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LEGAL FORMS PACKAGES
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BOAT INSURANCE
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BOATER EXAM |
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Do
all owners need to sign on a boat title transfer? -
In most cases, all of the owners will need to execute a title
certificate, certificate of documentation, bill of sale, or other
transfer instrument. Some exceptions would include an "or"
indication between the owner's names or a survivor of a joint
tenancy. Many state titles will also show "and" designations which
means that all respective owners must sign. The U.S. Cost Guard does
not use these types of qualifiers on documented boats and will
usually indicate the individual percentages owned or reveal the full
method of ownership. Special rules for releasing interest may also
apply to estate situations or trust arrangements. If the subject
vessel is owned by a legal or business entity, all transfer
documents will need to be signed by an authorized representative.
Boat registration or titling agencies may not always require proof
of such authority, but you should require this for your own
protection. In any event, you may wish to consult with the
respective governmental agency or an attorney if you have concerns
in this regard.
Do
I need a regular or maritime attorney for legal advice?
- It all depends on the kind of transaction your are
considering and the
situation at hand. In dealing with state level issues on a smaller boats, a regular
attorney may be quite sufficient. On Coast Guard documented vessels
or those which will be used in commercial operations, a maritime
attorney would likely be your better choice. In any event, you
should ask a prospective attorney whether he or she is qualified in your particular area of
interest. If not, you can request a
recommendation or check the marine attorney listings on our directory page.
Is
boat title insurance available for my transaction? -
Boat title insurance for vessel purchase transactions is not
currently available within the marine industry. Attempts have been
made in the past by various title insurance companies to offer this
badly needed service, but they have all withdrawn from the market
place. This means that buyers must basically rely on the seller for
any title guarantees or warranties. You should therefore take all
possible measures to ensure that the seller can and will stand
behind any such representations. A thorough inspection of the boat's
title status should also be conducted on your own behalf. Our website
offers a number of resources in this regard and provides a listing
of marine attorneys that can help with any of your legal concerns.
Should
I buy a boat without getting the title certificate? -
It is very difficult to re-title or register any boat without the
previous title certificate or proper ownership releases. If the
state where you are registering does not offer bonded or conditional
titles and registrations, it will likely be a matter of obtaining an
award of ownership from the appropriate court. You should therefore
never close on a purchase transaction without at least knowing the
condition and whereabouts of the boat's title.
Should
I place my boat in a charter or timeshare program? -
Time share and bareboat charter programs remain quite popular with
vessel owners, even though some of the earlier IRS tax advantages
have vanished. A well managed program can not only help defray the
financial burden of ownership, but also qualify the vessel for state
level tax reductions in certain jurisdictions. Unfortunately, these
advantages are offset by the fact that you may end up sharing your
vessel with some less than desirable individuals. In some states,
you must also turn over management of the vessel to an independent
third party for tax purposes.
Should
I state title or Coast Guard document my boat? -
Coast Guard vessel documentation is optional unless you intend to
use your boat commercially or your lender requires this for loan
security purposes. In fact, most vessels under 25' in length will
not qualify for documentation anyway. Keep in mind when making your
choice that a documented boat can not also have a state title.
However, some states require that documented vessels become
registered and display yearly tabs. As for taxes, documentation does
not typically exempt a boat from these obligations. Information on
the advantages of documentation and state boat titling information
can be found in our federal and state pages respectively..
Should my surveyor verify all boat identification numbers?
- One of the more important aspects of a surveyor's report
pertains to the vessel's description. Although often underrated,
this can be as vital to the buyer and marine lender as the vessel's
underlying condition. In addition to the exact specifications, any
identification numbers that are affixed to the vessel must be
clearly stated. Such items all serve to link the vessel itself with
those documents which evidence ownership and a lender's security
interest.
What are
boat operating or vessel travelling papers? -
Boat operating or travelling papers are copies of documents proving
that you own the boat. This may include a signed off state boat
title, a bill of sale, or other evidence that the title or Coast
Guard documentation has been assigned into to your name. In most
cases, such papers will also include evidence that you have applied
for a new registration, state title, or Coast Guard documentation.
These may also be supported by a letter from your title or
documentation service agent when applicable. Although such items are
not fully legitimate for operating purposes,
most law enforcement officials will honor them if they are
complete and reasonably current. However, you should always check
with the enforcement agency for the area in which you will be
operating to confirm whether these will suffice.
What is a vessel or
boat paper trade? - Many states
allow a reduction in sales or use tax on a vessel purchase for the
value of a trade vessel. This has created a tendency among some
buyers to arrange for passage of title for a trade through the
seller and then on to a third party as evidenced only by bills of
sale. The buyer maintains control and possession of the trade
pending delivery to the third party. Buyer's should be aware that
such tax deductions can be disallowed should the respective state
not view this as a bona fide transaction. Sellers should also be
concerned about stepping into the chain of ownership, even if it is
only on paper.
When
do I need the services an attorney? -
Maritime transactions are quite different from those involving other
types of personal or real property. You should accordingly seek the
advice an attorney whenever you do not fully understand the
workings or implications of any particular situation or boat
transaction. An attorney can also help address those unfortunate
circumstances where title defects exist, prior liens
were not properly retired, or the title transfer documents are insufficient.
Where can I find marine boat
or vessel escrow services? - You are not likely
to find the equivalent of typical real estate escrow services in the
marine industry. Boat or vessel escrows are for the most part
handled by yacht brokers, commercial lenders, a few documentation
companies, and perhaps an attorney who is willing to become involved in such
transactions. Other than attorneys and commercial lenders, there is very little by way of
bonding, accountability, and governmental oversight with respect to
the way marine escrows are handled. Brokers are regulated in some
states, but documentation companies are usually not subject to any such
constraints. You should accordingly conduct a great deal of
investigation before handing large sums of purchase funds over to an
independent marine escrow agent.
Who guarantees a
boat or vessel title? - The words "caveat emptor" represent what is arguably one of the
most important concepts you should bear in mind when purchasing a
vessel. This Latin phrase, which means "let the buyer beware",
is further defined in legal terms as "an axiom or principle in
commerce that the buyer alone is responsible for assessing the quality of
a purchase before buying". In the marine industry, this is true not
only as it pertains to a vessels condition, but also as it relates to
the quality its title.
Why
is my lender requiring Coast Guard documentation? -
Most vessels larger than 24' will qualify for Coast Guard
documentation if the owner is a U.S. Citizen. In this case, the
lender must become secured with a preferred vessel mortgage in order
to fully protect their collateral interest. In order to record the
mortgage, a vessel must be currently documented or in the process
of becoming documented in the borrower's name. |
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