Documentation Question

Kings Gambit · Apr 6, 2016

kimelmore said:
I'm in the process of buying a bigger boat. The boat is documented now. Is there a reason the broker said we "should" go to a special "Documentation specialist" and pay $400 so a "title search" can be done? I'm confused as I thought all we had to do was fill out the paperwork and send it off to the USCG with the proper fee of course. Any information would be appreciated.
The boat is currently documented and I am assured that any 'transfer' of the documentation is part of the deal.

If the boat has a recorded lien (e.g., mortgage) against it the USCG won't re-document it to you even if the present owner (i.e., seller) requests it. This could happen even if a mortgage or other lien was paid off but the USCG was not properly notified, etc., so one still exists on paper. You'd most likely find this out after purchasing the boat with the attempt to transfer title--documentation. Then YOU would have to track down whoever should have cleared that lien and get that person to do so.

[This happened to me with the purchase of a boat not using a broker. The seller had "forgotten" to clear the lien with the USCG.] If the title is "clean" then it's an easy thing for one to do for one's self. FYI: the company I used when I re-documented the boat I have now was Mary Conlin; read at the website for more information.

https://vesseldocumentation.com/

Charles Erwin · Apr 6, 2016

You can do a USCG lien search yourself at http://www.st.nmfs.noaa.gov/st1/CoastGuard/VesselByName.html

This is not the whole story however. The fee ($400 according to you) gets you some other things. It is essentially an escrow - just like a house purchase. The broker gets his commission from the buyer's share. Your funds go no place until you get clear title (a certificate without exceptions.)

I think it is worth the $400 but I would tell the seller that it comes from his share. Maybe negotiate down to splitting that $400 fee with him.

I would also very much consider a state and local title search as well - most certainly because your forum is California. There are state and local taxes (unique to California) that might have been unpaid and which may need to be addressed - even if they do not amount to a maritime lien and so don't (because they are not entitled to) show up as an USCG lien.

Edit:: At least obtain a bill of sale that warrants all liens and claims from taxing authorities have been paid. That way you have a shot at the seller later if that ever becomes necessary. Pay attention to sales/use tax liabilities.

Charles

pcjrusso · Apr 7, 2016

We bought a documented vessel last summer. My financing company handed it all. They charged me $250 if I remember correctly.

This was for a 33' Nauticat. I am not sure if length or weight effects the cost of documentation

Pat and Debbie
" Debra Lynn" NC 33
Lasalle Mi

uncledom · Apr 7, 2016

You can do a search on the USCG documentation web site for the vessel to see if there is a lien or you could call them. They are very congenial and helpful. The broker/s should be the one/s to research any liens. The documentation broker I used is really an expediter and an expert at international titles. PM me if you want her info. My boat was registered in Canada and must be removed from their database before the USCG will accept the documentation paper work.

BarryL · Apr 7, 2016

Hey,
On the last two boats I bought I did the paperwork myself. It took about 30 minutes.
Barry

Benny17441 · Apr 7, 2016

Boat title insurance is non-existent in the marine industry. This means you will not get a guarantee of a clear title whether you do a title search yourself or whether you engage a title agent. Performing a title search on a boat is part art and part science. It should start with a history of the boat and its ownership chain. This will point out which sources should be checked. It is quite common in used boats that a USCG documented boat may have been registered with one or more States in the past. The way liens are recorded will vary among registries and they are not very effective in sharing the information. Even if all sources reveal no liens there is nothing written in Maritime law that says that a lien needs to be recorded in order to be effective. If this sounds like chaos it could be. If the person doing the search is experienced, innovative and a hard worker the results of a search may provide adequate certainty of a clear title or it could bring up red flags pointing to potential problems. Ask the agent how does he intend on conducting the search and which sources does he usually check. If he convinces you he is $400 worth then do it, if he just says he checks with the USCG then do it yourself or find another agent. I mean 80% of the time these recreational boats have no title problems but is the other 20% that may need some work.

Charles Erwin · Apr 7, 2016

. . .there is nothing written in Maritime law that says that a lien needs to be recorded in order to be effective . . .

My experience is quite the contrary and this statement is frankly misleading. Matters of enforceable liens - against a bona-fide purchasers - are not art. The rules are well defined by state and federal statute where federal law is applicable. While a buyer does not (typically) obtain a title insurance policy - that fact does not foreclose a buyer from a claim against a title examiner - should it turn out the examiner goofed. Obviously if you do it yourself and goof - then you have no such recourse. Same goes for writing DIY escrow instructions, DIY searches for outstanding local and state tax claims.

Vessel purchases typically involve serious money. When anyone advises you that you can 'do it yourself' and you do - then what happens if you goof? One answer for sure is that the DIY advice giver pays nothing.

Charles

Gunni · Apr 7, 2016

Serious money and likely a mortgage holder. So you want a professional inquiry of of the boat's Abstract of Title for lien-holders, and your lender wants his lien recorded. And you want a Responsible Party if it is done wrong. Easily worth $300-$400.

jssailem · Apr 7, 2016

I bought my documented boat and the seller (a foundation) professed ownership. But the CG objected. Turns out the boat had been sold and taken back 5 months earlier but the documents were not properly processed. I got the parties together and enabled them to fix the paperwork. Then the CG approved the transfer to me. No broker involved.

Seems a broker gets paid for something. Shouldn't they provide a boat with a clean title and documentation. What are they getting paid for, holding your hand on the dock while you look at the boat?

Gunni · Apr 7, 2016

Just as in a R/E transaction, the broker assumes liability for the negotiating the deal, and making sure the sale documents are right and in compliance, the Documentation company assumes liability for clear title record, proper CG filing. ...and the surveyor does his thing...and the lender hers. The more expensive, the more SEM (someone else's money) the more complicated. A broker would have likely flagged your deal for insufficient title documentation.

Documentation Question

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