You need a lawyer. I may be reading this incorrectly.
- You bought a lien from someone who properly had a claim for payment and correctly executed the lien - If this is true you hold a lien that travels around with the boat title. The only thing you can do is engage a lawyer to try and collect the lien from the properly registered legal owner.
- There was an insurance company involved. They apparently paid out the insurance to the correct policy holder for the boat and for the salvage costs. At this point the insurance company has no further interest in the boat. The title to the boat apparently stayed with the original owner.
- The first owner sold the boat to a third party. The third party acquired the boat with a standing lien on it. The lien (if legal and properly executed) stands, the sale
stands and the remedy for the new owner is to try and collect or sue the seller if he misrepresented the deal. It is not illegal to acquire a boat with a lien but your state law may require boat registration
and may require the lien to be cleared first if they know about the lien.
State laws are different, I am not a lawyer, YMMV.
In my mind you are on shaky ground by holding the boat. You get to hold the lien and you get to go to court to collect. You get to register the lien (depending on state rules) with the state to bloke registration
or titling. I am pretty positive you don't get to seize the property.
I would contact the new (3rd party owner) and make a deal to sell him the lien. Or make a deal to buy the boat from him.