question about buying a documented boat

[what_barnacles]

Greetings,

Great site, I have already learned a lot just browsing the forum.

I have a question about buying a used trawler thats documented. The current owner said that we would need to close the deal with someone like a title agent much like when you buy a house.

Is that correct? I have never bought a boat big enough that it could be documented, but I was under the impression from reading on the Coast Guards site that all I needed was basically a bill of sale and I could redocument it myself and possibly save $500 (per the owners estimate).

Thanks in advance
Phil

 

[Bay Pelican]

First question will you be financing the boat?

Second, will you pay the purchase price before you are able to determine if the Bill of Sale is good and the Coast Guard will transfer the documentation to your name?

Yes you can save the title agent's fee and file the bill of sale and a couple of other documents yourself. Question is whether there is any additional risk. Last couple of times I have done it I was in a no risk situation.

 

[windmill29130]

Make sure you get an Abstract of Title done. This is similar to a title search on a house. It makes sure there are no liens or outstanding owners.

 

[twistedtree]

Abstract of title is a good plan. Otherwise there is no reason you can't do it yourself.

Another suggestion would be to include language in the sale agreement where the seller certifies that the he owns the boat free and clear, and that he will cooperate to effect the documentation change to your name. That way if there is any follow up paperwork needed, he's already agreed to help.

 

[BandB]

There are many excellent documentation agencies and the cost is quite modest. If you've never done it before, I'd recommend using one. They can handle title abstracts, lien searches (yes, UCC liens may fall outside a title abstract), bills of sale and even escrow services on the sale.

 

[windmill29130]

D.N. Jones Documentation Service, Inc.


I used these guys. Very fast, professional, and reasonably priced.

 

[psneeld]

The USCG documentation stuff is very easy if the vessel was currently documented.

Ensuring clear title isn't so easy...so that's up to you whether you farm that out and to what degree.

In my experience the title search is expensive but at least you can handle the documentation part yourself and not pay those bucks.

 

[BandB]

D.N. Jones Documentation Service, Inc.


I used these guys. Very fast, professional, and reasonably priced.

We recommend ASAP, Trey Reeder, but there are many excellent ones in Fort Lauderdale.

 

[what_barnacles]

Thanks for the insights.

After talking with the owners today, it will probably be best to use a title agent.

I'm still a little confused as I was thinking I would pay the title agent and the agent would then pay the sellers. The owners said they wanted me to give them the check and not the agent. Just seems to me that the sale isnt complete if the agent has the check until the title is tranfered. Where as if I give the owners the check the sale is done whether the agent determines that have clear title or not. Right?



Thanks.
Phil

 

[wyoboater]

If you give the seller the check prior to completing the abstract ie: title search...and in a weeks time you find a hidden lien holder on the boat, you have no protection, therefore no boat and no money....the title company will put the money in an escrow account until the abstract is completed, once that's done, they will ask you permission to release the funds. Once you give that, the money will go to the seller via wire transfer if you request that. He'll have the funds the same day the title clears the search...I would protect myself if I were you.

 

[what_barnacles]

ahhh so thats what my paranoid instinct was telling me. Thanks, again. The money goes to the agent.

 

[wyoboater]

Also, in the interest of time, I would send the boat funds plus the agent's fee to the agent via wire transfer also...that way, nobody has to wait for a check to clear. Costs a little bit, $30-$40, depending on your bank but everything is done on the same day. the agent can also do the USCG documentation papers for you. Just remember, once they send you all the necessary paperwork to fill out and sign, and you send it back, all of which can be done by fax, the USCG is currently working on Feb. 2015 requests so you've got about a 3 month wait. However, the agent can send you temp paperwork plus the bill of sale and title which will suffice during that time. The sellers should send the title of the boat to the agent also...that way, everyone's interests are protected.

 

[BandB]

So, we're back to use a documentation agent as a couple of us recommended (They are the house equivalent of Title Agent and arrange that aspect). They can also provide escrow services. They can walk you through the process correctly. You wouldn't buy a house without a Title Agent and you wouldn't allow a check to be given to the seller. In fact, on a house you just pay earnest money until the Title work is complete. Documented boats should be thought of in the same way as houses. Many of us have more money in our boat than in our house.

 

[twistedtree]

So, we're back to use a documentation agent as a couple of us recommended (They are the house equivalent of Title Agent and arrange that aspect). They can also provide escrow services. They can walk you through the process correctly. You wouldn't buy a house without a Title Agent and you wouldn't allow a check to be given to the seller. In fact, on a house you just pay earnest money until the Title work is complete. Documented boats should be thought of in the same way as houses. Many of us have more money in our boat than in our house.

In all boat transactions I've been involved with, all the title and due diligency work is done before you close on the deal. Checking for clear title is just as important as a survey, etc.

