Boat registration/ownership/insuarance payeein Charter

[svgoodvibration]

I just put my new FP Saba 50 in Charter with Navigare in BVI. The whole process has been very painful with them, mostly due to lack of communication and response to warranty items and managing my boat. The latest shock to me was when I requested registration and insurance documents. The papers all have Navigare as owner and first payee on insurance claims. I never received any title/registration documents with my name. The boat is 100% paid for by me with cash. I have retained a very good ($$$) marine lawyer who agrees with me that this is not correct. It will be corrected soon...

Just interested if other yacht charter owners have their ownership/insurance papers like this, or is Navigare trying to do something "special"?

[Montanan]

Which country is the boat registered?

Did you do the registration, if so, why would it have been titled with the charterer as the owner?

I see your location is listed as Tennessee, which means perhaps you are a US citizen in which case you could have your boat documented with the USCG.

[svgoodvibration]

No, that’s what I’m saying, they registered it without consulting me. I am in the midst of redoing it all with USCG. I’m just wondering why they did this and if it’s normal. They did not inform me or give me a choice.

[Montanan]

Only the owner or the owner's agents can register and / or title a boat. If they were not the owner then the would have fraudulently filed the documents.

As per the USCG form 1258: "The law provides severe penalties for false statements against both the person (including agents)
making the statement and against the vessel for which it is made."

"POTENTIAL PENALTIES FOR FALSE STATEMENTS OR REPRESENTATIONS BY OWNER OR REPRESENTATIVE: CIVIL, MONETARY, VESSEL
FORFEITURE (46 USC 12151), FINE AND/OR IMPRISONMENT (18 USC 1001)"


You did not indicate where they registered the boat. It will need to be deregistered before you can document the boat with the USCG.

How is it that they would have the requisite documents to submit, e.g., bill of sale?

Sounds beyond fishy.


From the USCG FAQs:

WHAT ARE THE REQUIREMENTS FOR DOCUMENTATION?
The basic requirements for documentation are to demonstrate ownership of the vessel, U.S. citizenship, and eligibility for the endorsement sought.

HOW IS VESSEL OWNERSHIP ESTABLISHED?
If the vessel is new and has never been documented, ownership may be established by submission of a Builder's Certification (Form CG-1261), naming the applicant for documentation as the person for whom the vessel was built or to whom the vessel was first transferred. Also acceptable are a transfer on a Manufacturer's Certificate of Origin, a copy of the State Registration or Title, or foreign registration showing that the applicant owns the vessel.

In the case of a previously owned vessel, the applicant must present bills of sale, or other evidence showing transfer of the vessel from the person who last documented, titled, or registered the vessel, or to whom the vessel was transferred on a Builder's Certification or Manufacturer's Certificate of Origin. If title was transferred by some means other than a bill of sale, contact the NVDC for assistance.

[billknny]

Wow...

That really does not pass the sniff test. There is no legal world where they can claim to be the owners.

Who did you pay the cash TO? Did it go to Navigare? Or to the boat builder? If you sent Navigare the money, then maybe they bought the boat?

Who is actually paying the insurance premiums to the underwriter? Again, if you pay Navigare and they pay the insurance premium...?

[CharlesEdward]

Originally Posted by svgoodvibration

I just put my new FP Saba 50 in Charter with Navigare in BVI. The whole process has been very painful with them, mostly due to lack of communication and response to warranty items and managing my boat. The latest shock to me was when I requested registration and insurance documents. The papers all have Navigare as owner and first payee on insurance claims. I never received any title/registration documents with my name. The boat is 100% paid for by me with cash. I have retained a very good ($$$) marine lawyer who agrees with me that this is not correct. It will be corrected soon...

Just interested if other yacht charter owners have their ownership/insurance papers like this, or is Navigare trying to do something "special"?

There must be another aspect to this narrative. Tripadvisor gives Navigare a 5 or best rating after 53 traveler reviews. I am aware however, that they could treat owners quite differently than they treat charterers.

[svgoodvibration]

That's what I thought as well. Turns out it's the default way for them. Unless you know better during the buying process (which I did not), they register and insure in their name. We are changing that now.

[Montanan]

Originally Posted by svgoodvibration

That's what I thought as well. Turns out it's the default way for them. Unless you know better during the buying process (which I did not), they register and insure in their name. We are changing that now.

