Yacht brokers in France: escrow, mandates and the duty to advise
French law on yacht brokers: what the mandate really says, whether your deposit sits in a genuine escrow account, and when the broker can be held liable.
The short answer
- Not a neutral party: a yacht broker is paid by one side, in most cases the seller, and owes his loyalty to whoever instructed him. He is a commercial intermediary, not an impartial referee of the transaction.
- No dedicated licence: pleasure boat brokerage falls outside the loi Hoguet of 2 January 1970, which covers immovable property and businesses. There is no professional card, no compulsory financial guarantee and no statutory ceiling on the length of a brokerage mandate.
- Mandate rules: where the intermediary acts in the name and on behalf of a party, articles 1984 and following of the Civil Code apply. Article 1993 obliges him to account for his management and to hand over everything he received by virtue of the mandate.
- Escrow is not automatic: no French rule requires a yacht broker to hold the deposit or the price on a segregated third-party account. Money paid into an ordinary operating account is exposed to the broker's own creditors if he fails.
- Duty to inform: article 1112-1 of the Civil Code imposes a pre-contractual duty to disclose information of decisive importance, and its fifth paragraph provides that the parties may neither limit nor exclude that duty.
- Time limits: five years from knowledge of the facts under article 2224 for most personal actions, and two years from discovery of the defect under article 1648 for a hidden defects claim against the seller.
Almost every second-hand yacht sold in France passes through a broker. The English word suggests a market intermediary standing between two parties, equally distant from both, whose function is to make the transaction work. French law sees something narrower: a professional instructed by one side, whose remuneration depends on the deal closing, and whose obligations are fixed by a document that most buyers never read and many sellers sign at the boat, on the day, without advice.
Two consequences follow, and they account for most of the disputes we are asked to deal with. The first concerns the mandate: what the broker is authorised to do, when his commission becomes payable, what happens if the owner sells the vessel himself, and whether the appointment can be brought to an end. The second concerns the money: whether the deposit and then the balance of the price sit in a genuinely segregated account held by a regulated third party, or simply arrive in the broker's business account alongside his own working capital. The second point is by some distance the more dangerous, because a drafting weakness in the mandate costs a commission, while a weakness in the payment route can cost the entire price.
What follows sets out the French framework for a reader who is buying or selling a yacht in France but is not French, and who may be dealing with the broker in English while the underlying law remains French. It covers the legal nature of the appointment, the clauses that matter, the escrow question, the broker's duty to inform and advise, his liability where damage or an inaccurate VAT position was not disclosed, and the signals that should be addressed before signature rather than afterwards. It is general information and not advice on a particular transaction; further material is available on our page on French yacht and pleasure boat law.
What a yacht broker actually is under French law
Courtier, mandataire, agent
English listings use one word for what French law treats as several distinct positions. A courtier brings two parties together and then withdraws: he represents neither, signs nothing in their name, and earns a fee if the transaction he introduced is concluded. A mandataire acts in the name and on behalf of a principal, and articles 1984 and following of the Civil Code apply: article 1992 makes him answerable for the faults he commits in managing the affair, and article 1993 obliges him to account and to hand over everything he received by virtue of the mandate.
Which of these applies is settled by the content of the document, not by its heading. A one-page listing agreement authorising the intermediary to negotiate the price, sign a memorandum of agreement and receive the deposit is a mandate whatever it calls itself. A further rule matters where one firm acts for both sides: article 1161 of the Civil Code provides that, in matters of representation of natural persons, a representative may not act for several parties whose interests conflict, unless the principal has authorised or ratified it. Dual representation is not automatically unlawful, but it must be disclosed and accepted in writing.
Is yacht brokerage a regulated profession in France?
There is no French statute creating a licensed profession of pleasure boat broker. The loi Hoguet of 2 January 1970 governs intermediaries in transactions on immovable property and on businesses; a yacht is movable property and falls outside it. A series of absences follows: no professional card, no compulsory financial guarantee securing client funds, no limit on the duration of a mandate, no obligation to keep client money separate and no authority supervising how it is handled.