I can certainly see using an agent to handle the documentation paperwork, and perhaps order the title abstract as well. But ti's not clear to me what value they bring to begin part of the closing. You had over the money and the seller signs the USCG bill of sale. Then the boat is yours.

It's then up to you to reapply for documentation, and as pointed out, that will take months. No seller is going to wait that long to get their money, so if there is any sort of escrow, what will it be for? To ensure there are no title surprises? I suppose it's to your advantage if you can get the seller to do this, but as a sell, I'd be very resistant. I would want to buyer to satisfy themselves that the title is clear before closing, and I'd be happy to certify that there are no liens or encumbrances, etc. But I wouldn't want to wait around while the buyer applies for documentation, or doesn't. What if they drag their feet? What if they decide to register at teh State level rather than document? Then when do I get my money? It's very unlikely I'd agree to such a thing as a seller, but that's just me.

 

[BandB]

In all boat transactions I've been involved with, all the title and due diligency work is done before you close on the deal. Checking for clear title is just as important as a survey, etc.

I can certainly see using an agent to handle the documentation paperwork, and perhaps order the title abstract as well. But ti's not clear to me what value they bring to begin part of the closing. You had over the money and the seller signs the USCG bill of sale. Then the boat is yours.

It's then up to you to reapply for documentation, and as pointed out, that will take months. No seller is going to wait that long to get their money, so if there is any sort of escrow, what will it be for? To ensure there are no title surprises? I suppose it's to your advantage if you can get the seller to do this, but as a sell, I'd be very resistant. I would want to buyer to satisfy themselves that the title is clear before closing, and I'd be happy to certify that there are no liens or encumbrances, etc. But I wouldn't want to wait around while the buyer applies for documentation, or doesn't. What if they drag their feet? What if they decide to register at teh State level rather than document? Then when do I get my money? It's very unlikely I'd agree to such a thing as a seller, but that's just me.

You don't wait around for documentation. The money is released from escrow when the title and lien work is all complete. Really the two ways I'm use to seeing it transpire is earnest money held until title clears or entire amount held in escrow until the title clears. I think the term documentation company is misleading some. Their initial role is lien and title work. Normally we're talking about a very short time for that. Then after that the deal closes and they handle the documentation.

 

[wyoboater]

As BandB stated, the seller doesn't wait for the documentation process...once clear title is proven, buyer transfers funds and seller transfers title/bill of sale to buyer. This is just all easiest thru a title/escrow company. No waiting is necessary.

 

[TDunn]

I have always used a lawyer for this process. Of course since my wife is a lawyer we just used someone in her firm at a very nominal fee.

 

[twistedtree]

Maybe we are all just saying the same thing in different ways. Transactions I've been involved with went like this:

- Buyer pays deposit which is help by one of the brokers. If it were a really big purchase, you could have an attorney or agent hold it.

- Buyer does survey

- Buyer does any title search

- Once buyer is satisfied with the survey and title, you proceed to closing

- Closing is anti-climactic. Funds are transfered and bill of sale is signed and handed over.

Note there is no holding of funds until any title clears. The title gets cleared before the sale takes place and is a contingency to the sale just as the survey is a contingency.

The only funds that are ever held is the deposit, and that is released at closing.

So is it the deposit you guys are talking about holding is escrow, or have you actually paid for the boat and had the funds held in escrow, then gone and done the title search?

There are of course infinite ways to structure and close a deal, but I've never heard of paying for the boat, then doing the title search. Just like buying a house, I've always done the search before turning over any $$ (other than the deposit, of course).

 

[twistedtree]

As BandB stated, the seller doesn't wait for the documentation process...once clear title is proven, buyer transfers funds and seller transfers title/bill of sale to buyer. This is just all easiest thru a title/escrow company. No waiting is necessary.

Yes, that's the way I've seen it done. I guess I'm just not understanding what money people are escrowing and holding until the title clears.

 

[BandB]

So is it the deposit you guys are talking about holding is escrow, or have you actually paid for the boat and had the funds held in escrow, then gone and done the title search?
.

Generally the deposit being held. Sometimes this is after survey and sea trial and the entire amount held in escrow.

Here is one of the issues. In all but two states there is no licensing of brokers. Not to speak disparagingly of brokers as I respect many, probably the majority, greatly, but this isn't like real estate brokerages with insurance, bonding and accounts set up for deposits. So, using a documentation company (the marine equivalent of a title company for a house) you have someone independent of the buyer and seller determining when the funds are to be released.

Either way, the title stage differs from the survey stage. A buyer can back out after virtually any survey if they so choose. Now, at the title stage, the buyer has signed off on the survey and relinquished their rights of termination. So at this point the buyer can't arbitrarily terminate. It's in the hands of the "title" company. Either it's clear or it's not. Survey is subjective. Title is objective.

