Buying a ship is a large, cross-border payment — and buyers are right to ask how their money is protected before it changes hands. The good news is that ship sales follow a well-established structure built around one contract, a held deposit, and a simultaneous exchange at delivery. Nobody pays the full price up front. This guide explains how a ship purchase is actually paid for, and where the safeguards are.
The MOA: the contract that governs payment
A secondhand ship sale is governed by a Memorandum of Agreement (MOA) — most commonly the Norwegian Saleform (the industry-standard template, e.g. NSF 2012), sometimes Nipponsale or a bespoke form. The MOA sets the price, the deposit, the delivery terms, and every payment condition. Everything below flows from it.
Key MOA terms that affect your money:
- Purchase price and currency.
- Deposit amount and where it’s held.
- Delivery range, date, and place (and cancelling date).
- Condition on delivery — class maintained, free of encumbrances.
- Documents to be handed over at closing.
- Default clauses — what happens if either side fails to perform.
Tip: The MOA is where your protection lives. Have it reviewed by a maritime lawyer before signing — the standard forms are balanced, but the negotiated clauses (condition, documents, default) are where deals go right or wrong.
The deposit and the escrow account
Once the MOA is signed (and any subjects — pre-conditions — are lifted), the buyer pays a deposit, typically 10% of the purchase price.
- The deposit is not paid to the seller. It goes into a joint escrow / deposit account — often a bank or a lawyer’s client account — released only on the joint instructions of both parties (or per the MOA).
- This protects both sides: the seller knows the buyer is committed; the buyer knows the money isn’t gone until the deal completes or the MOA says so.
Subjects: getting the deal firm
Ship deals are often agreed “on subjects” — conditions that must be satisfied before the MOA is fully binding, such as subject to inspection, subject to survey, subject to board approval, or subject to finance. Once the subjects are lifted, the deal is firm and the deposit is lodged. This is why the pre-purchase condition survey and your due diligence usually happen around this stage.
Closing: simultaneous exchange at delivery
The balance — the remaining 90% — is paid at closing, when the ship is delivered. Closing is a carefully choreographed simultaneous exchange: the money and the ship (with its documents) change hands at the same moment, so neither party is exposed.
At closing the buyer typically receives, against payment:
- Bill of Sale — transferring title, usually notarised and legalised.
- Protocol of Delivery and Acceptance (PDA) — the exact time/place the ship is delivered and accepted.
- Class and statutory certificates, and confirmation the ship is free of encumbrances (no liens or mortgages).
- Commercial and technical documents (as listed in the MOA).
- Deletion certificate arrangements so the ship can leave the seller’s flag — which ties directly into registration under your new flag.
Only when the documents are confirmed in order is the deposit released and the balance paid.
Newbuildings pay differently — staged instalments
A newbuilding is not paid via a single MOA closing but through a shipbuilding contract with staged instalments tied to construction milestones (contract, steel cutting, keel laying, launch, sea trial, delivery), protected by a bank refund guarantee that returns your money if the yard fails to deliver. See our guide to buying a ship from a Chinese shipyard for the newbuilding payment structure.
Where the safeguards are — a summary
- No full up-front payment — 10% deposit, 90% at delivery (secondhand); staged instalments (newbuilding).
- Deposit in escrow — held jointly, not handed to the seller.
- Simultaneous exchange — money and ship swap at the same moment.
- Free-of-encumbrances warranty — the MOA requires clean title; verify no liens/mortgages.
- Refund guarantee — protects newbuilding instalments.
- Legal review — a maritime lawyer on the MOA and closing documents.
This structure sits inside the wider transaction — see the full ship sale and purchase process from LOI to delivery.
Quick payment checklist
- ☐ MOA (Norwegian Saleform or equivalent) reviewed by a maritime lawyer
- ☐ Purchase price, deposit %, and currency agreed
- ☐ Deposit held in a joint escrow / deposit account, not paid to the seller
- ☐ Subjects (inspection/survey/finance/board) defined and lifted before the deal is firm
- ☐ Condition-on-delivery and document list clear in the MOA
- ☐ Title verified free of liens, mortgages, and maritime claims
- ☐ Closing set as a simultaneous exchange (payment vs. Bill of Sale + PDA)
- ☐ Deletion certificate / re-flagging arranged for delivery
- ☐ (Newbuilding) staged instalments with a bank refund guarantee
- ☐ Funds, banking, and closing logistics arranged ahead of delivery
Frequently asked questions
How do I pay for a ship — all at once? No. A secondhand ship is paid with a deposit (typically 10%) held in escrow when the contract is firm, and the balance (90%) at delivery in a simultaneous exchange of money for the ship and its documents. A newbuilding is paid in staged instalments tied to construction milestones, protected by a bank refund guarantee.
What is an MOA? A Memorandum of Agreement is the contract for a secondhand ship sale — most often the Norwegian Saleform (NSF). It sets the price, deposit, delivery terms, condition on delivery, documents, and default clauses. It is the document that governs how and when you pay.
What is escrow in a ship sale, and is my deposit safe? The deposit is placed in a joint escrow / deposit account (a bank or lawyer’s client account), not paid directly to the seller. It’s released only on both parties’ instructions or as the MOA provides — protecting the buyer’s money until the deal completes.
What happens at closing? Closing is the simultaneous exchange at delivery: the buyer pays the balance and receives the Bill of Sale, Protocol of Delivery and Acceptance, class/statutory certificates, and confirmation the ship is free of encumbrances. Money and ship change hands at the same time.
What are “subjects” in a ship purchase? Subjects are pre-conditions the deal is agreed on — such as subject to inspection, survey, finance, or board approval. Once they are lifted, the MOA becomes firm and the deposit is lodged. Due diligence and the condition survey usually happen around this stage.
Buying a ship? Golden Shipyard supports buyers through survey, MOA, closing, delivery, and registration on both newbuilding and secondhand tonnage. Browse current availability under vessels for sale, or learn how we guide the whole transaction with our ship sale & purchase brokerage services. To receive full particulars under NDA, email [email protected].