In the past, the only protection available to vessel/boat owners was a review of the United States Coast Guard (USCG) records and an attorney's opinion. In the case of State title check the state where the boat is currently registered. Today, you can get title insurance as owners of U.S. flagged vessels and state titled boats.
Maritime liens are often referred to as “secret” or “hidden”, because they often do not show up on a title search. Maritime liens are not required to be recorded; therefore, a vessel being transferred could have maritime liens against it that may not reflect on the Abstract of Title. Its validity does not depend upon who is in possession of the vessel at the time it is asserted, or whether there has been any notice of the lien filed anywhere. A maritime lien is valid even against a subsequent purchaser in good faith with no notice of the lien.
With state title, one scenario is there another title or registration or lien in another state via a duplicate title or lien filing by UCC in a state unrelated to your seller.
You think you are completely safe buying a New Boat / Vessel? Think about forged, manipulated Manufacture Statements of Origin or Builders Certificates, unauthorized transfer, invalid because the document was not executed properly or other liens. Just to name a few.
Many things can give rise to a maritime lien, including but not limited to: providing necessities to the vessel (dockage, fuel, supplies, provisions, repairs and maintenance of the vessel, insurance, etc.); seamen’s wages; salvage services; tort (collision, personal injury claims); general average (cargo related); a preferred ship’s mortgage (these must be recorded and usually appear on the Abstract of Title); and marine contracts (towage, chartering, etc.).
There are other risks that may affect title to the vessel that cannot be detected even after diligent search and evaluation. These risks include, but are not limited to, such matters as: evidence of title may be based on forged or fraudulent documents or involve parties without proper capacity; previous errors in the recording process; and the difficulty or impossibility of determining certain ownership interests.
Vessel title insurance is now available to owners and lenders that will provide coverage for many of the risks identified above. Just as title insurance is almost always obtained by owners and lenders in real estate transactions, a similar type of policy is available for vessels. A vessel title insurance policy based upon presumed value of $'s is available for a premium.
Protect yourself, contact our loan professional today and ask about Title Insurance, it could save you untold headaches "or haddocks if your an angler".
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