Making the right choice for owners, buyers, and lenders.
January 21, 2019
Whether to document a vessel with the U.S.Coast Guard or register on the
state level is a key decision for any boat owner or prospective buyer.
Although options do exist, this will most likely become a matter of
compliance when it comes to what's required by state and federal
regulations. The vessel's size, its intended usage, operational
location, an owner's citizenship, and
whether it will be given up as security for a marine loan are some of the
primary factors. This article will explain the conditions under which
one method or the other may apply and offer information that could
influence your preference when there is a choice to be made.
In dealing with this matter you will first need an understanding of the distinctions related to documentation, state registration, and state titling. Documentation, which is administered by the U.S. Coast Guard, is esentially a type of federal registration and titling. This is evidenced by a singular certificate of documentation which must be maintained on the vessel when underway. State level registration differs in that title certificates are issued separately from periodic registration certificates as one would find with vehicles.
Coast Guard documentation is only available to vessels over approximately 24' in length that are wholly owned by U.S. citizens. Although documentation is optional for recreational usage, it is required on vessles which are used for commercial purposes. This includes most fishing and passenger vessels. The vessel must have also been built in the United States to qualify for certain commercial endorsements.
State registration is available for any boat regardless of it's size, place where built, or type of ownership. However, federal law prohibits the issuance of title certifiates for vessels which are documented. Conversley, the states are allowed at their option to require the registration of documented vessels. This is because the Coast Guard does not recognize state registration certificates in themsleves as bona fide titles,
When it comes to Coast Guard documentation as a matter of preference, there are a number of things to consider. First and foremost is of course the issue of whether the vessel even qualifies for documentation. As mentioned above, it has to meet minimum size restrictions and the owners must qualify as U.S. Citizens. Additional information with regard to documentation requirements can be found in the Federal Page of our web site.
State titles have become widely accepted as sufficient proof of ownership both domestically and abroad. However, they may fall short when it comes to establishing a vessel's nationality. Coast Guard documentation is on the other hand designed specifically to provide conclusive evidence of U.S. registry. It confers a legitimate right for a vessel to display the U.S. flag which may be advantageous in foreign and non-jurisdictional waters. Most owners will accordingly choose to document their vessel when cruising offshore.
Coast Guard documentation is also considered to be the most conclusive form of vessel ownership. When applying for documentation, applicants must show convincing evidence that they are in fact the rightful owners. This is not always the case with state agencies where such requirements are sometimes quite relaxed. Documentation is further enhanced by an abstract of title which shows a chronological history of ownership. Such an extensive background history is not available in most state jurisdictions.
There is a common perception that documented vessels are furthermore exempt from state level taxation. This may be true for certain commercial applications, but not typically for recreational boats. State sales, use, and property taxes will apply regardless of how the boat is titled. In fact, a number of states even require yearly registrations on documented vessels for the primary purpose of revenue tracking. The registration fee itself will not apply of course in those states which do not register documented vessels. A summary of state titling and registration requirements can be found in the Registration page of our website
The cost of acquiring documentation can be another factor in deciding whether this is the best choice. The actual fees levied by the Coast Guard are typically less than a couple of hundred dollars. However, the use of professional documentation services can double or triple that amount as the overall cost. This may seem excessive, but the application process could become a nightmare if not properly implemented. Submissions are routinely declined even for minor deficiencies such as typos and omissions. This may cause considerable delays in processing or even a forfeiture of the application fees. Fortunately, the periodic renewal or maintenance costs are minimal once the certificate has been issued.
In the end, your choice may simply come down a matter of personal preference. Within the boating community, documentation is viewed as a more prestigious method of titling. A documented vessel joins the ranks of other luxury yachts and ships which are entitled to carry the U.S. flag. It is even exempt from having to display those unsightly state registration numbers associated with smaller boats and shore tenders. With regard to the marketplace, documentation is viewed as an enhancement for subsequent buyers and lenders.
Be sure to visit the Services page of our web site if you are anticipating a need for Coast Guard documentation or state level boat titling. Our economical self-service kits are ideal for those who are inclined to do-it-yourself. They are immediately available online and come with all of the necessary forms, instructions and contact information. Our full-service titling affiliate can also provide an online quotation for those who prefer the convenience of expert professional assistance.
A Division of Maritime Partners, LLC
State of Washington USA
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