How does one confirm clear title in US

[Pontoonrob]

I am considering purchasing a boat in Florida. This is between the owner and myself, no broker involved, cash deal.

Considering the dollars involved is there a way to know that it is a clear title?

Are there standard procedures one goes through such as escrow or similar? So that the funds could be clawed back should there be registration or title issues?

Could someone with good search skills point me to the relevant reference materials so that I may educate myself on this topic?

Thank you.

[Jammer]

The short answer is that there is no standard, established method similar to what you may have encountered with automotive or real estate transactions. Title problems, though rare, do occur, in part because of the potential for overlapping registrations and title actions among states, and between state titles and federal documentation. There is no iron-clad way to confirm that title is clear, and title insurance (though available for a price and with significant restrictions on what it will actually cover) is not routinely used.


Generally, deals that go through a broker are less likely to end badly, so you are wise to use caution. Consider the added risk part of the disadvantage of not paying the premium for boats sold through an established broker.



Assuming you are looking at a larger boat (sailboats 30'+) you would expect that it has been documented with the USCG and that there would be an unbroken history of it being documented since it was built. You can ask the seller to show you the certificate of documentation and show evidence of previous purchases/sales, though depending on the age and value of the boat many sellers will not be able to go back "forever."


Periods with state registration are a red flag because there may be joint owners or lien-holders that can only be found by searching in that particular state. An inability to show ownership history for a reasonable period of time when asked (reasonable? You decide, but a few years and at least one prior owner should be the minimum in most cases) is a red flag.


If there are red flags you would be wise to engage the services of an attorney experienced in maritime law or at least in vessel ownership matters -- or to simply move on to another vessel. What the attorney will do is perform a title search in states where the vessel is likely to have been registered or have liens attached -- places where it was docked, places where the owner lived, places that appear on prior bills of sale. If that doesn't turn up anything you'll get a title opinion and can move on with the sale, though the risk of a lien showing up in some other state is still on you. If the attorney finds other ownership interests or liens then you will ask the seller to have those released by whoever holds them, in which case the seller will likely look for a less careful buyer and you'll be stuck with the attorney's fees but won't be out the value of the boat, at least.


With smaller boats (<25') it's all state registration and so you go on the strength of whatever the state has provided to the seller. Usually it's a title but that can vary, states have varying criteria for which boats they issue titles for and some may have registration only and no guarantee of ownership. With lower dollar boats (<$25,000) any kind of search isn't really worth it.


In-between boats are a sticky wicket, because for a 30' boat that's worth $40,000 it isn't quite worth it to use an attorney and go through a title search, and it may well have been state registered with no intention of deceit. Yet it's enough money that you don't want to lose it over some years-ago lienholder showing up with a prior claim.



In any case, with no broker, know the seller. Make copies of ID. Get contact information. Take good notes of where they said they bought the boat and when. Check that the HIN matches the paperwork. Find out who they sailed with, where they went, who they knew. Do some basic checking to see if their story checks out. This information is all worth its weight in gold if there is a title dispute later, so hang onto it.



Escrow wise, the way it ordinarily works, is they fill out, sign, and notarize the certificate of documentation or state paperwork (as the case may be; depending on the state the state paperwork may not have to be notarized) but don't give them to you, then you wire them the money. Once their bank confirms receipt of the wire, they give you the papers. If there's a broker or attorney involved then they will hold the papers once they are signed and before the wire is confirmed.


Hope this helps. I'm not a broker or attorney but have bought and sold many boats over the years with no problems.


When selling I've never felt like the money paid to a broker was wasted.

[wholybee]

If the boat is USCG documented you can and should order an Abstract of Title, which will show the chain of ownership with any liens or mortgages. There could still be an issue if there is a break in ownership when it was state registered. But if it has since been documented for some length of time it would likely be ok. Some states would be able to provide lien and mortgage information which would completely clear that issue if there is a break in USCG documentation.

https://unitedstatesvessel.us/abstract-of-title/

[Pontoonrob]

Thank you both very much. Yes, this a small boat, 44 ft. Less than 200k. I think maybe I'll find an attorney to look over the paperwork.

[GordMay]

Jammer: Thanks for sharing [post #2] your ‘experiential’ knowledge, in one of the most clear, concise, yet comprehensive contributions, I’ve read, in a long time.

[Island Time O25]

Many times the issue is not some nefarious act by the seller but a hick up in the chain of title not noticed by either the seller or his or her prior sellers. This usually involves a deceased prior co-owner who's heirs either were not notified or notified but necglected to do anything on their end.

And if the estate of such past co-owner or bankrupcy court is doing their due diligence they may come up with this unrelinquished asset or appearance thereof. This happens often enough in such a retirement destination state as Florida.

[sailorboy1]

Originally Posted by Pontoonrob

Thank you both very much. Yes, this a small boat, 44 ft. Less than 200k. I think maybe I'll find an attorney to look over the paperwork.

What do you feel the attorney can find that you can not?

