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Boat Title Disclosure

What you should know about boat owner title disclosures.

Boat purchase and sale transactions are usually indemnified by the owner's written assurance of a free, clear, and marketable title. Such terms are typically incorporated in a purchase agreement and ultimately the bill of sale. However, they do not carry much weight if the guarantor is unavailable, unwilling, or unable to perform. A prudent buyer should therefore conduct an independent assessment of the title's condition. In order to do so, it becomes necessary to gather as much data as possible regarding all aspects of the title's current and historical standings. A comprehensive "Boat Title Disclosure" statement from the owner is an ideal way to address these needs.

About Disclosures - The object of a disclosure is to gather vital information from the owner that will facilitate a comprehensive title verification. It will eliminate the need for a time consuming discovery process based solely on the boat's identification numbers. In addition to any title or registration data, a full disclosure should identify all liens and encumbrances whether or not recorded. Any known historical details as to whether the boat was ever salvaged, stolen, auctioned, or damaged should also be reported.

Statutory Requirements - As it currently stands, there are few requirements when it comes to mandatory boat title disclosures. While salvage branding and lien declarations for vehicle titles are universally enforced, such regulations are lacking when it comes to boats. There are in fact a number of states which do not even issue boat titles. Efforts are underway to implement proposed legislation known as the Uniform Certificate of Title for Vessels Act ( UCOTVA ), but it has not thus far seen wide implementation. There are furthermore no disclosure regulations in the boating industry such as those applicable to real estate transactions.

Owner Cooperation - Given the absence of industry regulations, any efforts to obtain a full title disclosure will depend on the owner's willingness to cooperate. Although this is not generally a matter of concern, it can become problematic where the owner is being represented by a third party such as a broker, auctioneer, or trustee. Working with corporate and interim or non-recorded owners may also create hurdles. Conflicts of this nature can be avoided by adding a contingency clause to the purchases agreement which mandates the owner to produce a comprehensive title disclosure statement. In any event, a refusal on behalf of the owner to provide all relevant title information should be viewed with a great deal of trepidation.

Disclosure Statement - A boat title disclosure statement should include a compilation of all relevant aspects related to ownership, titling, and registration. This will include the boat's description, its identification numbers, details about the registration, and a list of all known liens or encumbrances. A disclosure should also contain historical details such as how the boat was acquired, duration of the current ownership, locations where the boat may have been previously operated, and types of usage. These are all requisite items in conducting an independent title verification and should be represented as true and accurate to the best of the owner's knowledge. An "Owner Title Disclosure Form" link can be found in the "More Information" module of this page which illustrates those items which are typically included in a disclosure statement.

Verification Methods - Verification methods will vary considerably depending on factors such as the boat's size, type of usage, areas in which operated, date of production, and registration methods. This is precisely why a comprehensive disclosure is a must-have in order to launch the overall process. Although this article does not deal with specific title verification procedures, they can be found in detail throughout the pages of our website. As you will see, it can get very complicated for the layperson. We accordingly recommend professional assistance for those who are disinclined to undertake such an endeavor on their own behalf.

Congratulations on finding the boat of your dreams and hopefully at a great price. However, the excitement of all this can be quickly overshadowed by undisclosed title deficiencies, hidden liens, and subsequent claims. A lack of attention to thorough, effective, and proven verification efforts can place your entire investment in serious jeopardy. When it comes to boat purchase and sales transactions, there is simply no substitute for due diligence. We hope this article raises your awareness about title disclosures and encourage any comments with regard to these contents.

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