"Default way". That seems incredibly presumptuous as to they being the owner of the vessel. If they are the owner, what are you? It seems that if they are assuming the ownership title then if you have paid the funds that you are in fact just a creditor. That could be a creditor in the form of a loan, or perhaps a lessor and the chart company is the borrower or the lessee. Perhaps, you become a creditor or a lessor with the right, AND/OR, the obligation to buy the vessel at the end of the term of the financing [e.g. 5 to 7 years], or the obligation to take title to the vessel, a put back onto you. The economics of each of the different arrangements would be completely different to both the charter company and to you, the charter financier.

If you are in fact the creditor, you damn well better secure your priority loan / mortgage by registering your lien with the registry of the country the vessel is flagged. That is the primary purpose of nation state flagging of a vessel, it is a process to provide for prioritizing liens.

If you are the true owner of the vessel and they have a charter contract against it then they too can register a lien with the nation state registry of your flagged boat.

Insurance is an entirely different matter. Both parties have risks which exposure can be financially transferred, you as owner, or you as the financier, and the charter company as the charterer. Seek expert risk management advisors to determine the scope of your risks and the nature of risk mitigation and risk transference. When I say, risk management advisors, I am NOT advising discussions with insurance brokers or agents which brokers and agents are first and foremost just policy sales persons. Risk management analysis goes way beyond just the insurance sector. insurance is one factor that can adjust your risk exposure, one tool in your workshed full of tools.

If you have entered into a financing arrangement with the charter, you will want to have full scope of insurance covering the value of the vessel with you being the loss payee so as to be able to pay off the balance of the loan you have given the charter with any residual loss payment above the loan balance being thence paid by you to the charter operator from the proceeds of the insurance settlement received by you. Note that there are numerous liabilities associated with the vessel which liabilities could filter back through to you, you should require indemnification of the specific identified from the charter. That usually includes as to indemnification from litigation expenses, rewards, etc, etc. [long list] and also that you be listed as an additional insured on their insurance policies covering a vast array of potential liabilities. Gets very complex and the devil is very, very much in the details. And since you are choosing to due business in a foreign country, foreign jurisdiction and laws come to play.

Sounds a lot like you have entered into the likes of a "time share" arrangement in Florida. Been sold a vision.

Reality check time: Do you really understand what the hell you have entered into. Truth is it sounds like you don't have even a basic understanding of the real transaction, let alone all the detail nuances and implications. Not trying to strike a harsh tone here, just a very cautionary note.


I took a brief look at their website for the part wherein they are soliciting boat ownerships arrangements and I see that they include discussion of the tax advantages with an emphasis on American taxation, which seems to be a common theme of most chartering companies seeking financiers. I rarely if ever see the charter companies have discussions of tax benefits for owners from say the EU.

Of specific concern to me when I see the tax benefit discussions is that they indicated that the vessel could be provided accelerated depreciation expense deductions to shelter current years' charter income [revenue]. Specifically as to the vessel being classified as Section 179 property, for US Federal Income tax purposes. It is true that a vessel under active charter management may realize qualification under Section 179 and be provided accelerated depreciation, but Section 179 property only applies to depreciable assets that are deployed in the USA. Assets that are located outside of the USA do not qualify for USA accelerated depreciation. [Kind of obvious public policy that the USA would not subsidize foreign located business activities by providing accelerated depreciation expense against US taxable incomes]. In fact, the business assets become subject to the taxation jurisdiction in which they are located which complicates things considerably for the American tax payer thence having to deal with international taxation reporting and obligations and not having the accelerated depreciation advantages of the USA. Note that USA taxpayers are subject to income taxation on worldwide income, not just income sources in the USA.

Charter ownership outside the USA opens up a whole new can of worms for USA taxpayers as it is in effect just ownership of a foreign business and all that entails.

You had indicated that your new boat was going to be placed in charter in the British Virgin Islands. You do realize that by actively doing business in the BVI: You aren't in Kansas anymore!" Do you know the taxation requirements of doing business in the BVI? Do you know the obligations of doing business in the BVI? Do you know implications of foreign based income as a USA citizen?

Do you have a BVI tax consultant? I'm suspect not.

Well good luck with clarifying the full scope and nature and implications of having started your own foreign located chartering business. Note that the charter is just a third party equipment manager and rental agent, if you in fact own the boat. Or in the alternative, you have become a financier of the charter by loan or lease of a boat they have acquired and you may have the obligation or option to buy back the boat at the end of the term of the charter term. There being several arrangements highlighted on their website discussing such arrangements, all of which seem to provide you with some weeks of "sailing time" on board the boat or another boat in their fleet of boats.

