Exactly. How does the real world's state get accurately put into a blockchain? My big beef with all the blockchain hype is that this doesn't seem to be addressed. They say "trustless" and "secure" and "transparent" all the time, but those assurances only exist within the very limited confines of the data structure itself. As soon as you hook it into real-world data, then those assurances only guarantee that fraud is accurately carried out.

It doesn't. You go to court like normal people.

How is this not a problem if the court system is filled to the brim with situation that could have been solved with smart contracts in place.

As for the yacht it's easy, the ownership is transfered from your address to the buyers address on the government's blockchain. :)