Marine Boat liens

What you should know about boat liens and how they are enforced.

A marine boat lien is the legal right to secure payment for a debt or obligation related to the vessel itself. Such claims may arise from operational necessities, loans, taxes, damage liabilities and government forfeitures. While it gives the claimant rights of foreclosure, doing so must conform with applicable state, federal, maritime, and foreign requirements. This article is intended for the general boating public in easy to understand terms. More detailed information can be found in the references for this page.

Governing Laws

Boat liens are governed, prioritized, and enforced based on the type of lien, the applicable jurisdiction, and how the vessel is titled, registered, documented, licensed or flagged.
State Laws: State lien laws apply to non-documented boats located or operating within their own jurisdictions. Recording and enforcement methods are typically based on the manner in which registered or titled.
Federal Laws: Federal lien laws, recording and enforcement procedures are primarily associated with Coast Guard documented vessels. However, these may extend to any boat operating on navigable waters regardless of its usage. In any event, federal lien regulations will take precedent over those on the state level.
Maritime Laws: Maritime lien laws are a specialized subset of federal law that generally apply to vessels engaged in maritime commerce. However, they may also extend to recreational boats in certain circumstances, particularly when U.S. Coast Guard documented. Maritime liens arise automatically by operation of law, without the need for recording, and are enforceable in U.S. district courts under admiralty rules..
Foreign Laws: Foreign lien laws may come into play on boats registered in another country while operating within domestic waters. Pre-existing liens may be recognized and enforced provided they do not conflict with domestic standards. Claims arising within the United States are subject to the respective state and federal regulations.

Maritime Liens

Maritime boat liens are special claims that arise automatically under federal maritime law. The boat itself is treated as a legal entity where debts or obligations related to its operation can become directly attached, not just the owner. While maritime liens are primarily intended for commercial vessels, they can also apply to recreational boats and particularly those which are U.S. Coast Guard documented.
Jurisdiction: Maritime law applies to all boats operating in navigable waters and particularly those used in commercial activities.
Qualified Claims: Maritime claims for unpaid debts can include almost any necessaries related to the basic operational functions of a particular boat. These may include repairs, supplies, equipment, salvage, towing and liabilities for injury, death and property or environmental damages. Contractual liens other than preferred vessel mortgages do not typically as maritime and are usually settled under state jurisdictional remedies. Professional services such as titling and legal work do not generally qualify as maritime liens either, although there could be exceptions when they are crucial for immediate operational purposes.
Recording Methods: Although maritime liens may be recorded, there is no requirement to do so and it does not affect their priority status. This gives rise to the concept of hidden liens that follow the vessel, even though unknown to subsequent owners.
Prioritization: Settlement priorities under maritime foreclosure rules are somewhat convoluted. The most recent claims will take priority over those filed earlier while there is also a pecking order based on the type of lien. Salvage claims come first, followed by tort claims, operational necessaries, preferred mortgages and finally state liens in some cases.
Enforcement Measures: Maritime liens are settled in federal district courts under admiralty rules and typically liquidated through a U.S. Marshals sale.

Contract Liens

Contractual obligations such as loan agreements are arguably the most common type of boat liens. Also known as encumbrances, these are secured, perfected and prioritized according to the manner in which the boat is registered, titled or documented.
Uniform Commercial Code: For boats that aren't state titled or documented, lenders typically file a UCC financing statement to protect their interest. This gives them priority over later filings, but they can lose such standing altogether if the boat is later titled or documented under a different loan.
State Title Records: On boats with a state title, lenders record their lien through the state’s title system. This overrides UCC filings but may be displaced if the boat is later documented with a new mortgage.
Preferred Mortgages: Loan security interests on documented vessels are perfected by recording a preferred vessel mortgage. This takes priority over any state level recordings and subsequently filed mortgages.
Enforcement Measures: If a borrower defaults, lenders can foreclose either non-judicially by operation of state lien laws or through the courts. In this case, documented vessels must go through a federal court whereas others are typically handled in state courts.

Mechanic's Liens

Mechanic's liens on boats typically arise from repairs, haul-out services, towing, storage and mooring. Also known as possessory liens, these are enforced on the merit of maintaining physical control of the subject boat.
Lien Recordings: There are no means of recording mechanic's liens on state title or registration records and UCC filings are not the proper venue. However, a claimant may file a notice of lien when the vessel is actively USCG documented. Although this will not validate the claim or afford any rights of foreclosure, it does notify the public and informs any mortgagees of such possibility.
Possession: The ability to enforce a mechanic's lien without going to court is predicated on the claimant having possession of the subject boat. Losing this does not invalidate the claim, it just means that the claimant must pursue settlement in a court of proper jurisdiction.
Operation of Law: Most states have mechanic's lien statutes that allow a claimant to liquidate a boat in its possession. This involves strict procedures which must be followed which include owner notifications, publications of sale and equitable settlements.
Documented Vessels: Title to documented vessels can be transferred pursuant operations of state mechanic's lien laws based on conclusive evidence that such rules were duly implemented. The only alternative would be actions taken in an appropriate federal district court.

