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What you should know about boat title searches.
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One of the most important aspects of buying any boat is ensuring that it has a marketable title which is free of liens and encumbrances. An effective title search should therefore become the cornerstone of any boat purchase and sale transaction. Such undertaking may prove difficult however, given the complex issues surrounding Coast Guard documentation, boat registration, state titling, and maritime boat liens. This overview explores the various aspects of conducting boat title searches, how to verify ownership, and where to look for recorded liens or encumbrances. You will also learn about the concept of hidden maritime liens and when to raise an alarm with regard to a boat's title condition.
An effective boat title search consists of several basic research elements. These include a boat description verification, boat registration search, boat lien search, ownership search, and boat history search. The various types of research are all interrelated and should come together as a complete and accurate portrayal of the boat's overall title condition. This is best accomplished by gathering all elements into an organized report where the data can be compared for any conflicts, anomalies, or inconsistencies.
A research project should always begin with a full disclosure from the seller which will serve as a basis for the ensuing search activities. A rightful owner should have no difficulty in providing details such as a full description of the boat, how it is currently titled and/or registered, and whether there are any outstanding liens, encumbrances, or claims. The disclosure should also include information as to when, where, and how the boat was acquired and if there are any historical events which may have impacted the boat's title condition. All details should be supported by physical evidence such as copies of the boat's title certificate, registration certificate, Coast Guard documentation certificate, and mortgage or financing documents as applicable.
Boat Description Verification
The description verification involves a physical inspection of the boat to determine its actual length, make or model designations, and all identification numbers. These should include any registration or documentation numbers affixed to the boat along with the hull identification number. The boat's name and hailing port are also relevant as they may provide clues to whether the boat has been Coast Guard documented or foreign registered. The inspection should be conducted on your own behalf unless you have supreme confidence in the seller's representations. If an inspection is performed by a surveyor, make sure photographs or stencil rubbings are provided for the identification numbers.
Boat Registration Search
All registration and title documents presented by the seller should be verified directly with the issuing agency to make sure they are current and valid. It is not unusual to find outdated or superseded certificates which have remained in circulation. In addition, all agencies where the boat may have been potentially titled, registered, or documented should be contacted to see if they show a record of the hull identification number in their databases. If the boat has ever been Coast Guard documented, even though expired or deleted, an abstract of title must be obtained.
Recorded Lien Search
The manner in which the boat has been titled or registered will determine where to look for any recorded liens, claims, or mortgages. If the boat is not Coast Guard documented and has been registered in a non-titling state, it will be necessary to conduct a Uniform Commercial Code (UCC) search. State titled boats which are not documented will typically show security or lien interests on the title certificate. However, this is not always the case and you should confirm such status with the issuing agency. On boats which are documented, it will be necessary to obtain an abstract of title from the U.S. Coast Guard certificates of documentation do not show mortgages and claims of lien.
Liens and claims can follow a boat and become a burden to subsequent owners even though not recorded. This is especially true of those which are documented with the U.S. Coast Guard. Such liens can include unpaid obligations for moorage, repairs, supplies, and other necessaries related to the boat's operation. Unfortunately, such liens may be difficult if not impossible to detect in some cases. At best, you can check with any known suppliers or service yards which may have had access to the boat. In any event, it would be prudent to have other means in place of holding the seller responsible should any hidden or undisclosed liens arise after the sale has been consummated.
Boat Owner Search
Boat or vessel title insurance is not currently available within the marine industry. This makes it incumbent upon the seller in most cases to make good on any title representations or guarantees. Of course, it does not help much if the guarantor is unable to fulfill such obligations or can not be subsequently located. A background check to see if the seller is responsible and financially solvent may alleviate such concerns. Criminal and asset checks are readily available through a number of internet services companies at a reasonable cost.
Boat History Search
A boat history or background search will help identify any circumstances or events which may affect the title's condition. These can include situations where the boat has been stolen or involved with incidents which have incurred some type of liability. Although boat history searches are available on the internet, these are rarely conclusive and should never displace warranties, guarantees, and other safeguards. You can also check directly with federal and state enforcement agencies if there is a sufficient cause of action.
Chain of Ownership
It is helpful to construct a complete chain of ownership showing every owner since the boat was new. This may not be possible in some cases however, especially for older boats. If the boat has remained Coast Guard documented right out of the factory, an abstract of title can be obtained showing all transfers of ownership. State records are more difficult as many jurisdictions do not keep such data indefinitely. Archived microfiche records may be available in some states, but obtaining them is usually cumbersome, time consuming, and expensive.
In addition to having an equitable interest, the seller must be capable of providing whatever items as may be required to record or establish title in the buyer's name. With respect to boats this typically involves a state title, current registration certificate, or certificate of documentation. These will need to be accompanied by the appropriate instruments of release or transfer. Any parties holding a security interest or claim against the boat must also provide releases or discharges.
Pass Through Titles
There are many situations where owners have never titled or registered the boat into their names. This does not automatically disqualify the title from being marketable if a seller has the necessary items to establish a continuance of ownership. These may include a bill of sale or released title from the last owner of record. A convincing explanation as to how the boat was acquired and why it was not subsequently titled or registered should also be forthcoming. Delinquent taxes and registration fees can sometimes become an issue under these circumstances.
Any inconsistencies in the vessels description or identification numbers as they relate to the title or registration certificates should be cause for alarm. This is especially true with regard to identification numbers which are missing, obscured, or have the appearance of being altered. Expired, damaged, missing, or altered registration certificates should also be of concern. Above all, the seller must display a complete willingness to disclose all matters related to the boats title condition. Any reluctance, vagueness, or lack of cooperation in addressing such issues should be viewed with great deal of trepidation.
Closings and Settlements
Boat closings, settlements, and disbursements should never be finalized unless you are convinced that the seller is capable of producing a marketable and unencumbered title. You should also have full confidence in the seller's wherewithal to make good on any representations or guarantees of title. If such conditions do not exist, it may be prudent to establish a reserve or holdback to cover any such contingencies. A seller may have less motivation for correcting any title deficiencies once the purchase price has been fully paid.
Title Search Resources
There are a number of resources on the internet which can offer assistance with researching boat titles. Although federal and state agencies are among these, they are typically narrow in scope and limited by anti-disclosure restrictions. The database section of this web site also contains information about conducting title searches.
As you can see, boat title research can be quite challenging unless you have a good working knowledge of how this all comes together. It may therefore be worthwhile to have a boat titling or documentation professional review all of the seller's items and perhaps assist with the overall process of researching the title. In any event, you should seek counsel from a qualified attorney if any titling related issues remain unresolved before finalizing a boat purchase transaction.
Credits and References
2/16/2022 - Page initiated by Team BoatWiki.