One historical point feeds a persistent misunderstanding. France did once have a regulated corps of courtiers interprètes et conducteurs de navires, ministerial officers holding a monopoly over certain ship brokerage functions. Law No 2001-43 of 16 January 2001 abolished that monopoly, and the Conseil constitutionnel confirmed the abolition in decision No 2010-102 QPC of 11 February 2011. Those functions concerned commercial shipping rather than pleasure craft in any event, so the expression "maritime broker", used as a protected and supervised title, refers to a regime that has not existed for more than twenty years.
The activity is not unregulated in every respect. A professional dealing with a consumer is subject to the prohibition of misleading commercial practices in articles L. 121-2 to L. 121-4 of the Consumer Code, which cover both false statements and the omission of material information, with penalties under article L. 132-2. A mandate signed with a consumer away from the professional's premises falls under the off-premises rules, including the fourteen-day withdrawal right of article L. 221-18. What is missing is prudential regulation of the money, and that is where the losses occur.
Who pays the broker, and what that changes
In the standard structure the seller pays a commission expressed as a percentage of the price, though a buyer's broker under a search mandate, a split between two firms or a fee charged to both sides are all met with. The economic logic does not vary: the broker is paid only if the sale closes, and more if it closes higher. Nothing in that is improper, but it is structural, and the incentive points towards concluding rather than towards pausing while an unexplained repair history is investigated. The seller's broker owes his loyalty to the other side; the survey, the verification of registration and of any registered security, the VAT file and the sale documentation remain the buyer's responsibility.
Reading the mandate before you sign
Exclusivity, duration and revocation
An exclusive mandate reserves the sale to one broker, usually with the commission payable even if the owner finds the buyer himself. A semi-exclusive appointment permits a direct sale without a fee but not a sale through another broker. A simple introduction leaves the owner free, with a fee due only on a sale to a buyer actually introduced. All three are lawful; the difficulty arises where the heading says one thing and the operative clause another. Because the loi Hoguet does not apply, there is no three-month ceiling and no compulsory renewal formality, so twelve months with automatic renewal is routine. Where the owner is a consumer and the contract renews tacitly, the information obligations of article L. 215-1 of the Consumer Code may apply. Article 2004 of the Civil Code allows the principal to revoke, but a clause making the appointment irrevocable for a fixed term, or providing an indemnity on early termination, will be examined on its own terms.
Commission, penalties and the authority to receive money
Commission may fall due on signature of a memorandum of agreement, on completion or on receipt of the price, and may be described as earned and non-refundable, which becomes painful if the buyer withdraws and the deposit is returned. Most mandates also contain a tail clause under which the fee remains payable if the owner sells, within a stated period after the mandate ends, to a person the broker introduced: three to six months with a written list of those parties is a normal term, while twenty-four months with no list, applying to any buyer, is a different proposition. A fixed sum payable if the owner sells directly is a penalty clause, and article 1231-5 of the Civil Code allows the court to reduce a manifestly excessive penalty of its own motion, though only once a dispute has begun. More important still, the mandate should state whether the broker may receive the deposit and the price at all, in whose name any account is held and on what conditions the funds are released. Silence there leaves the question to whoever ends up holding the money.
What we see in practice
The mandates we are shown are usually two or three pages, often in English, often assembled from templates drafted for other markets. What is present is the commission: its rate, its trigger, its tail. What is missing, in a striking proportion of them, is any description of how the money will travel. No named account, no named holder, no release condition, nothing on the deposit if the survey is refused. We also see mandates whose heading announces a simple introduction while the operative clause reserves the commission on any sale, and appointments signed aboard, on the day of the visit, by an owner who had come to discuss a valuation. When the relationship breaks down, the argument is almost never about whether the broker worked. It is about which of two inconsistent clauses governs, and about where the deposit went.
