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Old 01-03-2013, 04:39 PM   #1
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Must a Foreclosure Occur Before a Bank Sells a Repossessed Boat?

A good article if purchasing a repo!

http://www.thelog.com/Newsletter/AsktheAttorney/Must-a-Foreclosure-Occur-Before-a-Bank-Sells-a-Repossessed-Boat-
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Old 01-03-2013, 04:53 PM   #2
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The boat should have the proper paperwork prior to the sale. When we purchased our Bayliner 4087 (it was a repo), the broker has all the requisite paperwork ready to close the deal:
  • Notification of pending foreclosure sent to the previous owner
  • Notification of foreclosure
  • POA naming the broker (Marine Lenders Services) as attorney in fact for all paperwork relating to the sale of said vessel.
  • Satisfaction of lien letter filed with the USCG (critial)
All we needed was the bill of sale- the paperwork flowed smoothly.
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Old 01-03-2013, 11:22 PM   #3
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Old 01-03-2013, 11:43 PM   #4
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Beachcomber was a repo that the boat broker had bought at a repo auction two years before I bought it from him. I don't know about the paperwork because that was all handled by the marine title company in Seattle that did all the paperwork on the transaction.
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Old 01-03-2013, 11:55 PM   #5
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I don't know if you're thinking about buying a repo boat, or if this is just an interesting topic of discussion discussion.

If you are thinking about buying a repossessed boat, I can highly recommend a broker in Seattle that specilized in all aspects of boat repossession, from asset recovery, through liquidation.

We bought our boat as a repo through Marine Lenders Services. We found that they were honest, and straightforward. They made the whole experience very comfortable for us as buyers.
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Old 01-04-2013, 11:26 AM   #6
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Having also bought a repo boat, I strongly recommend using a title service. When we bought our first documented boat, we took care of title ourselves. At the time, I couldn't figure out why anyone would spend the money to have a third party file the bill of sale, name change, etc. However, there is a lot more to file with a repo, so better to leave it to the professionals (which also gives you someone to blame if problems come up). All that said, some companies won't even deal with repos due to the extra due dilligence, and some banks won't finance repos. Make sure you have all this lined up in advance and be sure to tell the bank/title company the boat is a repo in advance to avoid any last minute issues (this comes from experience).
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Old 01-04-2013, 12:38 PM   #7
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All that said, some companies won't even deal with repos due to the extra due dilligence, and some banks won't finance repos. Make sure you have all this lined up in advance and be sure to tell the bank/title company the boat is a repo in advance to avoid any last minute issues (this comes from experience).

The bank thing is interesting.

I never told my credit union I was buying a repo. I actually don't know how they would have even found out.

They pre-approved me, then approved the loan based on the survey value to loan ratio. They funded the loan based on the settlement statement sent from the marine title company. All they wanted after that was a prefered ships mortgage filed with the USCG, but that came after they funded the loan.
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Old 01-04-2013, 02:24 PM   #8
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Don't know why the link didn't work. Here you go:

Must a Foreclosure Occur Before a Bank Sells a Repossessed Boat?





Posted: January 2, 2013 | By: David Weil, Esq.
We are in the process of buying a boat that is a bank repo, and we would like to know a little about the process. We were advised that the boat is Coast Guard-documented, so we asked the broker to obtain a title history for us. It now appears that title is still in the name of the previous owner and that the bank never foreclosed on its mortgage. Is this a proper method for the sale of a repossessed boat? We had always understood that a foreclosure sale of a documented vessel must be conducted through a U.S. Marshals’ auction.
Our reader is partially correct. The enforcement of a maritime lien against a documented vessel must usually be performed by the filing of a lawsuit in federal court and the accompanying “civil arrest” of the vessel by U.S. Marshals. There are limited circumstances where this procedure may not be necessary, but for the most part, the enforcement of a maritime lien is a complicated process. A mortgage, however, is a unique type of claim against a vessel and enforcement may be possible through a simplified procedure.

