Due diligence on a ship is not one exercise but four, running in parallel and answering four different questions: will it earn, is it sound, can the seller actually sell it, and are its papers in order. Deals rarely collapse because a buyer missed something exotic. They collapse because one of those four strands was left to the lawyers at the end, when the deposit was already lodged. Here is what each strand covers, who does it, and when.
The four strands
| Strand | What you are verifying | Who does it |
|---|---|---|
| Commercial | That the ship can earn in your trade at the price you are paying | You and your broker |
| Technical | That hull, machinery and class position match the description | Independent surveyor and superintendent |
| Legal | That title is clean and the seller has the right to sell | Maritime lawyer, registry search |
| Documentary | That every certificate is current, unqualified and transferable | Broker and technical manager |
Commercial: does the ship earn?
Start here, because a technically perfect ship in the wrong specification is still the wrong purchase. Read the real intake rather than the headline figure — nominal capacity is not what the vessel lifts, and the gap is where earnings assumptions go wrong. Model consumption at your intended service speed, not the trial figure. Check the ship against the ports you actually call: draft, gear, and beam decide access more often than tonnage does. And compare the asking price against comparable recent sales before you fall in love with a candidate, using the same method set out in how much is a ship worth.
Technical: hull, machinery and survey position
The technical strand is the one buyers most often outsource and least often scope properly. A pre-purchase inspection should cover the class record and outstanding conditions, hull thickness measurements where age warrants, machinery history and running hours, and the coating condition of ballast tanks. What matters as much as the findings is the survey position: a ship due for its special survey and drydocking within twelve months carries a known bill that belongs in your price, not in your first year of operating surprises. The recurring warning signs are collected in ten red flags on a used ship.
Legal: title, encumbrances and sanctions
Three questions decide this strand. Does the registered owner match the party selling, or is there an intermediary whose authority needs evidencing? Is the ship free of mortgages, maritime liens and unpaid claims — a registry transcript will show registered mortgages but not every lien, so unpaid bunker, crew or repair claims need separate enquiry. And is every party clear of sanctions exposure, which now extends to the vessel’s own trading history and any AIS gaps in it. A ship with unexplained dark periods is a compliance problem that follows the hull, not the seller.
Tip: Order the registry transcript yourself rather than accepting a copy from the seller, and read the ship’s AIS history for the past two years. Both are inexpensive, and between them they surface most of the problems that later become expensive.
Documentary: the certificates that must be current
Every certificate should be current, unqualified, and capable of surviving the change of ownership and flag. Class certificate and any conditions of class come first, followed by the statutory safety and pollution certificates, tonnage and load line, the ballast water management certificate, and the emissions documentation that now travels with the ship. Read the notations on the class certificate rather than the summary in the particulars, using class notations explained, and confirm what will transfer on the intended flag — see ship registration and flag state.
When each check happens
| Stage | Due diligence carried out |
|---|---|
| Shortlist | Specification read properly, comparable sales checked, obvious mismatches eliminated |
| Before the offer | Class records and survey position reviewed, registry transcript ordered, sanctions screening run |
| Between MOA and inspection | Physical inspection and, where agreed, divers or thickness measurement; certificates reviewed in full |
| Before delivery | Encumbrance position re-confirmed, deletion certificate arranged, bunkers and stores counted |
The deal mechanics that sit alongside this timeline — offer, MOA, deposit, closing — are covered in the sale and purchase process and how you pay for a ship.
Due diligence checklist
- ☐ Real intake and consumption modelled against your intended trade
- ☐ Comparable recent sales gathered before an offer is made
- ☐ Class record reviewed for continuity, gaps and society changes
- ☐ Outstanding conditions of class obtained in writing
- ☐ Next special survey and drydocking dated, and its cost priced in
- ☐ Registry transcript ordered independently of the seller
- ☐ Mortgages, liens and unpaid claims investigated beyond the transcript
- ☐ Sanctions screening run on parties, vessel and trading history
- ☐ AIS history reviewed for unexplained gaps
- ☐ All certificates confirmed current, unqualified and transferable to the new flag
Frequently asked questions
What is due diligence in ship acquisition? The verification a buyer carries out before committing: commercial fit, technical condition, clean legal title, and current documentation. It runs from shortlist through to delivery rather than sitting as a single step before signing.
How long does ship due diligence take? Typically two to six weeks from serious interest to inspection, depending on where the vessel is trading and how quickly it can be inspected. Legal and registry work runs in parallel and is rarely the constraint; arranging the physical inspection usually is.
What is the most common deal-breaker? Survey position and undisclosed conditions of class. A ship whose steel renewals or drydocking costs turn out larger than represented changes the economics enough to end most deals, or to reopen the price.
Who pays for pre-purchase inspection? The buyer, in almost all cases. It is a five-figure cost against a seven- or eight-figure purchase, and it is the single highest-return spend in the process.
Can I rely on the seller’s class records? Read them, but verify independently. Order the registry transcript yourself and confirm the class position directly with the society. Documents supplied by a seller are a starting point, not evidence.
Does due diligence differ for a newbuilding? Yes — the emphasis shifts from condition to counterparty and contract: yard track record, refund guarantee, payment milestones and construction supervision. See buying a ship from a Chinese shipyard.
Running due diligence on a candidate? Golden Shipyard coordinates the commercial, technical and documentary strands for buyers and flags what needs a lawyer. Browse current tonnage under vessels for sale, or bring us a vessel you are already considering through our ship sale & purchase brokerage services. For full particulars under NDA, email [email protected].