Maritime lawyer Capt. John Kavanagh shares his due diligence steps.
YOU ARE EXCITED. YOU’VE FINALLY FOUND IT. THE ONE. THE DREAM BOAT.
More than that, your significant other is on board with the plan. You’re going to leave the humdrum behind and cruise the world’s most beautiful coastlines. You can’t wait to begin the adventure.
Just a few small problems: the boat of your dreams is in Europe, the Caribbean, Southeast Asia, North America, the UK, South America, Antarctica—or aground on a reef. It’s being offered for sale on a boat owner’s social media group. The price is attractive (too good to be true?). There’s no broker involved. The seller sends you a contract she downloaded from the internet. The vessel is flagged in the Cayman Islands and appears to be owned by an Isle of Man company. The seller has returned home to Canada, New Zealand, Russia, or Saudi Arabia, leaving the boat in the possession of a friend who’s living aboard.
WHERE DO YOU START?
How do you know who you’re dealing with? How do you find out if the seller actually owns the boat? What form of contract should you use? Who holds the deposit? How do you check whether any loans or liens are attached to the boat? How do you re-flag it once you’ve bought it—or should you leave it Cayman Islands flagged? Where do you take delivery—in the marina or at sea? How do you get it back to Australia? Can you use it for chartering to offset the costs? What about tax residency, GST, VAT?
These sensible questions are addressed during the purchasing process through a range of due diligence steps. In short, the dream purchase may involve:
> Due diligence on the seller – Using ‘know your client’ procedures to properly verify the identity of all persons involved.
> Due diligence on the vessel – Checking the ship register for recorded ownership, liens and mortgages; verifying the vessel’s provenance from builder’s certificate to current owner.
> Due diligence on corporate entities involved – Liaising with the relevant jurisdictions to verify company documents and office holders.
> Authorisation – Ensuring all parties are authorised (by power of attorney if required) to enter into the contract and carry out the sale.
> Technical due diligence – Is the vessel seaworthy and suitable for living your dream?
> Purchasing structures – Should you own the boat personally, through a company, or via a trust? How will you manage legal and tax liabilities and protect your significant other if something happens to you?
> Flag – Do you keep the current flag or re-flag? What are the legal, financial, and operational considerations of buying a boat from abroad?
> Relocating the vessel – Will you use the boat overseas or bring it to Australia? Will it travel on its own bottom or aboard a ship? Will you use it commercially or for private pleasure? Will you import it and pay GST?
> Insurance – What types of insurance do you need, and how do you obtain them?
CONGRATULATIONS! YOU NOW OWN THE DREAM BOAT AND ARE READY TO SET SAIL.
Fortunately, at Pacific Maritime Lawyers, we’re well-versed in answering these questions and assisting prospective boat owners to navigate these treacherous waters—avoiding the two-legged sharks to port and the coral reefs of bureaucracy to starboard.
We also work closely with a wide network of professionals including accountants, tax advisors, corporate lawyers, customs brokers, and marine surveyors. With the right crew on board, we can help make your dreams come true—by managing the risks, conducting the due diligence, and ensuring the dream doesn’t turn into a nightmare.
Capt. John Kavanagh Ph: 0481 170 373 Principal Lawyer – Master Mariner john@pacificmaritimelawyers.com.au
Published in print August-December 2025