Maritime liens arise from a wide range of claims involving a vessel, but all maritime liens fall under one of two umbrellas: They either involve services that provide some direct benefit to the vessel (such as shipyard work or a fuel purchase), or they arise as a consequence of some event that directly concerned the vessel (such as a personal injury aboard the vessel or a salvage claim involving the vessel).

A mortgage does not fit within either of these categories. It provides no benefit to the vessel and it does not relate to any particular event. Instead, a mortgage provides a benefit to the vessel owner by allowing him or her to borrow money, and to the lender by providing collateral for the loan.

As we have discussed many times in this column, most maritime liens arise without the need for a written document and without the need to record the claim with the Coast Guard, or anywhere else (see, for example, “Ask a Maritime Attorney -- A Lesson on Liens,” The Log, August 24, 2006). A mortgage is the exception to this rule because it is technically not a maritime lien. A mortgage against a documented vessel (technically known as a “Preferred Ship Mortgage”) must be in writing, it must properly identify the vessel, it must include the notarized signature of the vessel owner and it must be recorded with the Coast Guard.

A conventional maritime lien may include a contract between the parties, and we often see work orders or similar paperwork in connection with a shipyard project or a significant engine repair. However, since these forms are not required for the perfection or enforcement of a maritime lien, the language in that paperwork varies quite a bit between the various service providers, and we often see no paperwork at all.

Conversely, since a mortgage must be in writing, the form contracts that are used have evolved to the point where the rights and responsibilities of the parties are set out in considerable detail, and the language is very common from lender to lender. From the standpoint of our reader’s question, the most significant language found in almost all Preferred Ship Mortgages is a provision that allows the lender, upon default by the vessel owner, to repossess and sell the vessel “without judicial process.” Courts have upheld this provision and interpreted it to mean that the lender may proceed without the involvement of the court, repossess the vessel through a private repossession and sell the vessel through a private sale.

A potential buyer may therefore purchase a repossessed vessel in a private sale without concern about the lender’s legal authority to sell the vessel -- assuming, of course, that the lender had a properly recorded mortgage and that the boat owner had, in fact, defaulted on the loan and mortgage. The lender must prepare an affidavit of repossession attesting to its right to foreclose (authorized pursuant to the Code of Federal Regulations, Title 46, sec. 67.83), and the affidavit will be submitted to the Coast Guard with the Bill of Sale.

So, a lender may repossess and sell a vessel through the simplified procedure described above without a court order, but this may not always be the best approach for the lender or a potential buyer.

A lender may wish to use the federal court procedure, because it is performed with the participation and oversight of a U.S. Marshal and a federal judge. The marshal has a badge and a gun, and as such, any possibility of a confrontation with the boat owner at the time of the repossession is minimized. The judge is involved at every step -- and questions involving the disposition of personal property aboard the boat, claims by competing creditors or disputes about whether the vessel was sold at a fair price are quickly and conclusively resolved by the judge.

Buyers may prefer the federal court procedure because they are assured of obtaining clear title at the time of their purchase. Only a federal judge may issue an order that is recognized anywhere in the world to sell a vessel free and clear of all liens.

In the end, lenders will typically choose the foreclosure method that makes the most sense under the circumstances presented, based upon the value of the boat, the amount of equity involved and the likelihood of competing creditors. The federal court procedure is quite expensive, and they will avoid that cost if they can.

A buyer who is considering the purchase of a repossessed vessel through a private sale should consult an experienced maritime attorney if he or she has any questions about the issues discussed here.
David Weil is licensed to practice law in the state of California and, as such, some of the information provided in this column may not be applicable in a jurisdiction outside of California. Please note also that no two legal situations are alike, and it is impossible to provide accurate legal advice without knowing all the facts of a particular situation. Therefore, the information provided in this column should not be regarded as individual legal advice, and readers should not act upon this information without seeking the opinion of an attorney in their home state.
David Weil is the managing attorney at Weil & Associates (www.weilmaritime.com) in Long Beach. He is an adjunct professor of Admiralty Law at Loyola University Law School, is a member of the Maritime Law Association of the United States and is former legal counsel to the California Yacht Brokers Association. He is also one of a small group of attorneys to be certified as an Admiralty and Maritime Law Specialist by the State Bar of California. If you have a maritime law question for Weil, he can be contacted at (562) 438-8149 or at dweil@weilmaritime.com
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Old 01-04-2013, 02:27 PM   #9
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I don't know if you're thinking about buying a repo boat, or if this is just an interesting topic of discussion discussion.