The escrow question, and why it is the dangerous one
There is no statutory client account for yacht brokers
Because pleasure boat brokerage sits outside the loi Hoguet, nothing obliges a broker to hold client money separately from his own. A ten per cent deposit on a substantial yacht is a large sum, and it may lawfully arrive on the same account from which the broker pays his berthing, his advertising and his staff. If that company fails before completion, whoever paid the deposit is an unsecured creditor competing with everyone else.
What a genuine escrow arrangement looks like
French law is perfectly capable of producing a secure holding arrangement; it simply does not impose one. Funds may be held by a French avocat, who must pass client money through a CARPA account, a regulated and audited structure separate from the firm's own assets. They may be held by a notaire under his professional regime. Or a bank may operate an escrow under a tripartite agreement signed by buyer, seller and bank. The protection comes from the identity and regulated status of the holder, not from the word escrow appearing in an email. A workable clause names that holder, gives the account details and the name in which the account stands, sets out the events releasing the funds, says what happens if the survey is rejected or the sale fails, and fixes a repayment deadline. Anything shorter is a statement of intention.
The recurring failure modes
Five patterns account for most of the loss. There is no escrow at all, only a description of one, and the deposit is absorbed as working capital. There is an account presented as a client account which is in fact an ordinary account in the broker's own name, a label being no substitute for segregation. The account is abroad, in the name of a company that did not sign the mandate. The broker deducts commission, berthing and refit invoices before remitting a balance nobody agreed, notwithstanding article 1993 of the Civil Code and article 1996, which makes him liable for interest on sums applied to his own use. And there is payment diversion: revised bank details arriving by email shortly before completion, which should always be confirmed by voice, on a number obtained independently.
Deposits: arrhes or acompte
English drafting rarely makes clear which of two very different French concepts a deposit represents. Under article 1590 of the Civil Code, where a promise of sale is made with arrhes, each party may withdraw, the one who paid them by forfeiting them and the one who received them by returning double. An acompte is a part payment of the price and carries no such faculty. An agreement referring only to a deposit leaves both the right to withdraw and its consequences open to argument.
What we see in practice
Where there is no dedicated escrow, the pattern of the money is consistent. The deposit arrives on the broker's operating account. Weeks pass while the survey is arranged and the defect list negotiated, and during that period the funds are used, not because anyone set out to misappropriate them but because they are there and the business is seasonal. If the sale completes, the balance is netted against the deposit and nobody notices. If it does not, repayment is promised for the end of the month, then the following month, and the correspondence becomes less specific. By the time we are instructed the discussion has moved to instalments. We see the mirror image on the seller's side: the buyer has paid, the vessel has been delivered, and the seller is waiting for a balance from which unexplained costs have been deducted.
The duty to inform and the duty to advise
Article 1112-1 of the Civil Code
A party who knows information whose importance is decisive for the other party's consent must disclose it, where the other legitimately does not know it or legitimately relies on his counterparty. Information is decisive where it has a direct and necessary link with the content of the contract or with the capacity of the parties. The duty does not bear on the estimation of the value of the performance, which is why a broker need not tell a seller he could have asked for more. Paragraph 4 allocates the burden of proof: the person claiming that information was owed must prove that it was owed, after which it is for the other party to prove that he supplied it. Paragraph 5 makes the duty mandatory, so a clause excluding or limiting it is ineffective, and paragraph 6 adds that breach may also lead to annulment for a defect in consent. French courts also require professional intermediaries to advise on the essential characteristics and risks of the operation, and place the burden of proving it on the professional. Damages are commonly assessed as the loss of a chance rather than as the whole of the loss.
