Possessory Boat Lien
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Aug 22, 2023 - A possessory boat lien can be defined as the right to maintain possession of a boat until the charges for services rendered and/or products furnished have been paid. It is sometimes referred to as a mechanic's lien, although the coverage is much broader. It can include moorage fees, storage, towing services, repairs, cleaning, haul-outs, yard fees, fuel dispensed, electronics and other product installments, just to name a few.
Possessory liens are creatures of state law that allow for a service or products provider to ultimately foreclose on the subject boat if not paid in a timely fashion. However, such right is extinguished if the creditor loses or gives up physical possession of the boat. In this case it would become necessary to take other actions to satisfy or otherwise collect the debt. In any event, a possessory lien foreclosure does not vacate existing liens or encumbrances. The foreclosure process typically ends in an auction where the vessel is sold to the highest bidder, which may be the lienholder in most cases. Any proceeds in excess of that due the lienholder generally go to the existing owner of record or the state in unable to be found.
The purchaser of a foreclosed boat, may subsequently register, title, or document it by presenting copies of the transaction. This must typically include a copy of the statutes under which foreclosed and evidence of full compliance thereof.
The foreclosing party must be extremely careful that the respective statutes were followed to the letter in order to avoid liability to the debtor for unlawful or unwarranted conversion. A buyer, on the other hand, must be sure of the same circumstances in order to gain a recordable title. As these matters are sometimes complex, it may be advisable for all parties involved to seek the counsel of a qualified attorney. This is especially important if the boat is currently U.S. Coast Guard documented, as the question of venue may be called into question.
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Aug 22, 2023 - Page revised.