Buying a boat from a private seller: title, bill of sale and liens

A clean title, a properly worded offer, a deposit in the right hands and a careful closing turn a stranger's boat into your boat, with nobody else's debts attached. Boat paperwork in the US differs from car paperwork in one important way: some debts, called maritime liens, can follow the boat to a new owner. That's why this part matters.

Boat law varies by state. On a large purchase or anything unusual, such as an estate sale, a foreign-flagged boat or a business seller, it's worth paying a maritime attorney or using an experienced broker or closing agent.

What goes in the written offer

Whether it's called an offer, a purchase agreement or a contract, it should include at least:

• Buyer and seller, with the seller's name exactly as on the title or documentation
• The boat: make, model, year, length, hull identification number (HIN), registration or documentation number, name, and every engine's make, model and serial number
• What's included: the trailer (with its own VIN and title), dinghy and outboard, electronics, canvas, spares. Attach an inventory list.
• Price and deposit, and who holds the deposit
• Conditions: survey and sea trial satisfactory to the buyer, financing, insurance and clear title
• Deadlines for acceptance, survey and sea trial, your written acceptance or rejection, and closing
• The refund rule: if a condition isn't met, the deposit comes back in full, minus any agreed costs like the haul-out
• Condition at closing: as at survey, with all listed equipment aboard
• Risk of loss: the seller is responsible until closing
• Seller's statements: they own the boat and can sell it; there are no liens, loans, claims or unpaid bills; and it hasn't been sunk, flooded, salvaged or in a major insurance claim
• Who pays for the haul-out, survey, transfer fees and taxes
• Signatures from everyone on the title

Deposits and escrow

In brokered sales, a deposit of about 10 percent is common. Who holds it matters more than how much it is. In a brokered deal it should go into the broker's escrow or trust account, never to the seller directly. In a private sale, use a reputable escrow company you chose and verified yourself, or an attorney's trust account. Never send a deposit to someone you haven't met, for a boat you haven't seen. See boat buying scams.

Checking a state title

Ask the state agency that titles boats (often the motor vehicle department or the wildlife and boating agency) how to check a title for the owner of record, recorded liens and brands such as salvage. Compare the title with the HIN on the transom character by character. If a lender is listed, the loan must be paid off and the lien released at closing.

Some states don't title boats at all, or only above a certain length, which is one reason boat histories are easy to hide.

Checking a Coast Guard documented boat

Larger boats owned by US citizens, generally five net tons or more, which is often around 26 feet and up, can be federally documented with the Coast Guard's National Vessel Documentation Center (NVDC).¹ Lenders usually require it so they can record a preferred mortgage.

• Look the boat up on the Coast Guard's public PSIX vessel search.²
• Order an abstract of title from the NVDC. It shows recorded owners, mortgages and notices of claim of lien.³
• Recorded mortgages must be satisfied and the satisfaction filed at closing. Instruments filed with the NVDC are valid against anyone from the time they're filed,⁴ which is why you check the abstract and file your own bill of sale promptly.
• Notices of claim of lien can be recorded by people who say they're owed money; recorded notices expire three years after the lien was established.⁵ Any you find must be resolved before closing.

The liens you can't look up

Under US law, someone who provides "necessaries" to a vessel (repairs, supplies, dockage) on the owner's order gets a maritime lien on the vessel itself.⁶ Maritime liens don't have to be recorded to exist, and they're not wiped out when the boat is sold, even to an innocent buyer; they end mainly by payment, the passage of time or a court-ordered sale.⁷⁸ In plain English: the yard bill the last owner didn't pay can come after your boat.

Protect yourself:

• Get the seller's written promise that there are no unpaid bills, and that they'll cover any that appear.
• Ask the marina and the yard where the boat has been kept and worked on whether the account is paid up.
• Be wary of a boat that's been sitting at a yard a long time, recently moved in a hurry, or sold by someone avoiding a particular marina.

Paper red flags

• The seller's name isn't on the title or documentation
• The title is "lost" and the seller will "send it later"
• The HIN on the boat doesn't match the paperwork
• The abstract shows a mortgage the seller didn't mention
• A brand-new title on an old boat recently brought in from another state
• The seller wants cash, today, before you can check anything

Closing

Brokered closings: the broker usually collects your funds, pays off the seller's loan, pays the commission, collects the signed papers and releases the rest to the seller. Ask for a closing statement showing every dollar, including lien releases.

Private closings: if there's a loan on the boat, the safest way is often to close at the seller's bank: you pay the bank, the bank releases the lien and the title, and the seller gets the rest. Without a loan, use an escrow company, an attorney, or at minimum a traceable payment handed over at the moment you receive the signed paperwork. Verify any wiring instructions by phone at a number you found yourself.

Closing checklist

Before money changes hands, have in your hands:

• Bill of sale signed by every owner, with the full boat description, price and date (some states and the Coast Guard have their own forms or require notarization)
• The title, properly signed over to you, or for documented vessels, the documentation transfer papers
• Lien releases or a satisfaction of mortgage for every loan, or proof they'll be paid from your funds at closing
• The trailer's title and bill of sale, if a trailer is included
• Current registration and any outboard titles your state requires
• Your insurance in force from the moment of closing
• All keys, manuals, service records and inventory items

After closing

• Register or title the boat in your name with your state, usually within a set number of days.
• Pay sales or use tax as your state requires. Buying in a lower-tax state may still mean use tax at home. Florida, for example, charges 6 percent but caps it at $18,000 per boat.⁹
• For documented vessels, file the transfer with the NVDC and renew directly with the NVDC every year. Ignore look-alike renewal letters from private companies; the Coast Guard listed the real renewal fee as $26.¹⁰
• Keep copies of everything. You'll need them when you sell.

Common questions

Do I need a bill of sale to buy a boat?

Yes. Even where a state doesn't strictly require one, a signed bill of sale with the HIN, price, date and both parties' signatures is your proof of purchase, and you'll usually need it to title and register the boat.

What if the seller lost the title?

Don't pay until the seller gets a replacement title from the state in their own name. "I'll mail it later" is one of the most common paper red flags.

Is the trailer included in the boat title?

Usually not. A trailer is a separate vehicle with its own VIN, title and registration. Make sure the paperwork for both changes hands.