Undisclosed damage, and an inaccurate VAT position
Grounding, fire, flooding, structural repair, engine replacement, osmosis treatment and insurance claims are matters a broker often knows about, because the owner told him or because he handled the previous sale. Silence on such a point, in a listing describing the vessel as being in excellent condition with no known damage, is the classic scenario. Two routes exist. The first is the information duty. The second is fraud: article 1137 treats as dol the intentional concealment by a contracting party of information he knows to be decisive for the other, and article 1138 provides that fraud is equally constituted where it emanates from the representative, manager, employee or guarantor of that party. Concealment by the seller's broker can therefore be attributed to the seller, which matters when the broker has no assets and the seller does.
The statement "VAT paid" raises the same question in a different register. It describes not physical condition but tax and customs status, and it affects value, circulation within the European Union and the position of every future buyer. A broker who advertises that status without holding the supporting documentation is asserting something of decisive importance he has not verified. Where a buyer relies on it and is later required to account for VAT, the claim may lie against the seller, against the broker, or against both. The answer is always documentary: the original invoice showing the tax charged, the import and customs clearance documents and the chain of ownership, produced before the deposit is paid rather than after.
Where the broker's duty stops
The duty is not unlimited. A broker is not a surveyor, a tax adviser or a lawyer, and he does not answer for defects he could not reasonably have known about. Courts also take account of the competence of the person complaining: a buyer who is himself a professional, or who is assisted, is expected to make his own enquiries, and one who declines a survey after being advised to commission it weakens his position considerably.
Claims, defendants and time limits
Against the seller
The principal route is the guarantee against hidden defects. Article 1641 of the Civil Code makes the seller liable for defects rendering the vessel unfit for its intended use, or so reducing that use that the buyer would have paid less; article 1642 excludes apparent defects; article 1643 maintains liability even where the seller was unaware of the defect, unless a valid exclusion clause applies, and such clauses are set aside where he acted in a professional capacity or knew of the defect. Article 1648 requires the action to be brought within two years of discovery, and since the rulings of the Cour de cassation sitting in mixed chamber on 21 July 2023 that period must also fall within the twenty-year long-stop running from the sale under article 2232. Alongside it sit annulment for fraud or mistake and, where a professional sells to a consumer, the guarantee of conformity in articles L. 217-3 and following of the Consumer Code, unavailable where the broker merely acts for a private owner.
Against the broker
If you instructed him the claim is contractual, under article 1231-1 and the mandate provisions; if you are on the other side of the transaction it is generally in tort under article 1240. The heads of claim fall into recognisable categories: breach of the duty to inform or advise, failure to verify the vessel's registration or freedom from registered security, inaccurate description, failure to account for funds under article 1993, and retention or diversion of sums received. Where money handed over for a defined purpose has been applied to another, the facts may also fall within the offence of breach of trust under article 314-1 of the Criminal Code. Whether professional indemnity insurance responds is worth establishing early, since article L. 124-3 of the Insurance Code allows a direct action against the insurer of the liable party.
Time limits and cross-border points
The general limitation period for personal actions is five years under article 2224 of the Civil Code, running from the day the claimant knew or ought to have known the facts allowing him to act, with the same period for commercial claims under article L. 110-4 of the Commercial Code. Those periods look generous until one notices that the starting point is contested in almost every file. Where the parties are not all French, the choice of law and jurisdiction clause comes first; absent a valid choice, a services contract is in principle governed by the law of the provider's habitual residence under the Rome I Regulation, and jurisdiction may be taken at the place of provision of the services under the Brussels I bis Regulation, with protective rules for consumers. In practice the vessel's location in France often decides matters, because that is where judicial expert appointments and protective measures can be obtained.
Signals to address before signature
Frequently asked questions
Is a yacht broker in France required to hold my deposit in a separate escrow account?
No. There is no French rule obliging a pleasure boat broker to segregate client funds, and no compulsory financial guarantee of the kind that applies to estate agents. Segregation exists only if the contract provides for it and the funds are actually held by a regulated third party, such as a French avocat through a CARPA account, a notaire, or a bank under a tripartite escrow agreement.
Does the loi Hoguet apply to boat brokers?
