Non US citizen - state registered boat - unflagged and no nationality - a good idea?

[miraculix]

Hello all,

This is my second attempt to buy a boat. The first one failed due to the condition of the boat.
Now I have a little more information about the rules and regulations attached to boat ownership and realize that they can be complicated, especially if one is not a US citizen, and the boat is one of those that potentially could cross an ocean.

I am a legal permanent resident, residing in Pennsylvania.
I plan to buy a Beneteau 40 and have her exclusively on the Chesapeake Bay, at least for the next two years.

What I know (or think that I know...)

- as a legal permanent resident can NOT document a vessel with the US coast guard.
- if the vessel I intend to buy is documented with the US coast guard, it has to be "undocumented" (for lack of a better term) before I can buy it.
- I have to register the vessel with the state where the boat is located most of the time. There I have to pay taxes.
- I can get a title for the boat from the state where the boat is registered.

If all of that is done:

- State registration alone doesn't give the vessel a nationality, and because it cannot be documented with the US coast guard, it will have the status of an UNFLAGGED/no nationality vessel.
- the vessel will assume the nationality of his owner (or captain?)
- Because I am NOT a US citizen, the boat will be considered a "foreign vessel."

So far, so good?

I am NOT sure.

The broker told me that the above vessel status "state registered' - "state titled" and "unflagged - foreign" is not a problem at all and pretty common and that I can travel the entire country in a vessel with that status.

As long... and here comes the caveat... as long as I am not leaving the country (and try to come back, I would assume?). But that will not be a problem since I am not planning to do that for at least the next two years.

So what is the problem? If there is any at all?

Maybe the problem is that I will have an unflagged vessel with no nationality.

As a German citizen, I can apply for a so-called "Flagg Certificate" in Germany when I can prove ownership of the vessel. Since such a "Flagg Certificate" is internationally recognized, the vessel would become the status of an officially German flagged vessel, at least I would assume.

What would be the advantage?

As long as I stay in the Chesapeake Bay, I don't see a direct advantage, but I may be wrong here.
As soon as I would plan to leave the country and come back, maybe the Bahamas or the like, there is clearly an advantage. Being flagged or having a nationality, the vessel would be subject to international recognized agreements.

Wouldn't that be a weird construct?

A vessel that is registered by a US state, paid taxes there, and is foreign-flagged?

I am wondering what the insurance company has to say about that?

I am pretty sure I should involve somebody, like a lawyer, who understands Maritime Law. There are many and it's not so easy to identify the right one.

What do you think about all these assumptions? Are they close to correct or way off from any reality?

Can somebody maybe recommend a Maritime Lawyer in Maryland?

Thanks
Christoph

[Captn_Black]

I know this is not that helpful, but I am not even a US citizen, and I brought a US registered boat in Rock Hall, Cheasepeak, and had no problems. Although all the papaerwork was sorted out for me by the marina, who was the seller. The USCG inspected my paperwork on three occasions and everything was fine.

[flyingfin]

No difference either way for recreational vessel. To protect your interest as a non-citizen, you could take ownership as an LLC. Or let the documentation expire and just register/title the vessel in your name in the State where you live.

Ask an attorney in you state about creating an LLC. Vessels can be owned by corporations or individuals. And as usual, one should contact an insurance company well in advance of the purchase to ensure you meet all their requirements for recreational vessels.

[Bill O]

Christoph
IMO don't see a problem w/you purchasing a boat in Md. and having it state registered. Not certain why you would want to foreign flag it, but don't see why you couldn't fly any flag you wanted on a state registered boat. Heck you could fly a pirate flag if you wanted!

Would think most of these perceived legal issues could be quickly answered and shouldn't delay the purchase of your boat. If you haven't already call the National Documentation Center and ask your question about removing your currently documented boat. If the documentation is expired or about to expire then its a none issue, but would call anyway to answer your own questions.

Again don't see any issue w/state registration or insurance if you have a legal permanent address. Would call ( Md. DNR) or look on the internet since much of the info/registration process is up on the website for the Md. vessel registration. For insurance, could call Allstate or whomever you have for home insurance to cover your boat. (search for a recent CF thread discussing Boat US/Geico vs. Allstate).
Think you can do the process yourself w/o paying an attorney to sort this out. It doesn't seem super complicated and certain others have done this before so the respective agencies should have answers for you.

[Steel sails]

We are similar situation UK permanent residents.
Have had 3 boats state registered in Texas, been boarded in Kemah Texas by homeland security and on a different occasion by USCG no issues.
Also temporarily bought our British small Ships registered boat from The Caribbean. That needed a USA Cruising permit which was a real pain to renew when we needed an extension so I don’t recommend that.
We currently keep a boat in the BVI which is Delaware registered to an Llc
Sailed from France to BVI with that paperwork again no issues. Only reason for the Llc is we put that boat in a charter program and Delaware for tax purposes.
If only Bahamas, Caribbean from my experiences you will be fine with personal US state registration

Regards
Paul

[Paradoxus]

If you have kids who are US citizens, transfer title to them at no cost (once tax is paid)in Md. Then document the vessel.

[Steel sails]

We tried that had insurance issues. He was only 18 or 19 at the time.

Regards
Paul

[miraculix]

Originally Posted by Captn_Black

I know this is not that helpful, but I am not even a US citizen, and I brought a US registered boat in Rock Hall, Cheasepeak, and had no problems. Although all the papaerwork was sorted out for me by the marina, who was the seller. The USCG inspected my paperwork on three occasions and everything was fine.

Thank you for your reply.
Real-world experience is always helpful. Good to know that the coast guard had no problems with that.

[miraculix]

Thank you all for your response!

Originally Posted by Bill O

Christoph
...Not certain why you would want to foreign flag it, but don't see why you couldn't fly any flag you wanted on a state registered boat. Heck you could fly a pirate flag if you wanted! ...

