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Whether you've grown up on the water or are a relatively recent enthusiast, buying a boat of your own is always an exciting moment. It's also a significant purchase, one to take seriously and treat with due diligence. Buying a boat burdened with liens is one of the classic novice mistakes, so prepare to spend a bit of time and a few dollars checking government and third-party databases to be sure there are no liens on the boat you want to buy.
A lien is basically a debt, or claim, against the value of the boat. One obvious example arises if you buy a boat that was financed, and the previous owner has not completely paid out the loan. There are many other ways liens can crop up: An accident might result in a civil suit and judgment against the previous owner, for example, or a sizeable bill for repairs. Even an unpaid moorage fee or fuel bill can result in a lien, and, unfortunately, the lien attaches to the boat rather than to the boat owner. When you assume ownership of the boat, you'll take on responsibility for the debt as well, whether you want to or not. It's your responsibility as the purchaser to make sure your pockets won't be raided to pay those outstanding debts.
Coast Guard Search
The first place to check for liens is at the U.S. Coast Guard's National Vessel Documentation Center. Most boats over 30 feet in length, and many smaller vessels, are registered with the Coast Guard. To check for liens on any registered vessel, contact the Center through its website or toll-free telephone number and provide the boat's official hull number. Request an abstract of title for the boat you're interested in, and read it carefully once you've received it. It's a biography of your boat, so to speak, from construction to the current owner. It will list sales, liens, mortgages, changes of ownership and many other details of the boat's history. Read it carefully to confirm that all named liens and mortgages have been discharged, or hire a professional to do it for you.
State Title Record Search
Another place to check for outstanding liens is the state titling office for the state where the boat is currently registered and in the seller's home state if they're different. If you're uncertain who to contact, the National Association of State Boating Law Administrators, or NASBLA, maintains a list of all boating-related departments by state. Look for the Titling and Registration listing first. Not all states require small watercraft to be titled, so you may also be referred to the office of the Secretary of State for the corresponding state. That's where you'll find liens from the Internal Revenue Service, so it's always worth a look unless you're keen to pay someone else's tax bill.
Third-Party Online Searches
Not all boats are registered with the Coast Guard, and states have widely differing requirements for titling and registration. That lack of consistent documentation means you'll sometimes have to dig deeper to find liens on a specific vessel. A number of companies offer third-party searches, which dredge other data sources such as the Uniform Commercial Code in search of unpaid debts. One such site, Marine Liens, provides a sort of clearinghouse for liens where claims can be posted, searched or settled. Using one of these third-party searches clears up many of the remaining possible sources for liens and can provide a reasonable degree of peace of mind, but there may still be unreported liens lying in wait for the unsuspecting buyer.
A Bit of Detective Work
Unreported liens often arise from the ongoing costs of boat operation, such as mooring fees or fuel purchases. If you have any reservations about the seller, or about the boat's history, you might have to do a bit of in-person investigating. Ask around local marinas and boating-related retailers to see whether the boat and its current owner have a reputation for slow payment or non-payment. If so, you may have to take extra pains to make sure you identify any potential creditors and arrange to have the debts paid before you sign off on your boat purchase.