No. The Act of 2 January 1970 governs intermediaries in transactions on immovable property and on businesses. A yacht is movable property, so the professional card, the financial guarantee, the mandate formalities and the duration limits of that regime do not apply to a boat sale.
Can I claim against the broker if he knew about damage and said nothing?
Potentially, on two bases. Article 1112-1 of the Civil Code imposes a duty to disclose information of decisive importance, and that duty cannot be excluded by contract. Deliberate concealment may also amount to fraud under article 1137, and article 1138 provides that fraud emanating from a party's representative or agent is attributed to that party, which can allow the buyer to act against the seller as well. Everything depends on proving what the broker actually knew and when.
Who is liable if the VAT status turns out to be wrong?
It depends on who asserted the status and on what basis. The seller may be liable under the contract of sale and, where the misstatement was deliberate, for fraud. The broker who advertised a status he had not verified may be liable for breach of his information duty and, where consumers are concerned, exposed to the misleading commercial practices rules of the Consumer Code. The decisive material is documentary: the original invoice, the import and customs papers and the ownership chain.
I signed a brokerage mandate at the marina. Can I get out of it?
Possibly. Where the owner is a consumer and the contract was concluded away from the professional's business premises, the off-premises rules of the Consumer Code apply and a fourteen-day withdrawal period under article L. 221-18 may be available, subject to the information the professional gave. Outside that situation, article 2004 of the Civil Code allows revocation of a mandate, but a fixed-term exclusive appointment may carry an indemnity, and any penalty remains subject to judicial reduction under article 1231-5 if it is manifestly excessive.
Is my deposit refundable if the survey is unsatisfactory?
Only if the agreement says so with sufficient precision. The refund depends on how the survey condition is drafted, on the deadline for exercising it, and on whether the sum was intended as arrhes within the meaning of article 1590 of the Civil Code or as a part payment of the price. Vague wording such as "subject to satisfactory survey", with no deadline and no definition of what counts as satisfactory, is the most frequent source of argument.
How long do I have to bring a claim?
For most contractual and tortious claims, five years from the day you knew or should have known the facts, under article 2224 of the Civil Code. For a hidden defects claim against the seller, two years from discovery of the defect under article 1648, and that period must fall within the twenty-year long-stop from the sale under article 2232. Because the starting point is contested in nearly every file, evidence of when you learned of the problem should be preserved from the outset.
Conclusion
The vocabulary of yacht brokerage suggests a regulated intermediary standing between the parties. French law offers something else: a professional instructed by one side, remunerated on completion, operating in a field where the loi Hoguet does not apply and where nothing obliges him to keep other people's money apart from his own. That is not an argument against using a broker, and competent brokers add real value in a market where vessels are mobile, documentation is scattered across jurisdictions and buyers and sellers rarely meet. It is an argument for reading the mandate as a legal document rather than as a formality, and for deciding, before any money moves, who will hold the funds, in whose name, and on what conditions they will be released.
Two documents therefore deserve genuine attention: the mandate and the escrow arrangement. Both are negotiable before signature and almost impossible to renegotiate afterwards. On the buyer's side, the same discipline applies to the survey, the registration position and the VAT file, none of which the seller's broker is there to guarantee. Where a transaction has already gone wrong, the useful early steps are documentary: secure the correspondence, identify precisely which account received the funds, and establish when the problem became known, because the limitation periods run from knowledge and that date will be disputed.
About the author
Guillaume Leclerc is an avocat admitted to the Paris Bar, practising through SELARL Victoris, 34 Avenue des Champs-Élysées, Paris. His practice covers yacht and pleasure boat transactions, financing, tax and disputes, including brokerage mandates, escrow arrangements, sale documentation and litigation arising from second-hand purchases. He works in French and English and handles files remotely by video conference for clients based in France, Switzerland and abroad. Further information is available on our page on French yacht and pleasure boat law, and enquiries can be sent through our contact page.
Last reviewed: September 2026.
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