Certificate of Documentation?
A federally registered boat is said to be documented, which means that the boat’s build, lineage and ownership is recorded with the National Vessel Documentation Center (a division of the US Coast Guard), the vessel registration agency of the US Federal government, instead of an individual state government agency. Vessels of all types, from boats to ships, can be documented. For a boat to be documented it must measure at least 5 net tons (a cargo carrying measure related to the British shipping system). Most boats qualify if they are at least 27′ in length.
Federal documentation is a privilege available to US citizens owning a vessel that meets the classification requirements of size that the USCG requires. The USCG Official Number assigned to a documented boat stays with the boat for its lifetime, whether the boat remains documented or not. If the boat is sold to a person who is not a US citizen, it must be deleted from documentation. If the boat is subsequently returned to US citizen ownership, the boat can be placed back into US documentation under its original official number. Most states require documented vessels to be registered and carry a decal.
Documented vessels also carry certain privileges that makes documentation a preferred method of recording ownership. Individual US citizens and US corporate entities can document a boat.
Transferring ownership of a documented vessel can be a bit complex. In fact, whether the vessel is state titled or federally documented, the paperwork and procedures for transferring ownership can be intimidating and there can be lots of forms.
For many purchasing a boat, it’s a wise choice to employ a documentation agent to handle the transaction closing. A documentation agency is a private firm familiar with all aspects of state, federal and foreign registration requirements. The agent’s professional handling ensures that your transaction will proceed efficiently and correctly. Fees are based on the complexity of the transaction and include the fees imposed by the government agency.
What is the alternative to USCG documentation?
A state title, in contrast to documentation, means that the vessel is titled with a state government. Individual states are divided further into two subcategories; title states and non-title states. Both issue a registration certificate for the vessel. Title states also provide a title, a second certificate of ownership, which must accompany the vessel when sold. If you are buying a boat in a title state, you must obtain the title to own the boat legally. Without the title certificate, you cannot register the boat. The title is also used to convey ownership in a sale transaction and a title may also have valuable lien information. A lien (mortgage) would have to be satisfied in order to pass clear title to a new owner. Non-title states require only the registration form to prove ownership.
State titled boats must carry an external number marking and an annual validation sticker (in most states). For example, if a boat is registered in Maryland and carries Maryland markings, it can be moved to another state by the current owner or sold to a new owner and then registered in a different state. It would then have to carry that state’s numbering requirements. A boat that has been previously documented can be deleted from US documentation and titled in a state. A boat that has been state titled can apply for US documentation. Upon acceptance by the Coast Guard into documentation, the title is then returned to the issuing state.
How can I be sure the title to the boat I buy
is free and clear of liens?
When financing a boat, banks and finance companies prefer, and may require, that the vessel be documented. Lending institutions feel this provides more protection for their money than state titling alone. A First Preferred Ship’s Mortgage recorded in the records of a documented boat carries the highest lien priority and banks and other lending resources are comforted by knowing their interest is protected in this way.
If the seller has an outstanding loan on the boat, there will be a lien on the title or document. This lien must be paid off before clear title can pass to the buyer. If the vessel is foreign registered, the seller should produce proof, in the form of a US Customs receipt, that he has paid the import duty required before he can sell the vessel in the United States. In both cases, using the services of a documentation agency will be the best and most economical means of protecting yourself, guaranteeing that you receive clear title to the vessel.
Boat registrations in a title state can show liens as well but, if a lender did not require that the owner record the lien, the title may not reflect a lien. A lien search may find such a lien but there are no guarantees. An affidavit from the seller as to any known liens is always a wise choice to help insure a free and clear vessel transfer of ownership. Here again, a documentation agent can be your best ally in a boat sale transaction.