Federal vs. State Documentation: Which One Matters More When it Comes to Your Boat, Vessel, or Yacht?

You’ve just bought the boat you’ve had your eye on for a while. The price is reasonable, you’ve arranged for financing, and all surveying is complete. Now you have to decide whether you’re going to document the vessel with the Coast Guard, otherwise known as federal titling, or opt for state titling. Which one matters more/takes precedence over the other?

Federal Documentation

The U.S. government started documenting vessels as a way of controlling commercial shipping. Today, recreational boats are also eligible for documentation.

There are several advantages to documenting your new boat with the U.S. Coast Guard.

  • Not only is the registration national in scope, it is also international, which offers added protection if you intend to take the vessel into foreign or international waters for extended periods of time.
  • If you need to finance the purchase, many lenders require federal USCG documentation because it is presently the only way to obtain a Preferred Ship’s Mortgage, which is recorded against the boat (as opposed to the owner) and takes precedence over most liens.
  • A boat documented with the Coast Guard does not need a state title, dispensing with the requirement to display state registration numbers on the hull.

To qualify for Coast Guard documentation, your recreational boat must be completely owned by a U.S. citizen and weigh at least five tons, which amounts to an average of 25 feet and up. If your purchase does not meet these conditions, you must opt for state titling instead.

State Titling

With few exceptions, all recreational vessels that have not been titled federally must be registered in the state where they will be used the most, no matter where the owner resides. So if your permanent home is in Illinois but you plan to use the boat while spending your winters in Florida, registration must take place in Florida.

It is important to note that if you have a federally documented boat but use it primarily in American waters, you may still have to register it with the state and comply with state laws. The majority of states actually require documented boats maintained in state waters to register and obtain a decal to indicate that you have paid all required state taxes. You do not, however, have to carry state numbers because you already have federal ones for the vessel.

When it comes to Coast Guard documentation vs. state titling, there is no universally appropriate answer to the question of which is better. It all depends on the size of the boat, your nationality, and whether you intend to spend more time in state or international waters. If you have difficulty deciding, professional and experienced input is only a phone call or email away.

Howard S. Reeder has a Marine Documentation Division that can answer your questions, help you decide which titling is more suited to your situation, and handle all necessary paperwork after you decide. If you need assistance, contact us today.

Howard S Reeder Inc