Boat Title Disclosure Overview

What you should know about boat title disclosures.

A boat title disclosure is an action on behalf of the owner or seller to provide detailed ownership information along with the boat's registration, title and lien status. This should be accompanied by historical data such as how the boat was acquired, where it has been operated and for what purposes. Such factors are crucial to almost any kind of boat transaction including a purchase arrangement, loan agreement or insurance application. This overview will provide the basics of what you should know about boat title disclosures, including references to more in depth guidelines and resources.

Title Guarantees

There is no such thing as boat title insurance in the marine industry. Boat transactions are accordingly indemnified by the owner's written assurance of a free, clear, and marketable title. Such terms are typically incorporated into agreements, applications and documents such as a bill of sale or transfer of interest. However, these do not carry much weight if the guarantor is unavailable, unwilling, or unable to perform in the event of a subsequent claim or deficiency. A prudent buyer, lender or insurer should, therefore, conduct an independent assessment of the title's condition. In order to do so, it becomes necessary to gather as much data as possible regarding all aspects of the title's current and historical standings. A comprehensive boat title disclosure statement from the owner is an ideal way to address these needs.

Statutory Requirements

As it currently stands, there are few requirements when it comes to mandatory boat title disclosures. While salvage branding and lien declarations for vehicle titles are universally enforced, such regulations are lacking when it comes to boats. There are in fact some states that do not even issue boat titles. Efforts are underway to implement proposed legislation known as the Uniform Certificate of Title for Vessels Act, but it has not been widely adopted. There are furthermore no disclosure regulations in the boating industry such as those applicable to real estate transactions.

Owner Cooperation

Given the absence of industry regulations, any efforts to obtain a full title disclosure will depend on the owner's willingness to cooperate. Although this is not generally a matter of concern, it can become problematic where the owner is being represented by a third party such as a broker, auctioneer, or trustee. Working with corporate and interim or non-recorded owners may also create issues. Conflicts of this nature can be avoided by adding a contingency clause to the transaction agreement which requires the owner to produce a comprehensive title disclosure statement. In any event, a refusal on behalf of the owner to provide all relevant title information should be viewed with a great deal of concern.

Disclosure Statement

A boat title disclosure statement should include a compilation of all relevant aspects related to ownership, titling, and registration. This will include the boat's description, its identification numbers, details about the registration, and a list of all known liens or encumbrances. A disclosure should also contain historical details such as how the boat was acquired, duration of the current ownership, locations where the boat may have been previously operated, and types of usage. These are all requisite items in conducting an independent title verification and should be represented as true and accurate to the best of the owner's knowledge. A title disclosure form, which can be found in the referrals for this overview, presents those items which are typically included in a disclosure. If nothing else, it can be utilized as a check sheet for gathering such information.

Verification Methods

Title verification methods will vary considerably depending on factors such as the boat's size, type of usage, areas in which operated, date of production, and registration methods. This is precisely why a comprehensive disclosure is a must-have in order to launch the overall title verification process. The referrals for this overview will provide all the guidelines and resources necessary to conduct a comprehensive title search based on a sufficient disclosure.

Owner Background Check

In addition to a title disclosure, you may wish to run a background check on the owner, seller or guarantor of title. Whether to do so will depend on your confidence in such party's wherewithal to make good on any title representations or guarantees. More information in this regard can be found in the referrals for this overview.

Conclusion

The excitement of purchasing a previously owned boat can be quickly overshadowed by undisclosed title deficiencies, hidden liens, and subsequent claims. A lack of attention to thorough, effective and proven title verification efforts can place your entire investment in serious jeopardy. There is simply no substitute for due diligence. We hope this article raises your awareness about title disclosures and encourage any comments with regard to these contents.

References and Referrals
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