I will be selling my boat in Florida soon and am more concerned that the buyer get the boat titled to them so I am not on the hook. In Florida if the boa has been here 90 days it should have a Florida registration and title. Seller and buyer should go to the tax Collectors together to get the title transferred and that should discovered if there is an official lien on the boat.

[wrwakefield]

Jammer’s real world depiction is spot on from my experience.

I used a Marine Title Company on my last two vessel purchases [USCG Documented] even though both were through a broker. They are very thorough and worth the few $100 they charged [which included fees they- and I would have if going solo- had to pay.] Those agencies also took care of filing all the new registration paperwork and having a temp COD issued so I could get underway immediately after taking possession.

Here is a link to a Marine Title resources page I have found useful. [This is not the company I used; just an online resource.]

Best wishes with your new boat!

Cheers, Bill

[Montanan]

Some States issue titles and registration, other states do NOT issue titles and only have registration.

A vessel that has been documented by the USCG can not have simultaneously issued State titling but may require to be registered with the State if the State becomes the place of principal use.

FYI: Neither a title nor a USCG document certificate is proof of ownership, but are documents that are evidence and notices of ownership.

Liens can be registered and perfected by recordation in States that issue titles and with the USCG for vessels that have issued certificates of documentation.

Mortgages are the primary lien that is recorded.

Registered only boats do not have a centralized means to record and perfect liens and releases of liens.

Not all liens are recorded. So confirmation of clear title is not feasible.
Also, one can only find that which has been recorded at the institution that has recorded the lien, e.g., the USCG, the State, the county, etc. If you don't look for such in the proper places then you may miss identifying such.

That is to says, you perform due diligence to the level that you are satisfied with; your risk.

In your contingency covenants of your purchase offer and included in the closing documentation, you will desire to separately obtain representations and warrants from the seller that the vessel is free of any and all liens at the time of transfer of ownership. This will allow you to obtain recourse against the seller for any that may arise, e.g., property taxes, unpaid marina or boat yard fees, maintenance or repair fees, sale / use taxation, excise tax, insurance, various estate and divorce asset matters, damage liabilities, etc.

It is not a matter of confirmation of clear title, but rather a degree of comfort of clear title.

[Cpt Mark]

I used a marine title/escrow company. Everything was fine. Because of the county in CA the boat was located in is notorious about taxation I asked if they had checked for tax liens. Nope. Said they'd never done that. Ok, please do. $5000 in back taxes. It pays to be thorough.

[Montanan]

A state will not transfer title, nor will the USCG release and transfer documentation until they receive release of lien documents from all recorded lien holders. Just part of the requisite paperwork process to complete a sale / transfer to a new owner.

[Montanan]

FYI, a brief background article:

https://sealawcentral.com/maritime-c...aritime-liens/

[Cpt Mark]

Originally Posted by Montanan

A state will not transfer title, nor will the USCG release and transfer documentation until they receive release of lien documents from all recorded lien holders. Just part of the requisite paperwork process to complete a sale / transfer to a new owner.

Correct BUT, in my case I would not have known until after the sale. trying to get money back from them then would have been messy. They knew exactly what they were trying to do. When the title/escrow people found out they paid it out of escrow. Seller went ballistic.

[Montanan]

Originally Posted by Cpt Mark

Correct BUT, in my case I would not have known until after the sale. trying to get money back from them then would have been messy. They knew exactly what they were trying to do. When the title/escrow people found out they paid it out of escrow. Seller went ballistic.

Very wise and astute due diligence. The county will review to see if taxes have been paid and the account is current before releasing the title and transfer.

Which is why one puts such representation and warrants covenant into the closing document such that the escrow will pay off any and all liens that are presented to them at the time of closing and one can have recourse to the extent that recourse can be realized.

As to pursuing the warrant, yeah that is a matter of the credibility of the warrantor to oblige fulfilling the warrant and also of having the financial capacity to fulfill the warrant. By way of example, a person in bankruptcy proceeding may not be able to provide for payment.

The liens remain with the boat and the lien holder has possessory rights.

Buyer beware, very wary, as they can lose all that they expend on the purchase once the consideration is exchanged.

[Jammer]

Originally Posted by Montanan

Liens can be registered and perfected by recordation in States that issue titles and with the USCG for vessels that have issued certificates of documentation.

I don't believe USCG liens work quite like that. They arise under specific circumstances and do not have to be perfected. Have a look at https://www.thelog.com/news-departme...n-on-a-vessel/

Originally Posted by Montanan

A state will not transfer title, nor will the USCG release and transfer documentation until they receive release of lien documents from all recorded lien holders.

For documented vessels, this isn't true. The USCG will record the lien and it will show up in a title search. The vessel can still be bought and sold as usual. (Whether anyone will want to buy it is another matter.)


In practice, small liens on documented vessels are impractical to collect because the attorney's costs and fees are high. The source I posted above indicates that typically the cost of enforcing such a lien is typically around $40,000.


In most cases the greater risk is disputes over ownership where a state title or foreign documentation is out there somewhere that was never canceled.