If you are thinking about buying a repossessed boat, I can highly recommend a broker in Seattle that specilized in all aspects of boat repossession, from asset recovery, through liquidation.

We bought our boat as a repo through Marine Lenders Services. We found that they were honest, and straightforward. They made the whole experience very comfortable for us as buyers.
We are looking. I actually went up to Seattle a few weeks ago and look at w 53' Ocean at MLS that they repossed from Anacortes Charters. It was a hotel on the water and not suited to what we wanted.
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Old 01-04-2013, 02:47 PM   #10
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We are looking. I actually went up to Seattle a few weeks ago and look at w 53' Ocean at MLS that they repossed from Anacortes Charters. It was a hotel on the water and not suited to what we wanted.
How about this:

National Liquidators - 1990 Carver Californian 5539/MY , 55 ft. - National Liquidators
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Old 01-04-2013, 02:50 PM   #11
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LOL Number 2 on our list!
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Old 01-04-2013, 02:52 PM   #12
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Old 01-04-2013, 03:05 PM   #13
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We are looking. I actually went up to Seattle a few weeks ago and look at w 53' Ocean at MLS that they repossed from Anacortes Charters. It was a hotel on the water and not suited to what we wanted.
It's great that your actively looking. The right boat will come along.

I assume your on the slip list at your favorite harbor???

We are 2 on the 50' list in Seward and have been on the list since 2010 or 2009 I forget. We have been unofficially assigned what is now a vacant slip so were happy
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Old 01-04-2013, 04:34 PM   #14
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It's great that your actively looking. The right boat will come along.

I assume your on the slip list at your favorite harbor???

We are 2 on the 50' list in Seward and have been on the list since 2010 or 2009 I forget. We have been unofficially assigned what is now a vacant slip so were happy
I have given up on Whittier, so I am buying my own dock on a back slough on the lower Columbia River to use as a base station. You will see us on the inside passage and in PWS during the summer once I retire in about 2 1/2 years!
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Old 01-05-2013, 12:44 AM   #15
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I have given up on Whittier, so I am buying my own dock on a back slough on the lower Columbia River to use as a base station. You will see us on the inside passage and in PWS during the summer once I retire in about 2 1/2 years!

ah-ha, buying the retirement boat, someplace warmer. Thats fantastic!

I've done enough Prudhoe winters for one lifetime myself.
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Old 01-05-2013, 02:32 AM   #16
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My previous boat purchase from the owner via his broker went well until a secured lender popped up. They then managed the sale though the owner remained the seller, a sort of supervised forced sale. Settlement was at the lenders lawyers office, with seller and broker present. All funds went to the lender and I made sure the seller so directed in writing. The lender paid the broker though in hindsight not sure they had to legally, they don`t in a real estate situation, though they may.
Had I not been a retired lawyer I would have got advice or maybe walked. Make sure you establish you are getting good title and don`t get involved in owner/lender disputes. In my case I had the owner somewhat reluctantly co-operating with the lender, which had the boat as extra collateral as part of a business loan to the owner. The lenders lawyer was co-operative, helpful, and willing to work with me to ensure I got title. But take care, it is another layer of difficulty.
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Old 01-10-2013, 05:05 PM   #17
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If you choose to not use an attorney of your choice KNOWLEDGABLE IN MARITIME sales be very careful, marine liens can be filed almost anytime and follow the boat.
YOU might not be liable but the boat could be, in any event you lose.
CCC
Practiced marine law for quite a few decades.
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