Equipment & Supply Liens

Marine boat lien claims can arise from debts on all types of equipment, supplies, fuel and other items necessary for the maintenance and operation of a vessel. However, there is a distinction with regard to how these are acquired.
Qualifying Factors: A claim for boating equipment and supplies provided over the counter would not likely qualify as a marine boat lien. However if they are part of services rendered or delivered directly to the boat itself, they may fall subject to state and federal lien laws.
Lien Recordings: There is no way of recording equipment and supply liens on the state level unless covered by a UCC financing statement. If the boat is documented, a claimant may record a notice of such claim on the underlying abstract of title. However, this is for notification purposes only and does not validate the claim or provide rights of enforcement. Equipment and supply liens occurring under the coverage of maritime law arise automatically without the need for recording.
Enforcement Measures: If equipment and supplies are rendered as part of a service, such claims could be foreclosed upon through a mechanic's lien procedure. The only other option would be through an appropriate court of law.

Hidden Liens

Operational liens that arise on boats subject to maritime jurisdiction are viewed as hidden liens because there are no recording or public notification requirements. This means they automatically become attached to a vessel, even through subsequent owners that may be unaware of their existence.
Detection: Hidden liens are often difficult to detect because they are not dependent on the claimant having possession of the boat. It is therefore incumbent on a buyer or lender to look for any potential claimants such as boatyards, fuel docks, marine equipment stores, suppliers and the like. It may also be worthwhile to investigate any known incidents that may not have been covered by insurance.
Enforcement Measures: Hidden boat liens are typically foreclosed in federal court under admiralty rules. In most cases a U.S. Marshall will take possession of the vessel and organize an auction sale. The proceeds are then distributed according to maritime priorities.

Government Liens

Government boat liens typically arise from delinquent taxes, impoundments, fines, penalties and forfeitures. Although typically related to the boat itself, this may not always be the case if the boat is awarded in settlement of personal tax or assessment obligations.
Lien Recordings: Government liens may be flagged on state title records, filed as UCC recordings or listed on a documented boat's abstract of title. However, they are not always recorded and often difficult to detect.
Enforcement Measures: Government liens are usually enforced through a court of law appropriate to the jurisdiction in which invoked. However, some agencies are empowered to foreclose through statutory or regulatory policies without court action.

Abandonment & Salvage Liens

Abandonment and salvage liens are created when a boat has been abandoned or rescued from a perilous event. The manner of enforcement will depend on the boat's location and usage.
Abandoned Boats: Most states have regulatory procedures that allow private property owners to dispose of boats that been abandoned at their location. Although an attempt must be made to contact the owner, there is no recording mechanism under these circumstances. Boats abandoned on public lands or waterways are dealt with by the respective enforcement agency in the jurisdiction where located.
Salvaged Boats: Salvage liens arise when a boat that is in imminent danger is rescued whether under contract or not. These can become maritime liens when on navigable waters regardless of the boat's type and usage.
Wrecked Boats: Recovery of a wrecked boat that is creating a hazard may result in a maritime lien claim if removal is authorized by law enforcement. However, taking possession of a wrecked or sunken boat does not automatically confer rights of ownership.
Enforcement Measures: Lien enforcement measures on abandoned, wrecked and salvaged boats will depend on the jurisdiction in which the occurrence takes place. State regulations may allow for either non-judicial or court remedies. Federal or maritime claims must usually be settled in a federal district court under admiralty rules.

Foreign Liens

Most foreign countries have state, provincial and national boat lien laws similar to what we find here in the United States. These may be of consequence when conducting a title search or the enforcement liens while the vessel is operating within U.S. Waters.
Pre-existing Liens: State and federal agencies may honor foreign boat liens under a principle known as comity. U.S. jurisdictions will accordingly honor these matter of treaty, mutual recognition, and courtesy. This is particularly true of maritime liens that are uniformly recognized globally on flagged vessels and those engaged in commerce.
Domestic Liens: Domestic liens that arise on foreign boats while operating in U.S. waters will generally fall subject to the respective jurisdictional requirements.
Enforcement Measures: The enforcement of both domestic and foreign liens is handled according the nature of the claim and manner in which licensed, registered, titled or flagged.

Personal Liens

Debts and obligations of an owner's personal nature that are not related to the boat itself do not typically qualify as marine liens. However, these may become attached to the boat when part of a settlement awarded from a court of law or by governmental action.
Recording Methods: Although court awards are usually recorded in the respective clerks system, they are not typically found on boat titling, UCC or documentation records. However, government liens such as those for delinquent taxes may become flagged or recorded on such levels.
Enforcement Measures: Personal liens settled through the court systems are usually enforced by a county sheriff or U.S. Marshall depending on the applicable jurisdiction.

Lien Retirement

Upon the settlement of a marine boat lien, the claimant must relinquish all rights to the claim and negate, release or offset any recordings and public notifications whatsoever previously implemented. Failure to do so in a timely manner may result in liability to the owner for any damages as a result thereof.
UCC Financing Statements: Upon settlement of a UCC financing statement the secured party must file a termination statement to offset such recording.
State Titles: Although electronic titles have gained popularity, the secured party usually maintains possession the title. Upon settlement, it must be relinquished to the debtor while electronic recordings must be offset or negated.
Documented Vessels: When a preferred mortgage or notice of lien has been settled on a documented vessel, the mortgagee or claimant must record a release instrument in a timely manner.
Bank Releases: When a bank has closed, undergone a merger and refuses to cooperate in releasing a paid off boat loan, you can contact the Federal Deposit Insurance Corporation (FDIC) and it will assist in this regard.
Court Action: If all else fails in obtaining a lien release you can petition a court of proper jurisdiction to have it vacated through an award judgment.

Conclusion

This article was drafted by a maritime professional and enhanced with AI technology. While we strive for accuracy, the content may be subject to change without notice and may contain errors, omissions, or misstatements. Before acting on this material, you should consult the appropriate authority or a qualified legal professional.

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