Now this is a complex subject and all the more reason to use a professional experienced in these transactions.

 

[BryanF]

You all might be surprised at how many boats have title issues. For my peace of mind my money as the buyer would go to the title agent or broker. When the seller provides title and the title agent says the seller actually owns the boat then the seller gets my money. Simple process, does not cost much and gives me peace of mind and no ugly surprises later.

 

[BandB]

You all might be surprised at how many boats have title issues. For my peace of mind my money as the buyer would go to the title agent or broker. When the seller provides title and the title agent says the seller actually owns the boat then the seller gets my money. Simple process, does not cost much and gives me peace of mind and no ugly surprises later.

Very high number of boats have liens too that are not filed with the USCG, just UCC filings. Plus many cases of dealers/brokers (this also happens on cars) where the boat is on consignment but for ease they have the owner go on and sign the title. They sell the boat but don't pay the previous owner. Oh, and don't assume new boats are free from all this.

 

[Opu]

When I bought Cheers, the PO had a loan from an east coast bank. My broker contacted them, got the payoff amount and wired the money. After two weeks I hadn't received the title, so my broker called them. Well, uh, er we lost the title. They sent a notarized release on the lien, seller filled out and notarized a DMV form to request a duplicate title and release it to me. Went to AAA with the paperwork, gave them a check for DMV. Title in our names arrived two weeks later.

Piece o' cake. Glad I had a broker.

Dick

 

[FF]

"Title in our names arrived two weeks later."

A title is NOT a USCG doc.

 

[dimer2]

What barnacles. May I suggest you give Martha a call (licensed/insured title company), she is right there in Kemah and she will explain the whole process to you, free of charge. If you then elect to use her services, she does ALL the paperwork, clears titles, pays off loans, temp cruising permits, (if required), pays both sellers and buyers brokers etc etc. Best $500, I have spent and have used her twice. A phone call is free, kinds cheap for peace of mind. PM me for her number if interested. Incidentally, on one occasion, she saved me more than her fee when a broker was charging some "fees" that were not applicable.

 

[yachtbrokerguy]

From the original question it sounds like no broker is involved to hold deposits or answer questions.
Anyone can get an abstract of title from the National Vessel Documentation Center, just supply a document number and a credit card. The fee had been only $25 and it takes 3-5 days.
I use documentation agents all the time and use them not for escrow of funds but for escrow of paperwork. They write up Bills of Sale and the seller sends them to the doc agent by FedEx. When the agent sees that they are signed correctly with three original copies then funds are sent by wire from the buyer.

 

[what_barnacles]

thanks for all the input everyone. I enlisted a local title agent today to handle the work. About a week to do the title search, and then we close. After that I get to wait months for the documents from the CG.

So as one last question, can I change the name on the boat itself (the paperwork will be filed with the new name and port of call) and secure at least liability insurance before I get the CG doc's?

Thanks again.

 

[BandB]

thanks for all the input everyone. I enlisted a local title agent today to handle the work. About a week to do the title search, and then we close. After that I get to wait months for the documents from the CG.

So as one last question, can I change the name on the boat itself (the paperwork will be filed with the new name and port of call) and secure at least liability insurance before I get the CG doc's?

Thanks again.

You can and must secure all insurance before you take ownership. You don't need the Documentation for insurance. You are fine to operate without the final documents. Only if you're leaving the country is it an issue and you can get expedited service if that's your situation. It's actually referred to by them as Priority Handling. However, highly illegal to falsify a document to get it.

As to waiting for months, it's just over three months at the moment for initial applications. They are currently on February 15 receipts.

 

[wyoboater]

And yes, you can put the new name on the boat before you get the final docs....and by all means, secure insurance before you take possession. Not sure if you're aware of this, a lot of insurance companies require a full survey before they'll bind coverage. Also, you need to look into register and pay sales tax to the state of Tx..I can give you links explaining what you need for tx if you want. You can pm me. In Tx, you have 20 days after closing to register the boat in Tx and pay the taxes. Tx is one of the states that requires state registration even on a USCG documented vessel. Only difference is you don't have to put the reg numbers on the outside of the hull, just the current registration sticker.

 

[Donsan]

When we bought our boat, we were unaware it had been USCG documented.

Over the weekend, when I was climbing around in the ER, I noticed a USCG number hidden away on the hull.

Today, I looked up the documentation number in the vessel documentation database and it was there but stated "Data found in historical database no longer in Documentation."

No owner is listed although a vessel name, previous owner and previous vessel name is. So, what does that mean to us? If we went to document it would we get a new documentation number?