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HansTony · 25-03-2024, 16:08

Hello,
We’re from the Uk and I’m looking at a boat in the north east near New Haven. We've never purchase a boat of this value before and definitely not in another country. I’ve gone through the process of vetting the boat and I’m happy to proceed with the purchase. It’s $80,000 which is a lot of money to us.
The seller is selling it privately so not through a broker. I’ve identified a document service company to raise all the paper work and check for liens and ownership, but they won’t deal with the money aspect.
The issue I have is the seller wants the money in their bank before signing the sale agreement and so I find this risky as when I transfer the funds he could say that it hasn’t arrived and won’t sign.
I can’t seem to find a bank who will issue a Cashiers Cheque unless I have an American bank account. This method would be the safest and easiest but I can’t find anyone who will produce one.
In the Uk there are reputable law firms that could handle this through an Escrow account. All the legal people here seem to be small independents and so also seems risky as they could just as easily be just as risky as paying the seller.
Appreciate that I might be been paranoid, but I just wondered if there was an alternatives to this process that gives the buyer and seller security.

Thanks in advance

5BTM · 25-03-2024, 16:41

Look for another boat, or hire a lawyer or a broker.

Katapult Mike · 25-03-2024, 17:11

Tony, I recently bought a boat in a pricvate sale without a broker. I did use a marine title company to handle the USCG documentation. In my case, the title company held signed bill of sale pending payemnt. I had a separate purchase agreement with contingincies for survey and insurance. Once the title comapny confirmed they had the signed docs and no filed liens on boat, I paid the seller directly (cashier's check, in my case). Then I informed tilte company and title company released docs. This felt like asafe way to proceed to me.

I would not be too worried about seller claiming they didn't receive payemnt - cahsier's check is not the only way to do that. If you do a wire transfer, there is a paper trail the seller will not be able to refute.

I am assuming the boat you are buying is USCG docuemtned now? If not, there is really no way for the title comapny to ensure it is lien free. THe only way to perfect a lien on a USCG vessel is by filing with USCG.

If your seller will not agree to something similar after you explain it to him, I agree with the suggestion to find another boat. There are a lot of used boats out there.....

HansTony · 25-03-2024, 17:23

Quote:

Originally Posted by Katapult Mike

Tony, I recently bought a boat in a pricvate sale without a broker. I did use a marine title company to handle the USCG documentation. In my case, the title company held signed bill of sale pending payemnt. I had a separate purchase agreement with contingincies for survey and insurance. Once the title comapny confirmed they had the signed docs and no filed liens on boat, I paid the seller directly (cashier's check, in my case). Then I informed tilte company and title company released docs. This felt like asafe way to proceed to me.

I would not be too worried about seller claiming they didn't receive payemnt - cahsier's check is not the only way to do that. If you do a wire transfer, there is a paper trail the seller will not be able to refute.

I am assuming the boat you are buying is USCG docuemtned now? If not, there is really no way for the title comapny to ensure it is lien free. THe only way to perfect a lien on a USCG vessel is by filing with USCG.

If your seller will not agree to something similar after you explain it to him, I agree with the suggestion to find another boat. There are a lot of used boats out there.....

Thank you kapapult mike. Very interesting. Just clarify is it your understanding if there is a lien on the boat they much be registered with USCG. It was registered but not sure if it still is. The hull number has been consistent throughout the records I’ve seen. We have asked the document service company to carry out their services yet so not sure what they’ll find. The seller is being very helpful I don’t think there is any doubt he’s genuine. If I could get a bankers draft/cashiers check like you I’d feel much happier.

Katapult Mike · 25-03-2024, 17:38

Quote:

Originally Posted by HansTony

Just clarify is it your understanding if there is a lien on the boat they much be registered with USCG.

This is ONLY true for USCG docuemtned boats. Not all are. In fact, most boats in US are nto USCG docuemtned, they are registered with the state where the ownere resides. THe problem with state registrations is that there no central repository for liens for them, so no very effetive way to do lien search. For this reason, in order to get a marine mortgage in teh US, you usually have to register the boat with the USCG.

Quote:

Originally Posted by HansTony

It was registered but not sure if it still is.

Coast Guard process is called "documentation." If someone says it is "registered" that should refer to state registration, see comments above, although many people use the terms interchangeably or loosely.

In my case, the USCG registration had not been kept current, but title company said that was not a problem. In retrospect, I guess I can think of lots of ways non-current documentation could be a problem, but no crediters have crawled out of the woodwork, yet....

Montanan · 25-03-2024, 17:41

Recommend utilizing an escrow service to handle the requisite document exchange and funds transfers [first funds go to any and all lien holders] the remainder is paid to the seller. You do not pay the seller directly, the funds are placed in an escrow account and when the escrow instructions are completed then the funds will be transferred to the seller by the escrow agent.

If the vessel if documented by the USCG, the seller will need to execute a deletion from documentation & a bill of sale.

Recommend start by obtaining an Abstract of Title from the USCG which can be requested on line for a fee of $US$25.00: https://www.pay.gov/public/form/start/1175233

Reference: https://www.dco.uscg.mil/Our-Organiz...tation-Center/

https://www.dco.uscg.mil/Our-Organiz...ons-and-Forms/

https://www.dco.uscg.mil/Portals/9/D...2Jp9L2FQ%3d%3d

https://www.dco.uscg.mil/Portals/9/D...M5-PlZMA%3d%3d

The lien holders will need to provide this:

https://www.dco.uscg.mil/Portals/9/D...-01-144715-483

Bill of Sale document:

https://www.dco.uscg.mil/Portals/9/D...alwn_IAA%3d%3d

Do not get confused by private websites that look like the USCG Documentation Center.

The title search firm will find what they can but they do not provide guarantees or insurance of clean title. They will disclose what they can find.

