Just imagine, you saved up for years to have your dream boat built, you approached a (seemingly) bona fide shipyard, but many thousands of euros later the shipyard turns out to be bankrupt.
The consequence of bankruptcy is that all items owned by the boat builder (including the stock he has in the yard, such as the boats under construction) fall into the bankruptcy and can be monetized by the trustee to satisfy the creditors in the bankruptcy. In practice, as a customer you are a so-called ‘unsecured creditor’ which usually means you have to join the back of the queue. The ‘preferential’ creditors, such as the tax authorities and a business association, come first in 99 out of 100 cases. And then you lose your money.
An additional danger of bankruptcy is that the bankrupt entrepreneur’s stock-in-trade, including ships under construction, falls into the bankruptcy. If you cannot prove that a hull is your property, it will fall into the bankruptcy and you will be empty-handed. How can you minimize the damage?
A first possibility, to cover yourself against the financial damage in the event of bankruptcy of the builder, is to ask the builder for a bank guarantee. This is repaid on the basis of the construction schedule and partial payments. A bank guarantee means that the bank guarantees the amount you have agreed with the builder. If the builder goes bankrupt, you can call on the bank guarantee and get the remaining amount back. The snag is that if the builder goes bankrupt and you can’t prove that you own the beautiful hull in the shed, you still suffer a considerable loss. Because the bank guarantee applies only to the remaining amount and not to the amount that has already been spent on building the hull.
To create maximum security, I therefore recommend that, in combination with the request for a bank guarantee, the hull being built should be registered as soon as possible with the Land Registry. Since 1883, the cadastre has also kept a ship’s register. This allows an owner to obtain a mortgage on the vessel. Perhaps an even more important aspect is that once the ship (or the hull) is registered with the land register, the ownership of the ship or hull is unequivocally established. So in the event of a possible bankruptcy of the builder, the hull does not fall into the bankruptcy and the dream ship – in half-finished condition – can be claimed by the owner.
Registration is possible from the moment the keel is laid. The ship is “burned”, provided with a unique combination of numbers and letters and then registered in the shipping register. Everything that is subsequently built on and to the hull is, by law, part of that hull and you automatically become the owner of it. Therefore you should have as few parts of the ship as possible ordered separately in advance by the builder, because in the event of bankruptcy it is more difficult to prove what you own. Loose parts are not yet part of your ‘burned’ hull.
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