What you should know about USCG vessel documentation.
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USCG vessel documentation is a federal registration system for recreational and commercial vessels. It is designed to provide evidence of nationality and facilitate commerce throughout the United States. Vessels that meet the required qualifications are issued a Certificate of Documentation which serves as proof of ownership and entitles the vessel to engage in certain activities. It also facilitates a listing of vessels which are available in case of war or national emergency.
National Vessel Documentation Center
The National Vessel Documentation Center (NVDC) is a federal agency which administers all aspects of USCG vessel documentation. Although previously fragmented into several districts, this operation has now been centralized into a large and very modern facility. Everything is processed electronically which makes for very efficient handling of recordings, research, and the documentation process in general. The documentation center or NVDC is located in Martinsburg, West Virginia.
Documentation for Recreational Vessels
USCG vessel documentation was originally established to regulate commerce, however it is now dominated by recreational or pleasure vessels. There are several advantages to documenting a recreational vessel, but such dominance has come about mostly because of the Ship Mortgage Act of 1920. This gives marine lenders a priority or perfected in vessels which have become documented. Boats used for non-skippered bareboat charter are considered as recreational for vessel documentation purposes.
Documentation for Commercial Vessels
Although Coast Guard documentation is optional for recreational boats, it is mandatory for vessels that will engage in commercial activities. These include operations such as carrying passengers, hauling freight, and commercial fishing. Certificates of documentation for commercial vessels must be endorsed for the respective types of usage. Vessel build and owner citizenship requirements are considerably more stringent for commercial vessels.
As a general rule, all owners of a documented vessel must be US citizens. This also applies to legal and business entities such as corporations, limited liability companies, and partnerships. Principals who own and operate such entities must be U.S. citizens in their own right. An individual who owns all or part interest in a documented vessel must be native born, naturalized, or a derivative U.S. citizen. Coast Guard documented vessels may be operated or placed under the command of a foreign citizen only if the vessel is used for recreational purposes.
Any type of vessel, whether mechanically powered or not, can become documented so long as it is capable of navigation on its own bottom. However, it must measure out to a minimum of five net tons. This is determined by volume rather than weight or displacement. Except for barge shaped hulls, the formula involves the length, width, and depth of the hull structure itself. Most vessels will need to be approximately twenty five feet in length or more to qualify. The country in which a vessel was built is only an issue for commercial usage.
Official Number Designation
When initially documented, every vessel is assigned a unique official number which becomes the primary identifier. This must be affixed to the inside of the hull its or an integral part thereof and preceded by the letters "O.N". It must also be secured in a permanent manner and located where easily accessible upon an inspection. An official number remains with the vessel for life and is never changed. The Coast Guard maintains official numbers and their corresponding abstracts of title indefinitely, even for vessels which are no longer documented.
Name and Hailing Port Designation
Every documented vessel must display a name and hailing port on the exterior of hull where it can be easily seen. Vessel names are not exclusive and can be of the owner's choosing so long as it is not profane or in conflict with safety signals. Hailing ports may consist of any city and state which has a postal code. These can be completely arbitrary as the Coast Guard no longer maintains home port designations. State registration numbers may not be displayed on a documented boat.
Certificate of Documentation
A certificate of documentation is issued on first time and upon re-documentations of every vessel. It services as evidence of ownership and indicates all trade endorsements under which the vessel is entitled to operate. The certificate must remain on the vessel whenever it is operational for presentation to law enforcement officials and service vendors. Certificates of documentation must be renewed on a yearly basis and a new one is issued upon such occurrence.
Managing Owner Designation
A managing owner must be designated for contact purposes whenever there are multiple owners of a documented vessel. In the case of two or more individuals this can be any one of the parties. As for legal or business entities, the name of such entity will itself be shown as the managing owner. The managing owner's name and address are then listed on the certificate of documentation.
Changes can be made in the documentation status such as the vessel's name, hailing port, trade endorsements, specifications, and transfers of ownership. If a change is made due to an error on behalf of the Coast Guard, they will re-issue the certificate of documentation at no charge. Otherwise, an application for re-documentation must be submitted along with the appropriate fees. A new certificate of documentation is then re-issued showing the respective changes. Re-documentation is not required for a change of address as this can be implemented with a simple notification
Vessel Abstract of Title
When a vessel is first documented, the Coast Guard creates an electronic index or ledger wherein all transactions are recorded. These include transfers of ownership, mortgages, and claims of lien. Abstracts also contain notational information such as changes in the vessel's name, build information when presented, recording cross-references, and entry corrections. Any party involved in a documented vessel transaction should obtain an abstract of title, even if the documentation is no longer active. Abstracts are important because mortgages, lien claims, and methods of ownership are not shown on the certificate of documentation itself.
Preferred Mortgages and Supplements
A lender's security interest in a documented vessel is evidenced by a preferred vessel mortgage. This is very important as such recordings establish a rank and priority which is superior to other means of collateralization. Any number of mortgages can be filed against a particular vessel with the earliest ones having priority. Supplements to mortgages can also be recorded and include such instruments as amendments, assignments, addendums, assumptions, and subordinations. A mortgage is discharged or offset by implementing a release or satisfaction recording.
Claims and Liens
Claims of lien can be filed against any vessel that is actively documented. These are unilateral filings on behalf of a claimant and written consent of the owner is not required. Such recordings do not afford validity to any particular claim, but they do place a cloud on the abstract of title. Most lenders and potential buyers will insist on having these dealt with before proceeding with a loan or purchase. Such claims are discharged or offset by implementing a release or satisfaction of lien.
Advantages of Documentation
Coast Guard vessel documentation is only required for commercial operations and whenever a preferred mortgage is called for by the lender. However, there are advantages to voluntary documentation on recreational vessels. This will establish a complete chain of ownership, the vessel may be exempt from state registration in some jurisdictions, state numbers are not required on documented boats, and documentation it is generally considered to be more prestigious. It is especially important to have documentation for offshore cruising as this offers evidence of nationality and certain protections under the U.S. flag.
The documentation process is quite exacting and can become rather involved in some cases. The Coast Guard's application form is somewhat confusing and various supporting items must be provided depending on the transaction. Instruments presented for recording such as bills of sale and preferred vessel mortgages must contain specific citations and be properly executed. Any applications that do not meet such standards are promptly rejected by the documentation center.
Fees and Expenses
One of the more endearing aspects of vessel documentation is that application fees are one time only with a minimal cost for renewals. However, an application for initial or re-documentation can range from a couple hundred to several hundred dollars depending on whether the services of a documentation professional are employed. The Coast Guard does not collect taxes or customs duties as part of the application process.
Anyone with the time and inclination can implement their own vessel documentation. However, such effort may prove difficult and frustrating for those unfamiliar with the process. Documentation fees can also become forfeited if any deficiencies are not dealt with promptly. The assistance a qualified documentation specialist may therefore be a worthwhile consideration.
Credits and References
2/18/2022 - Page initiated by Team BoatWiki.