[Montanan]

FYI:

An informative article:

https://www.sailmagazine.com/multihu...a-charter-boat

[Montanan]

The BVI has no income taxation of business income so no tax return required of entities incorporated there.

As to the vessel placed in charter in the BVI for a US taxpayer, note:

Internal Revenue Code § 168 covers the rules for depreciation, including the method, period and percentages. While U.S.-based assets are covered under the General Depreciation System, tangible property that is used predominantly outside the United States is covered under the Alternative Depreciation System.

The Alternative Depreciation System is determined by using the straight line method, the applicable convention depending on the type of property and a recovery period of 12 years for personal property with no class life and 40 years for both non-residential real property and residential rental property.

It is prudent then for individuals with foreign assets to be aware of the special rules for depreciation for those assets and make certain they are in-line with the Alternative Depreciation System rather than the General Depreciation System.

You can write off depreciation (for example a straight-line 7 years), maintenance, boat equipment purchases, insurance, fuel and mooring costs. Detailed records of every expense as well as the amount of income will be necessary. To avoid extra attention from the IRS, you’ll need to make a profit in at least three out of every five years. You can only deduct the percentage of overall expenses that you use the boat for business. You cannot write off expenses when you’re pleasure boating.

[CharlesEdward]

I don't have a vested interest in the outcome of these titling issues.
However, in an earlier post I wrote and thought, there must be more to the story. I sent the original Cruisers Forum post to Navigare and added this was really bad for their reputation.

Somehow, Amanda of Navigare got my old land line telephone number and called me.
She is the person who has the responsibility to make things right. I expect she will either give a satisfactory explanation, or change the registration, ownership or insurance beneficiary.

Peter@sailor66.com

[billknny]

Originally Posted by CharlesEdward

I don't have a vested interest in the outcome of these titling issues.
However, in an earlier post I wrote and thought, there must be more to the story. I sent the original Cruisers Forum post to Navigare and added this was really bad for their reputation.

Somehow, Amanda of Navigare got my old land line telephone number and called me.
She is the person who has the responsibility to make things right. I expect she will either give a satisfactory explanation, or change the registration, ownership or insurance beneficiary.

Peter@sailor66.com

Even if "Amanda" of Navigare "makes this right" how did they think this was the way to do business in the first place? You are certainly right about one thing, this throws a big stink bomb at their reputation.

On the other hand... I believe less than 10% of what I read on the internet, so it is possible that the original post is just out of wack...

Most likely, the fault line runs down the middle...

[svgoodvibration]

i am 100% owner, paid cash. Rather than rely on "forum lawyers" I have hired an experienced lawyer from Annaplolis, MD who has handled things like this before. He actually does work for some of the large cat manufacturers and is used to going after charter operators. He will make sure my interests are taken care of. He assured me this is not "normal". In hindsight, I should have hired him before I signed the purchase agreement.

[Jolly Roger]

How on earth can someone who can pay cash for a 50’ foot cat get themselves into this can of worms? There are surely a number of answers to that question. But if there was ever a case of caveat emptor this has to be it!
And now, after asking for help the OP is complaining about “forum lawyers.” Well, Mr. svgoodvibration, the people who have taken the trouble to reply are actually trying to help you, but I can’t imagine there will be many more.
Carry on throwing more money at a “real lawyer”, who I bet secretly thinks to himself, “Here comes another one?” much the same as the charter company.
There’s a lot of things you should have done in hindsight mate!

[svgoodvibration]

Originally Posted by Jolly Roger

How on earth can someone who can pay cash for a 50’ foot cat get themselves into this can of worms? There are surely a number of answers to that question. But if there was ever a case of caveat emptor this has to be it!
And now, after asking for help the OP is complaining about “forum lawyers.” Well, Mr. svgoodvibration, the people who have taken the trouble to reply are actually trying to help you, but I can’t imagine there will be many more.
Carry on throwing more money at a “real lawyer”, who I bet secretly thinks to himself, “Here comes another one?” much the same as the charter company.
There’s a lot of things you should have done in hindsight mate!

No can of worms, it's being resolved as we speak. They responded very quickly when the lawyer sent a letter. Anybody dealing with Navigare should check how the boat is registered/insured and make sure you are protected in all ways financially. What they did is not normal practice.