I think you are right, I could fly any Flagg, in that case it would just be a piece of colored cloth. But think of a Flagg in the same way as a passport. If the boat would be USCG documented or documented by any other country the Flagg is a statement about your nationality like a passport is.
Just imagine a sailboat bot from Iran would enter US waters with a US Flagg on the stern, I don't think the US coast guard would find that funny. I would think that they would get problems.

Originally Posted by Steel sails

We are similar situation UK permanent residents.
Have had 3 boats state registered in Texas, been boarded in Kemah Texas by homeland security and on a different occasion by USCG no issues.
Also temporarily bought our British small Ships registered boat from The Caribbean. That needed a USA Cruising permit which was a real pain to renew when we needed an extension so I don’t recommend that.
...

That is good to know and reassuring.

I think you can not apply for a cruising permit if your boat has no nationality, meaning if it's not officially documented in a country. Your boat was British registered, hence you could get a permit.
Did you ever leave the country with the state registered boats?

Originally Posted by Paradoxus

If you have kids who are US citizens, transfer title to them at no cost (once tax is paid)in Md. Then document the vessel.

We do, our son is US citizen but probably way too young.

[Dsanduril]

Originally Posted by miraculix

....
- State registration alone doesn't give the vessel a nationality, and because it cannot be documented with the US coast guard, it will have the status of an UNFLAGGED/no nationality vessel.
- the vessel will assume the nationality of his owner (or captain?)
- Because I am NOT a US citizen, the boat will be considered a "foreign vessel."

So far, so good?

I am NOT sure.

The broker told me that the above vessel status "state registered' - "state titled" and "unflagged - foreign" is not a problem at all and pretty common and that I can travel the entire country in a vessel with that status.

As long... and here comes the caveat... as long as I am not leaving the country (and try to come back, I would assume?). But that will not be a problem since I am not planning to do that for at least the next two years.


Christoph...

In most cases state registration does give a vessel "US Flag" status, this is covered in 46 U.S. Code § 116:

In this title, the term “vessel of the United States” means a vessel documented under chapter 121 of this title (or exempt from documentation under section 12102(c) of this title), numbered under chapter 123 of this title, or titled under the law of a State.

Note, however, that the term applies to title 46 only, but that covers shipping, including recreational craft.

For the OP, however, this breaks down with the foreign ownership, even with residency. Not being privy to all of the details, I suspect the CBP Van Den Berg ruling would probably apply. Customs ruled that notwithstanding the definition cited above, the flag of a foreign owned, state registered vessel would be determined by the citizenship of its beneficial owner.

I suspect the broker is right, from both a practical and a legal perspective, if the vessel is already in the United States and registered there then you never have to "make entry" with Customs, and thus you could probably move around at will. Certainly I know foreign nationals with green cards who have had state registered vessels for decades without any problems, including during USCG/LEO boardings. Whether or not that falls afoul of some obscure provision? That would mean no foreign national could own a boat in the US. Sounds absurd but I could see it being technically the case.

[Paradoxus]

Originally Posted by Steel sails

We tried that had insurance issues. He was only 18 or 19 at the time.



Regards

Paul

I got on the phone with BoatUS and explained that while my kids (18 and 20 at the time)are on the title, I would be the master of the vessel and responsible for the premium. This worked.

[Jammer]

I will point out that vessels too small to be documented cross the U.S.-Canada border all the time in northern Minnesota. Most on trailers, but more than a few on Lake of the Woods or Rainy River, and some at remote locations. They are registered in one of the states or provinces as the case may be, and I've never heard of people having trouble because of the nature of the registration.


Some states require documented boats to be registered with the state also depending on the amount of time they are in state.

[smj]

I’m a British citizen and a US green card holding permanent resident like Steel Sails.
I’ve purchased quite a few US documented sailboats.
As others have said, it’s an easy process to de document the boat and register in a state, no attorney or help needed.
Also have made trips to and from the Bahamas with no problem.

[Wallaby]

From the last time this issue came up,

Originally Posted by Wallaby

This is far more complex than most people realize, especially having been through it.
First, I am a permanent resident alien. I am NOT allowed to document my vessel as US. The same is true for LLC ownership. Try to do it without 51% US ownership, and if you get caught... good luck. Companies that say you can have an LLC not 51%, or sneak through a change on the documentation reassignment, have not read the applicable statutes.



Next, I can and do register my boat in SC as a legal resident. I paid sales tax on purchase, and property tax every year. Even if the boat was documented, I will still need to pay property tax to SC if I stay in the state over 90 (?) days.


I could document my vessel in Australia, or I could become a US citizen. Both cost money, and I don't need to as I can easily get in and out of the Bahamas. If I was traveling farther afield, I would document in Australia or become a US Citizen.



As far as DHS is concerned, my state-registered vessel is UNFLAGGED. Which means I cannot fly the US flag. An unflagged vessel takes its nationality from the owner.


Now, as a permanent resident alien, I can enter and leave the USA as I wish. The same is true of the vessel, except every time it enters a US port I must file a VESSEL ENTRANCE ($19). IT is a minor inconvenience as I spend the summer in one place. BTW, some regional offices interpret the statute differently and do not ask for vessel entrance fee. Florida may be one of them.

Please NOTE the issue of entering a US port. It also applies to changing ports. See:
https://www.cbp.gov/document/forms/f...ance-statement

[stormalong]

You are going to have to pay MD tax regardless of registration type.

Even for international travel state registration works in most countries. State registration is legal title. The only issue is that some countries don't understand how the USA is organized. As long as it is in your name and you have identification with you it's all good.

The French islands in the Caribbean were an exception a while back and I don't know the current status of that. It was during a dispute with France 20 years ago.