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Guide on Drafting Vessel Purchase and Sale Agreement in UAE
A vessel purchase and sale agreement in UAE is a crucial step in the process of buy and sell, which outlines all the terms and prices for a vessel transaction. Each element of a vessel's sale is covered, starting from the earnest money requirements up to the disclosures. What the primary goal would be is to give sufficient protection to both the seller and the buyer, as well as to ensure that the expectations of all parties involved are clear.
The purchase and sale agreement of a vessel in UAE can vary significantly, depending on the needs and requirements of the contracting parties. An agreement may be relatively concise, only to serve purely as an open for a negotiation process. A purchase and sale agreement for a vessel in UAE can also be full and legally binding contract.
What are the key clauses for vessel purchase and sale agreements in UAE?
The first time that you glance at a vessel purchase and sale agreement is most likely an overwhelming experience. Often an excruciatingly lengthy document, an agreement for the purchase and sale of a vessel in UAE may contain different terms and concepts that are unfamiliar. It's imperative for all parties involved to fully understand the key provisions prior to signing the document. Note: the signing of a contract has to be done in the presence of a public notary in Dubai for notarization.
So, without further ado, here are the essential elements that are generally found in a vessel purchase and sale agreement in UAE:
Contracting Parties and Details of the Ship
First and foremost, any vessel or ship sale and purchase agreement should have an outline regarding the property that's at stake. There must be a clear and straightforward legal description. In addition, the agreement should have the identities and description of the buyer and the seller.
The buyer is to determine whether or not he/she/they will be the sole owner of the ship or will include co-owners. Co-owners enjoy survivorship right or right of survivorship. Should one owner pass away, ownership of the vessel will immediately pass to the other even without probate.
With co-ownership very common, the owners own shares to the property or ship. The shares can either be equal or not among the owners, and may also be freely transferred to someone.
Price and Terms
The vessel purchase and sale agreement must include the agreed price and the means in which payment will be given. The common methods include full payment through cash and cash down payment plus a loan for the purchase of the ship. The information should be in detail. A financing addendum can also be included in order to outline clearly the down payment of the buyer and the lending situation.
For the purchase of ships, an agreement usually includes an earnest money requirement. It's used in confirming the agreement and rates can vary from a purchase to another. However, buyers typically expect paying a certain amount. Earnest money will go towards the down payment. There are sellers that choose in adding contingencies which stipulate forfeiture of earnest money should the sale happen to not fall through due to an issue with financing. In other situations, earnest money is completely refunded onto the buyer even when the key conditions aren’t met. This will all depend on the contracting parties. All terms, including the pricing and method of payment, can be negotiated by the buyer and the seller.
The Closing Costs and Date
The date of a sale’s closing must be added in the vessel purchase and sale agreement, and the stipulate that changes to the closing need to be agreed mutually by parties and be put in writing. The possession of a vessel typically transfers to a buyer upon closing time and date. The closing date will make the conveyance of the title of the ship from the seller onto the buyer.
Closing costs for the buyer and the seller need to be included in the contract. The costs can vary greatly from one ship to the next. The buyer often covers all of the costs for closing, but there are sellers that agree to pay a portion. The division of the sale and purchase-related expenditures must be described clearly in the contract.
Special assessments and taxes
As of the closing date, taxes as well as other costs like maintenance fees, dockage fees, vessel registration costs, etc., should be prorated. In the event that the taxes can’t be assessed immediately or need to be rolled back, then they may be addressed in the addendum. A seller is the one responsible with the payment of the special assessments prior to during the closing.
When it comes to legal documents, it is always best to consult with legal professionals for their drafting and review. To know more especially on the notarization and legalization of vessel purchase and sale agreements in UAE, call here in Notary Public Dubai today!
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