Coast Guard Documentation
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         Coast Guard vessel documentation information, state level boat registration guidelines, buyer related articles, and other items of special interest for lenders. This page also serves as a gateway to our complete selection of buyer services, vessel forms, boating databases, and ownership guides.

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  General Information 

▪  Does a preferred vessel mortgage cover a boat trailer?
▪  How do I foreclose on a boat loan?
▪  Should I record on the state level if I have a mortgage?
▪  Should I require a preferred vessel mortgage?

▪  What is a preferred vessel mortgage?
▪  When should I file a UCC statement?
▪  Where can I find marine, boat, or vessel escrow services?

Please submit an advisor request if your question is not listed above.

          Does a preferred vessel mortgage cover a boat trailer?  -  A boat trailer is considered a vehicle rather than a vessel. Accordingly, your security interest in a boat trailer should be perfected on the state level even though you have a preferred mortgage on the vessel itself.

      ◄ Back   /  Resources ►     Marine Financing Forms     Boat Registration Kits

          How do 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 loan contract or security agreement and the manner in which the loan was perfected. These choices can also determine whether deficiencies may be recovered for any shortfalls from liquidating the boat. When using the non-judicial method, repercussions may arise from the borrower if not performed in exact accordance with the respective statutes. In any event, you should seek the advice and guidance of an attorney in determining the best method of foreclosure.

      ◄ Back   /  Resources ►     Marine Financing Forms     Mortgage Foreclosure Service     Marine Attorneys

          Should I require a preferred vessel mortgage?  -  The issue of whether to require a preferred mortgage is a moot point if the boat is too small to qualify for Coast Guard documentation. As a rule of thumb, most boats under 25' in length can not be documented. A preferred mortgage can only be recorded on a vessel that is currently documented or in the process of acquiring documentation. Once filed, it will rank higher in priority than anything recorded on the state level such as a legal ownership position or UCC recording. Many lenders require a preferred mortgage under any circumstances if the boat is large enough to qualify for documentation. Others have risk thresholds and may forego such requirement on smaller loans.

         ◄ Back   /  Resources ►     Preferred Mortgage Services     Preferred Mortgage Forms

          Should I record on the state level if I have a mortgage?  -  If your preferred mortgage has been properly filed with the U.S. Coast Guard, there is no real need to record it on the state level. However, some lenders elect to file a UCC financing statement as an interim measure until a mortgage has actually been recorded or to cover any accessories. The lag time between a mortgage filing and its actual recordation can be several weeks depending on the documentation center's workload. Many lenders also insist on becoming named as a legal owner on state level registrations if such methods are available for documented vessels.

       ◄ Back   /  Resources ►     Marine Financing Forms     Boat Registration Kits

          What is a preferred vessel mortgage?  -   A preferred vessel mortgage is an instrument which perfects a lender's interest when recorded with the U.S. Coast Guard. However, mortgages can only be filed on vessels which are actively documented or in the process of becoming documented. 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 contractual vessel loans.

          ◄ Back   /  Resources ►     Preferred Mortgage Services     Preferred Mortgage Forms

          When should I file a UCC statement?  -  A 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 in any event as an interim protection measure until higher level recordings have been implemented. UCC filings are most common in states that register boats, but do not issue corresponding titles.

      ◄ Back   /  Resources ►     Marine Financing Forms     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, and the occasional 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.

          ◄ Back   /  Resources ►    Marine Attorney Listings

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Optimal Security

         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 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 qualified marine attorney may well be worthwhile.

 

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