can I detect existing boat loan security interests? -
In order to become perfected and prioritized, boat loan security
interests must be properly recorded. The manner in which this
becomes implemented depends on how the boat is registered,
documented, or titled. Where to search for loan security interests
is therefore based on such circumstances.
If a vessel is documented
with the U.S. Coast Guard, it will be necessary to obtain an
abstract of title that corresponds to the respective official
documentation number. This will show all mortgages that have ever
been recorded against the vessel and any releases or satisfactions
which have been filed as evidence of their discharge. Abstracts are
sometimes complex and difficult to interpret so you may wish to
retain the services of an experienced documentation specialist. An
abstract should be inspected even if the vessel is reportedly no
On state titled
vessels a lender's secured interest is recorded on the respective
title and/or registration records of the issuing state. In most
cases, the secured parties will be shown on the title certificate
itself. However, this is not always the case and you should never
rely on the face value of boat title certificates. The appropriate
recording agency should be queried with regard to the certificate's
validity and further evidence of any liens or secured interests.
Certain states do not
issue boat titles and offer registrations only which serve as
evidence of ownership where the boat is not Coast Guard documented.
Lender security interests are not typically recorded on such
registration records, but this should always be verified with the
respective jurisdiction. Uniform Commercial Code ( UCC ) recordings
are the appropriate venue for recording financing interests in
non-title states. Such records should be searched under the owners
name and address as shown on the registration certificate along with
any other known aliases.
Titling and registration
methods are less than consistent due to the various means by which
boats can become titled, documented, or registered. Lines of
communication among various states and federal agencies with regard
to the exchange of boat information are inadequate at best. Tracking ownership and boat loan security interests
can therefore become quite challenging. Marine lenders may wish to rely on
professional assistance in this regard, especially for large or
Boat Title Research
How can I foreclose on a boat loan?
- Boat loans are typically foreclosed through actions taken
within the courts or performed non-judicially under state
regulations. Such options are generally governed by the terms of a
financing contract or security agreement and the manner in which the
loan was perfected. These choices can also determine whether
deficiencies may be pursued for any shortfalls from liquidating the
collateral. Caution should also be exercised when using self-help
foreclosure methods as you may become liable if not performed in
precise accordance with state regulations. In any event, you should
seek the guidance of an attorney in determining the best
method of foreclosure.
How can I
secure a boat loan on a floating home? - As a
matter of perspective, just about anything afloat with living
accommodations could be viewed as a floating home. However, floating
homes, house barges, and house boats fall into different categories
with respect to the manner in which they are moored, utilized,
titled, registered, and taxed.
Floating homes are building structures that are situated on a platform supported by
floatation devices. House barges are similar to floating homes, except
they are supported by a rectangular hull. House boats are self-propelled
cruising vessels with rectangular cabins situated on displacement type
hull structures. Although not designed for self-propulsion, many floating
homes and house barges are equipped with outboard motors
to avoid city or
county residential classifications.
Coast Guard documentation, state titling, and state registration are
generally available for all three categories of such vessels. This is important
with respect to financing because it provides the lender with a
means of perfecting its loan via a preferred ships mortgage or state level
boat recording. If the structure is not titled, it may become
classified as a mobile fixture to the wetlands property over which
it is moored.
How do I
release a preferred vessel mortgage? - In order
to discharge a preferred vessel mortgage, the lender must execute
and file a release or satisfaction of mortgage form. This becomes
indexed on the vessel's abstract of title as an offset to the
underlying mortgage. Although there is no recording fee, the release
form must show certain citations which includes recording
information which indentifies the mortgage to which it applies.
Satisfactions or releases of mortgage must be filed with the U.S.
Coast Guard's National Vessel Documentation Center. Lenders should
be aware of federal requirements which dictate that a mortgagee must
implement a timely discharge when the mortgage is no longer
Should I check on my vessel mortgage status periodically?
- Once recorded, a preferred mortgage will remain active
on the vessel's underlying abstract of title until discharged. This
also restricts the owner from transferring ownership or altering the
documentation without a mortgagee's consent. However, it will not
prevent the owner from granting additional mortgages and claimants
can record liens which may affect the mortgagee's collateral
interest. A prudent lender should therefore check on any such
occurrences from time to time. In order to do so, it will be
necessary to inspect the vessel's abstract of title for any
recordings that have been made subsequent to the filing of your
mortgage. Our abstract of title services as shown below are ideal
for this purpose.
Abstract of Title
Should I record on the state level with a vessel mortgage?
- A preferred vessel mortgage should take priority over
any state level financing recordings. If properly executed, a
mortgage becomes effective on the date received by the National
Vessel Documentation Center. However, there is a lag time until the
actual recording takes place. This leaves a certain period in which
the mortgage could be rejected should it not meet recording
standards. Accordingly, some lenders will elect to file a Uniform
Commercial Code ( UCC ) financing statement as an interim measure
until a mortgage has actually been recorded. Security interests may
also be filed on state
level registrations as a precautionary measure if such method is available for documented
Boat Registration Kits
When must I discharge a boat lien or mortgage recording?
