBA yacht contracts before signing is essential. Additionally, considering who will hold the deposit—whether he or she works for one of the major brokerage firms—should be a primary consideration. “You’re sending a million dollars to someone that you’ve never met,” as Moore aptly warns. “The most you can hope for is that they have a house flag like a Fraser’s or Camper & Nicholsons or Burgess, but you’re playing with fire if you don’t really have an understanding of who’s going to be holding these soft and substantial funds.”
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