Buying a yacht can be a lot like buying a new home in that due diligence must be carried out to confirm that the title is both marketable and free of encumbrances like liens. Title searches for boats can be challenging given the complexities surrounding boat registration, titling and liens as well as Coast Guard documentation, but there are some clear signs that something is amiss with the transaction. Below is a list of five red flags that signal potential problems.
- Inconsistencies in Vessel Description: If the vessel you are thinking about buying has an entirely different description than the one that appears in the title or registration certificates, it’s an immediate red flag.
- Mismatched Identification Number Details: If the state titling agency records for the yacht show a different seller name and address for the hull and registration number, be extremely cautious.
- Missing Registration Certificate: The registration certificate proves that the boat is registered, and must be kept on board during operation. If the title search confirms that the vessel is registered but the seller cannot provide you with the certificate, be careful about proceeding further.
- Missing Titling Certificate: If the title search indicates that the vessel is titled, but the owner/seller says that the documentation is missing, proceed with caution.
- Unsatisfied Liens: If a lien search reveals an unsatisfied claim, it could cause issues with your ownership of the vessel in the future, unless any parties holding a security interest or claim provides a release or discharge.
Even if a title search does not reveal anything unusual or concerning, non-recorded liens and claims can become a surprise burden later on. These liens may include unpaid debts for repairs, supplies, moorage, and other operation-related necessities. Unfortunately, such claims can be next to impossible to detect unless you go to the extent of checking with service yards and marine suppliers who may have done business with the seller. It would be wise to arrange the terms of the sale so that the seller is held responsible for any undisclosed liens that arise in the future.
Unless you feel confident that the seller can provide you with a marketable title that is also free of encumbrances, the boat sale should not be finalized. Once the purchase price has been received, the seller may not be inclined to help you resolve any title problems that arise.
Because boat title searches can present difficulties for those who are unfamiliar with the process. At ASAP Marine Documentation, a division of Howard S. Reeder, Inc. , we can assist you by researching the title, pinpointing potential issues, and providing the advice you need to make an informed purchase, so that you can enjoy your new acquisition with peace of mind.
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