- With respect to
vessel liens and encumbrances, it is natural to think only in terms of
an owners indebtedness to a lien-holder. However, in the event of a
settlement, the lien-holder actually incurs a converse obligation to the
debtor in the same amount as the original debt. In order to fulfill this
obligation, the lien-holder must offset any recorded claims it may have
filed against the vessel. Furthermore, there are certain state and
federal regulations that require lien-holders to implement this in a
timely manner. In fact, the holder of a preferred marine mortgage on a
documented vessel can incur substantial civil penalties for not
recording a discharge upon payment.
There are also some practical reasons for getting releases of interest
issued promptly. A good case in point pertains to debt settlements that
arise in conjunction with vessel sales transactions. In these
situations, the closing is precipitated upon paying off any underlying
liens or encumbrances. On settling these claims, any subsequent titling or documentation
recordings can not be completed until
the respective releases have been filed. Lien-holders, who
fail to do this within a reasonable time, can inflict damages upon the
affected parties. This usually results from a buyer's inability
to operate or encumber the vessel until proper titling, registration, or documentation
can be attained.
Resources ► Coast Guard
Documentation & State Registration Services
When should I require a preferred vessel mortgage?
- The issue of whether to require a preferred vessel mortgage is a moot
point if the boat is too small to qualify for Coast Guard
documentation. As a general rule, most boats under 25' in length can
not be documented. A preferred mortgage can only be recorded on a
vessel that is actively documented or in the process of acquiring
documentation. It should then rank above any state level
registration or Uniform Commercial Code ( UCC ) recordings. Some lenders require a preferred mortgage under
any circumstances if the boat is large enough to qualify for
documentation. Others have established risk thresholds where they
will forego mortgage requirements on smaller loans.
Preferred Mortgage Services
equipment does a preferred vessel mortgage cover? -
The language in a typical preferred vessel mortgage may include
coverage terms such as "whole of the vessel", "necessaries",
"appurtenances", "machinery", "equipment", "tackle", "apparel", and
"furniture'". The effectiveness of such citations with regard to
items which are not actually part of the vessel or essential to it's
operation is something that should be discussed with a maritime
attorney. However, some lenders will take additional measures just
as a precaution when it comes to dinghies or tenders with separate
titles, boat trailers, commercial licenses, and other portable
objects. In these cases, there may be further methods of recording
available on the state level or through other federal agencies.
Coast Guard Documentation
State Boat Registration
What is a preferred vessel mortgage?
- A preferred vessel mortgage is an instrument which
perfects and prioritizes a lender's interest on a Coast Guard
documented vessel. However, mortgages can only be filed on vessels which are
actively documented or in the process of becoming documented. This
excludes most vessels under 25' in length and those owned by
non-citizens as these would not qualify for documentation. Any
number of mortgages can be recorded on the same vessel and they
attain priority according to the date on which filed. A preferred
mortgage is said to have the highest rank and priority with respect
to securing vessel loans. It also affords the lender with certain
rights regarding repossession and foreclosure methods. Preferred
mortgages are indexed on a vessel's underlying abstract of title and
remain outstanding until offset by a properly recorded satisfaction
or release of mortgage.
Preferred Mortgage Services
is the optimal method for securing a boat loan? -
Coast Guard documentation with a preferred mortgage is
typically viewed as the optimal security for vessels exceeding twenty five
feet in length. However, this may not
always be the best answer with regard to realities of
the marketplace. Although a
preferred mortgage is generally recognized as the best method for
perfecting contractual boat liens, it is usually more expensive and cumbersome
to deal with than state titling. Accordingly, lenders are often confronted
with varying degrees of resistance from borrowers who are usually the ones
to bear such burden. This is especially true on smaller vessels where
documentation may not otherwise be advantageous.
The issue of
optimal security can not, therefore; always be viewed in
precise terms. It may instead come down to a matter
of calculated choices based on certain loan
conditions. While some lenders have established parameters within
which a preferred mortgage is required, others may call for it on
every qualified vessel. In order to best resolve this equation, a
lender should look carefully at all of the various implications. In
doing so, the services of a marine attorney may well be worthwhile.
Documentation and State Registration Services
type of lender support services do you offer? -
As a web based enterprise, our services are mostly comprised of
economical self-service kits,
downloadable forms, and handbooks which can be accessed directly from our site.
Plus we offer our BoatScope service, the nation's largest searchable
online boat record database. As for full-services, we have partnered
with a very good boat title company that can provide a complete
range of vessel documentation and nationwide state level
registration services. Each service listed on our site has a
corresponding option for obtaining a full-service quotation.
Documentation and State Registration Services
BoatScope Database Service
When should I file a
boat UCC financing statement?
- A Uniform Commercial Code ( UCC ) recording is appropriate for perfecting an
interest in a boat, trailer, or outboard motor that is neither state
titled or Coast Guard documented. However, many lenders elect file
UCC statements as a precautionary measure until
higher level recordings have been implemented. UCC filings are most
common in states that register boats, but do not issue corresponding
titles. You should keep in mind that a UCC filing may not be the
best protection on boats that can become subsequently documented or
Boat Registration Kits
Where can I find marine, boat, or vessel escrow services?
- In the marine industry, you are not likely to find the
equivalent of typical real estate escrow services. Boat or vessel
escrows are for the most part handled by yacht brokers, commercial
lenders, a few documentation companies, or 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 whatsoever. You should accordingly conduct a great deal of
investigation before handing large sums of purchase funds over to an
independent marine escrow agent.
Resources ► Marine Attorney