In France and Italy in particular, many pleasure boats are financed by a lease, that is a lease-purchase agreement (known in France as LOA) or a finance lease. While the contract runs, the boat does not belong to the person using it. Selling it is entirely possible, but not like an ordinary sale: the finance company has a say, and the order of the steps matters. This guide gives general pointers, not legal or tax advice.
Who owns a leased boat?
Under a lease or lease-purchase agreement, the finance company buys the boat and leases it to its customer for an agreed period. The customer pays the rentals, uses the boat and may buy it at the end of the contract by exercising the purchase option, for the residual value set at the outset. Until then, the owner is the finance company: its name appears on the registration certificate, with the lessee usually recorded as the user.
The consequence is simple: you cannot sell something you do not own. Every sale of a leased boat therefore goes through the finance company.
First step: ask the finance company for a settlement figure
Before you even set a price, ask the finance company for an early settlement figure: the amount payable to end the contract on a given date (remaining rentals or outstanding capital, residual value, fees provided for in the contract). Whether you can exit before the end of the term, and at what cost, depends on the contract you signed.
The settlement figure is valid for a limited time, because the amount changes with each instalment. Compare it with the valuation of your boat. If the boat is worth more than the settlement figure, the difference comes to you on the sale. If it is worth less, which happens on a recent contract or one with a small deposit, you will have to make up the shortfall to settle the contract.
Three ways to sell
- Buy the boat out, then sell it: you pay the settlement figure, the finance company issues you the purchase-option invoice, the registration passes into your name and you sell as the owner. This is the clearest route for the buyer, but you must advance the money before receiving the price.
- Have the finance company sell to the buyer you have found: you end the contract naming the buyer, the finance company invoices the boat to the buyer directly and pays you the difference between the agreed price and the settlement figure. Many finance companies accept this arrangement; check the conditions and timescales with yours.
- Transfer the contract to the buyer: they take over the remaining rentals and the purchase option, and pay you a balancing sum for the boat's value above what remains to be paid. The transfer requires the finance company's agreement, which will assess the new customer, and usually involves a fee.
VAT on a boat coming out of a lease
Under a lease, VAT is paid on the rentals and then on the purchase-option price, rather than in one go at purchase. In France and Italy, yacht leasing contracts long benefited from specific VAT rules, amended in recent years; the treatment therefore depends on the date of the contract. For a buyer who wants to use the boat in the EU, the question is whether the boat can be regarded as "VAT paid" once the contract is settled.
The answer lies in the documents: the contract, the rental invoices, the purchase-option or sale invoice issued by the finance company, and where applicable a statement from the finance company on the VAT paid. Gather them before the boat goes on the market. If in doubt, have the position reviewed by a tax adviser.
What the buyer and their broker will check
- the registration certificate: in the name of a finance company, it reveals the lease at once, and the buyer will ask how the sale will be organised;
- the settlement figure or the finance company's written agreement to the sale;
- the purchase-option invoice or the finance company's sale invoice, which will be their proof of ownership;
- the contract and the rental invoices, for the VAT status;
- the usual papers: hull number, CE declaration of conformity, service invoices, list of equipment.
In what order to proceed
Start with the settlement figure and a valuation of the boat, so you know where you stand. Then agree the exit route with the finance company before accepting an offer: a buyer who discovers the lease at signing often walks away. At the sale, the buyer's payment goes first to settle the contract; the balance comes to you. Allow for the finance company's time to issue its documents, and do not let the buyer take the boat before the contract is settled and the registration transferred.
How YachtVerify handles a leased boat
YachtVerify's free valuation gives you a starting price to compare with the finance company's settlement figure. Indicative valuation. It does not replace a survey. If you are considering selling, your listing request is sent to selected brokers in your area; brokers regularly handle sales involving finance companies.
The Verified documents label includes a leasing point: when the registration is in the name of a finance company, a statement from that company is requested, and the boat's record states, in a neutral colour, that the current lease will be settled on sale. A leased boat does sell; what matters is that the buyer knows what to expect and that the documents prove it.