If the boat is USCG documented then liens could be perfected by the lienholder who has recorded such with the USCG.
One never knows for certain if there are outstanding liens that will follow the vessel after a change of ownership as not all liens are filed with the USCG or the titling agency of a US State for vessels that are titled by a State.
Not all liens are perfected and prioritized by recordation with the USCG or a States titling agency. Some are unrecorded others are just ordinary UCC Uniform Commercial Code items. Unrecorded, unperfected liens remain valid and follow the vessel and can arise to bite your ass. Obvious ones include property taxes, marina fees, mooring, boat yard, mechanics, chandlers, sail makers, insurance policy underwriters, crew, charters, etc.

A vessel cannot have both a State Titling and a USCG documentation. One or the other but not both. A USCG documented vessel may be registered with a State.

Obtain in the purchase / sale agreement standard sellers representations and warrants [sellers guarantee] that the vessel is sold clear of any and all liens, and obligations. Such language allows you legal recourse to demand the seller resolve any obligations that are from before your purchase.

If the vessel is registered within a State, be sure to determine if property [and excise] taxes have been paid and that none are due or past due on the vessel. Check with the County of the State the vessel is registered to determine if tax was due and if it has been paid.

Be sure to place a contingency with your purchase offer that insurance acceptable to the buyer [you] must be obtained before the purchase can close. Define the type and coverage of insurance policy you require.

HansTony · 25-03-2024, 17:48

Thanks for the info. This boat is registered with Connecticut vessel registration and had a prior federal registration. So similar to yours I guess. It will be interesting what the marine document company find. Just to clarify something else you say a marine title company is that the same as a document service company or something else. Sorry this would be the last question. Appreciate your time

Katapult Mike · 25-03-2024, 17:50

Quote:

Originally Posted by Montanan

Recommend utilizing an escrow service to handle the requisite document exchange and funds transfers [first funds go to any and all lien holders] the remainder is paid to the seller.

Can you recommend any specific escrow service? I was completely uanable to find anyone offering this service in California, and it sounds like the OP was not able to find it whereever he is either. If you are aware of any, please post links.

Montanan · 25-03-2024, 18:09

If the boat is to be sold in New Haven, Connecticut then a sales / use taxation may apply.

Reference for details on tax and registration.

STATE OF CONNECTICUT
IP 2018(20)
DEPARTMENT OF REVENUE SERVICES
450 Columbus Blvd Ste 1
Hartford CT 06103-1837
INFORMATIONAL PUBLICATION
Q & A on Purchases of Vessels

https://portal.ct.gov/-/media/DRS/Publications/pubsip/2018/IP-2018(20).pdf?la=en

Looks like 2.99% of the sales price, there are exemptions.

Read.

There are no local property taxes on boats in Connecticut.

Bon voyages.

jzk · 25-03-2024, 18:14

Quote:

Originally Posted by Katapult Mike

Tony, I recently bought a boat in a pricvate sale without a broker. I did use a marine title company to handle the USCG documentation. In my case, the title company held signed bill of sale pending payemnt. I had a separate purchase agreement with contingincies for survey and insurance. Once the title comapny confirmed they had the signed docs and no filed liens on boat, I paid the seller directly (cashier's check, in my case). Then I informed tilte company and title company released docs. This felt like asafe way to proceed to me.

I would not be too worried about seller claiming they didn't receive payemnt - cahsier's check is not the only way to do that. If you do a wire transfer, there is a paper trail the seller will not be able to refute.

I am assuming the boat you are buying is USCG docuemtned now? If not, there is really no way for the title comapny to ensure it is lien free. THe only way to perfect a lien on a USCG vessel is by filing with USCG.

If your seller will not agree to something similar after you explain it to him, I agree with the suggestion to find another boat. There are a lot of used boats out there.....

There is a whole class of liens called "maritime liens," and they stay with the vessel even through a purchase. They do not need to be recorded or registered in any way. When you sign a contract on a boat, be sure that the seller represents that there are no such liens and agrees to be responsible for them.

Montanan · 25-03-2024, 18:18

California or Connecticut.

Is the seller located in California and wishes to have the sale transaction occur within California? Will you travel to California to complete the sale?

Where specifically is the sale to be closed in California, very big State with loads of escrow services.

Should be a simple matter to Google search by subject and convenient location.

Long ways away from where the boat is located.

Which State laws do you wish to have applied as jurisdiction of the purchase offer and of the sales contract? We have 50 to choose from.

Even though the paperwork may be closed in California, the asset being sold is in Connecticut, so the sale / use taxation is applicable to the situs of the vessel at time of exchange of ownership [Connecticut], not where the parties signed the documents.*

HansTony · 25-03-2024, 18:32

Hi Montanan think our questions are being switched. My boat is Connecticut and I’m in Connecticut not California. It would be good to know what I should search for to find an escrow company that I could reply on the be reputable.

Montanan · 25-03-2024, 18:36

Excellent Guidance reference:

Warranty bill of sale for boats—How-to guide

https://www.legalzoom.com/articles/w...ide#SnippetTab

Sample language:

Seller warrants and represents that he/she is the legal owner of the vessel and that the vessel is being purchased free and clear of all debts, claims, liens and encumbrances of any kind whatsoever except as expressly stated herein and Seller warrants and will defend the assertion that he has good and marketable title hereto and the lawful right to sell the vessel and will deliver to Buyer all necessary documents for transfer of title to Buyer upon the completion of the Purchase of the Vessel by the Buyer.

Seller shall discharge all liens, mortgages and claims, bills of any kind held against the vessel or which may be incurred by Seller before completion of the sale and passage of title and possession of the vessel to Buyer.

Loads of other terms of a typical agreement are searchable on line.