Know your options for USCG documentation vs. state registration.
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A key decision for many boat owners and prospective buyers is whether to obtain vessel documentation or simply register on the state level. Although options may exist, this is more often a matter of compliance when it comes to state and federal boating regulations. The vessel's size, its intended usage, operational location, an owner's citizenship, and whether it will be given up as security for a marine loan are some of the primary factors. This article will explain the conditions under which one method or the other may apply and offer information that could influence your preference when there is a choice to be made.
First and foremost, you will need an understanding of the distinctions related to vessel documentation, state titling, and state registration. Documentation is essentially a type of federal registration which is administered by the U.S Coast Guard. It is evidenced by a singular certificate of documentation. However, It serves the dual purpose of a renewable registration while at the same time providing evidence of title. State level registration and titling differ in that permanent title certificates are issued separately from periodic registration certificates similar to those for vehicles.
Coast Guard documentation is only available to vessels over approximately 24' in length that are wholly owned by U.S. citizens. Certain other qualifications such as having been built in the United States may also apply for commercial usage. Although optional for vessels which are used solely for recreational purposes, documentation is required for most types of commercial operations. This includes commercial fishing, carrying passengers for hire, and freight transportation.
State registration is on the other hand not restricted by the boat's size, place built, usage, and type of ownership. Registration and numbering are required, with certain exceptions, for all boats that reside in a particular state. Small tenders, non-powered boats, and documented vessels may be excluded depending on the respective jurisdiction. Transient boats, when registered in another state, are also typically exempt for periods of 30 to 90 days.
Boat titling is now also offered by most states, although there are still a few hold-outs that issue registrations only. This is irrelevant however on documented vessels because federal law prohibits the issuance of state titles under these circumstances. This does not apply to registration certificates only because the Coast Guard does not look upon these as bona fide titles. On non-documented vessels in non-title states the registration certificate itself substitutes as proof of ownership.
When it comes to a matter of preference, there are some pros and cons to consider. On the plus side for documentation, it viewed as the most conclusive evidence of vessel ownership. When applying for documentation, applicants must show convincing proof that they are in fact the rightful owners. This is not always the case with state agencies where such requirements are sometimes quite relaxed. Documentation is further enhanced by an abstract of title which shows a chronological history of ownership. Such a comprehensive background history is not available in most state jurisdictions.
Evidence of Ownership
Documentation is also universally accepted as decisive proof of ownership both domestically and abroad. It confers the legitimate right for a vessel to display the U.S. flag which may be advantageous in foreign and non-jurisdictional waters. Most owners will accordingly choose to document when cruising offshore. Documentation is also an enhancement when it comes to obtaining a boat loan as it affords the lender with a preferred vessel mortgage. This takes priority over all other forms of contractual encumbrances.
There is a common perception that documented vessels are exempt from state level taxation. This may be true for certain commercial applications, but not those used exclusively for recreational purposes. State sales, use, and property taxes will apply regardless of how the boat is registered. In fact, a number of states require yearly registrations on documented vessels just for the primary purpose of revenue tracking. The registration fee itself will not apply of course in those states which do not register documented vessels.
The cost of acquiring documentation can be another factor in deciding whether this is the best choice. The actual fees levied by the Coast Guard to obtain documentation are typically less than a couple of hundred dollars. However, the use of professional documentation services can double or triple that amount as an overall expenditure. This may seem excessive, but the application process could become a nightmare if not properly implemented. Submissions are routinely declined even for minor deficiencies such as typos and omissions. This may cause considerable delays in processing or even a forfeiture of the application fees. On the positive side, periodic renewal and documentation maintenance costs are minimal once the certificate has been issued.
All said, your choice may simply come down a matter of personal preference. Within the boating community, documentation is viewed as a more prestigious method of registration. It joins the ranks of other luxury yachts and ships which are entitled to carry the U.S. flag. It is even exempt from having to display those unsightly state registration numbers associated with smaller boats and shore tenders. With regard to the marketplace, documentation is generally seen as an enhancement for subsequent buyers and lenders.
Credits and References
2/18/2022 - Page initiated by Team BoatWiki.
4/30/2022 - Reviewed by TeamBoatwiki.