Superyacht finance—taking security over superyachts
Produced in partnership with Ince and Co
Superyacht finance—taking security over superyachts

The following Banking & Finance guidance note Produced in partnership with Ince and Co provides comprehensive and up to date legal information covering:

  • Superyacht finance—taking security over superyachts
  • Mortgages
  • Security over a new build
  • Security over the owner and other assets
  • Third parties’ security
  • Enforcement of security

This Practice Note covers the main areas involved in taking security over a superyacht and highlights the issues which set it apart from mainstream ship finance. For more information on taking security over commercial vessels in general, see Practice Note: Shipping finance—security.

Lender’s security can be grouped into three categories—security over the superyacht itself, security over rights connected to the superyacht and security over the beneficial owner’s other assets.

Third parties may also acquire security rights over a superyacht (whether by contract or by law) in the form of liens over the superyacht. This last division is of particular importance to a lender, as certain liens can, in certain jurisdictions, take priority over the lender’s security.

Which security it takes and when will depend in part on whether a lender is financing a new build or acquisition of a second-hand superyacht. Obtaining adequate security over a mobile asset is of paramount importance.

The lender will limit the borrower to a number of preferred flag states in which to register the superyacht, as its laws and regulations will impact the enforcement of security in case of default. Location of the superyacht will also affect the value of security, as value is drastically reduced if a jurisdiction is not conducive to enforcement.

Mortgages

After delivery and acceptance of a secondhand superyacht or once a superyacht under