The benefits of federally documenting an eligible vessel are vast. Many marine lenders require that their collateral be documented in order to secure their interest by way of a recorded First Preferred Ship’s Mortgage. More often than not these days, if the vessel can be documented, a commitment to lend will be conditional upon applying for a Certificate of Documentation after funding.
A ‘documented’ vessel is one that is registered by the Federal Government through the U.S Coast Guard, rather than being titled and registered by the state. Pleasure vessels of 5 net tons and over (usually 26 feet +) are eligible to apply for a Certificate of Documentation. Commercial vessels 5 net tons and over must be manufactured in the US and U.S.C.G. documented, by law.
From a vessel owner’s perspective, it offers, having a vessel documented is the proper way to show a boat’s identity when cruising into foreign territory. A Certificate of Documentation is universally recognized by Customs officials. Documentation also expedites transfers of ownership and refinances by incontrovertibly establishing a history of record of all previous transactions that are associated with that particular vessel. All transactions including bills of sale, mortgages, and satisfactions are recorded by the National Vessel Documentation Center of the U.S.C.G. and issued
When a vessel is initially documented with the U.S.C.G., it is ‘awarded an official number’ which will remain with the life of the boat; through transfer of ownership, etc. The vessel owner must affix that number to the interior structure of the hull. This allows for a more elegant appearance of the vessels’ exterior. The Certificate of Documentation that is issued to the vessel owner is valid for 1 year, and must be renewed on an annual basis, which is free of charge.
Some Benefits of Federal Yacht Documentation are:
Title Assurance. You have better assurance of title because the U.S. Coast Guard has more stringent chain of title requirements than most states. Once a vessel is documented, the complete history of the vessel is available on the Abstract of Title.
Foreign Travel. If you sail in foreign water, your Certificate of Documentation facilitates clearance with foreign governments and gives you the status and protection of a U.S. flag vessel.
Financing. Most lenders require documentation so that their interest may be secured by a Preferred Ship’s Mortgage recorded by the U.S. Coast Guard.
Other Reasons. Many boat owners like the prestige of having their boats documented. Others object to state registration because they do not want to display the numbers on the hull. A major advantage becomes evident when you sell your boat, as ownership and encumbrances are easy to check.
Documented Vessel – Types of Documentation
- Initial Vessel Documentation: for a vessel that is being documented with the U.S.C.G. for the first time.
- Exchange or Re-Documentation: applies to a change of ownership (sale) of a used, previously documented vessel.
- Change of Status: for changes in vessel name, hailing port, or trade endorsements.
- Lien Recording (Mortgages): recordation of a First Preferred Ship’s Mortgage to perfect a bank’s security interest in their collateral (the vessel).
- Simplified Measurement: pertains to a used vessel being documented off of state title/registration, or re-documenting a vessel that was documented before, but previously deleted from documentation.
- Deletion from Documentation: removing a vessel from federal documentation, as long as the vessel is free and clear of any mortgages, and is not required to be documented.
- Satisfaction of Mortgages: recording a Satisfaction of Mortgage, releasing the lien from the vessel once it is paid in full, as agreed.
- Replacement or Reinstatement: replacement of a lost, mutilated, or stolen Certificate; renewal of an expired Certificate.
- Priority Handling: a request to expedite the issuance of a Certificate of Documentation in situations where the applicant will be traversing into foreign territory.