Vessel Documentation vs State Registration

All you should know about USCG vessel documentation as opposed to state registration.

A key decision for many boat owners and prospective buyers is whether to obtain vessel documentation or simply register on the state level. Although such options may exist, this is not always a matter of choice depending on a number of factors. These may include a vessel's size, its intended usage, location, an owner's citizenship and whether it will be given up as security for a marine loan. There are also distinctions to consider when it comes to the relationships between documentation, titling and registration.

References

Definitions

 Boat vs Vessel: There is no difference between a boat and vessel other than the context in which such terms are invoked. Federal regulations usually make reference to a vessel whereas a boat is the term commonly referred to in state level regulations and general boating circles.
State Registration: State registration is a process by which a boat is granted operational privileges on the waters of a given jurisdiction. Depending on the respective state, this may entail the assessment of periodic fees and taxes. Registration certificates are re-issued periodically.
State Titling: In conjunction with registration certificates, many states also issue a separate one time certificate of title. However, this is not always the case as some states do not facilitate titling. In this case the registration certificate serves as proof of ownership unless the boat is also USCG documented.
USCG Documentation: USCG documentation is a process by which a vessel is federally registered. However, only a single certificate is issued which serves as both evidence of registration and ownership. Although renewed periodically, a valid certificate of documentation is also viewed as a title certificate.

Vessel  Documentation

There are varying circumstances under which a vessel must become USCG documented, where it may be desirable as an option and when it's not even available. As an option there are certain advantages and drawbacks that should be taken into consideration.
Qualifications: In order to document a vessel it must measure at least 5 net tons in cargo capacity. This is determined by a formula based on its length, breadth and depth. Accordingly, most vessels under 25 feet in length will not qualify for documentation. A documented vessel must also be wholly owned by U.S citizens. The country in which built is not a factor unless destined for commercial usage.
Usage: Documentation is optional for recreational purposes. However, vessels engaged in commercial activities must become documented and endorsed for the specific trade in which engaged. Commercial endorsements do not otherwise prevent recreational usage.
Marine Financing: Marine lenders are usually more inclined to finance a qualified vessel when it becomes USCG documented. This facilitates the recording of a preferred vessel mortgage which offers collateralization priority over state level security methods and provides better foreclosure options. Availability of financing is, therefore, considered to be one of the advantages of documentation.
Titling Priorities: A valid certificate of documentation takes priority over any other forms of titling. It also affords a bona fide title in situations where certain states do not issue such certificates. This enhances the marketability of a vessel as buyers can be assured of a strong title.
Documentation Standards: The USCG enforces very strict standards and requirements when it comes to documenting a vessel. There are in fact some hefty fines and penalties for such violations. On the other hand, this can be viewed as a positive factor given its reliability over state registration and titling.
International Recognition: Vessel documentation affords certain rights, protections and recognition as a U.S. flagged vessel while operating in international waters and foreign jurisdictions. It also makes life much easier when dealing with foreign customs entry.
Abstract of Title: One of he most endearing aspects of vessel documentation relates to an underlying abstract of title. This indexes all transactions about the subject vessel during the entire duration of being actively documented.
Numbering and Marking: Although documented vessels must display a name of choice and hailing port, they are not required to show state registration numbers. Many boaters view this as prestigious in joining the ranks of world class luxury yachts that are entitled to carry the U.S. flag.
Fees and Taxes: Documenting a vessel does not exempt it from state or local taxes, fees and assessments unless perhaps endorsed for commercial usage. In addition, vessel documentation fees can become a bit pricey, especially if this involves the services of a documentation company.
State Registration: The coast guard prohibits state titling on documented vessels. However, state registrations may be required in some jurisdictions. This is because they viewed by the Coast Guard as simply evidence that a boat has complied with state laws rather than as bona fide titles.
Lien Claim Recordings: Lien claims may  be arbitrarily filed against a documented vessel without the owner's consent. These remain open on the underlying abstract of title until released by the claimant. Although this helps potential buyers or enders in recognizing any potential claims or liens, these can be difficult to clear if filed improperly or not released in a timely manner.
Owner Privacy: Ownership and recording information about a particular vessel is readily available to the general public. Anyone can order an abstract of title, a copy of the documentation certificate and copies of recorded instruments such as mortgages and bills of sale. These are readily available from the National Vessel Documentation Center. Vessel documentation also provides the federal government with a list of available vessels in the unlikely event of wartime or national emergency.

State Registration and Titling

Basic requirements for state level boat registrations are prescribed by federal regulations as a matter of nationwide uniformity. However, each state has a great deal of latitude with regard to how these are administered. This may involve various exemptions, the availability of state issued titles and whether documented vessels must also become state registered.
Documented Vessels:  Registration of documented vessels is required in certain states whereas exempted in others. However, the issuance of state titles is forbidden on documented vessels.
Qualifications: There are minimal qualifications for registering a boat on the state level. A boat's size, usage, place of build and owner citizenship are of no consequence. All that's required is reasonable evidence of ownership and perhaps a hull number inspection whenever in question.
Ownership Standards: Most of the states in general have basic requirements for evidence of ownership when registering a boat. However there are some jurisdictions where this is quite relaxed. This is one of the reasons from a reliable title perspective that vessel documentation is considered to be much stronger.
State Titles: State level boat registrations and titles go hand in hand just like with vehicles. However, titles are not provided in all jurisdictions which means that registrations must serve as evidence of ownership unless the boat is documented.
Historical Data: State boat registration agencies do not maintain abstracts of title like those for documented vessels. At best, you may be able to obtain prior record printouts or perhaps microfiche copies. In any event, most states spurge their systems of archived records after a certain period of time. This is not the case with the USCG where vessel records are maintained indefinitely.
Fees and Taxes: Although some application fees may be avoided in states that exempt documented vessels from registering, this not the case when it comes to taxes and assessments. Unless used commercially, the same rules will apply whether or not documented.
Owner Privacy:  Unlike the open availability of ownership information for documented vessels, most states will enforce very strict owner privacy rules for registered boats. This means that such data can only be accessed by the owner or certain privileged parties as designated by law. Such privacy may be seen as more desirable by some owners over open source vessel documentation data.

Conclusion

The information provided herein is stated in broad terms and may not apply to every situation. More details about vessel documentation, state registration and boat titling in general can be found throughout the pages of our website.

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