Purchase of a Vessel


Checklist for Significant Vessel Purchase


If you are purchasing your neighbor's 14 foot aluminium skiff, you are probably OK to simply exercise reasonable caution -- check the title, make sure the Hull Identification Number is present and correct, and put something in writing (even on a scrap of paper) that says who is buying what from whom, when, and for how much. If you are considering a more significant purchase, consider the following:

1. Seek Counsel: Do not allow yourself to become caught up in the moment. Vessel purchases can be a very significant investment, not unlike the purchase of a home. They are different from a home purchase, however, in that the consumer vessel buyer is typically without a buyer's agent or experienced professional. Consumer buyers are also not protected by legislation in the way that they are in mortgage and real estate transactions. Seek the advice of an attorney, even if it is to merely look over that which you are about to sign. A small investment in attorney time can potentially save many thousands of dollars down the road. Also, make sure that the attorney you select does not have an interest in the sale of the boat, e.g. is also the broaker or represents the seller as well.

2. The Surveyor's Role: If you are purchasing a used boat (and potentially even a new one) you should have the vessel surveyed by a professional surveyor. A professional survey can identify problems, such as dry rot, lack of structural integrity, or improper wiring that could change a vessel from a beautiful investment to a nightmarish liability. Many boat purchases are driven more by love than good sense. Remember the old saying that "love is blind?" The surveyor is essential to help you snap out of it and make an informed decision. Your attorney will be able to recommend a good surveyor. The Boat Owners Association of the United States also maintains lists of qualified marine professionals.

3. Vessel Documentation: When you purchase a vessel you must have her properly titled, which is known as the vessels' documentation. Depending upon the particulars of the vessel she may be registered with a state or she may be a US Documented vessel. If she is US Documented, much of her history is available to you with as little as a facsimile request. There are Vessel Documentation Services which are available to assist you in making sure that your vessel is properly documented. There are many professional documentation services available, however, most documentation services do not have attorneys on staff and are not equipped to handle offshore flagging transactions which may save you tens of thousands of dollars.

4. Watch Out For Liens: A maritime lien may arise in a variety of contexts. A maritime lien attaches to the vessel and it remains with the vessel even though you may have purchased it without any knowledge of the lien. These situations often arise in the purchase of a used vessel. In order to be reasonably assured that there are no liens on the vessel, you must check with the state in which the vessel is registered and, in the case of a Documented vessel, with the U.S. Coast Guard. Your attorney will be able to assist you in ascertaining whether the vessel has any liens placed upon it.

5. Do Everything in writing: When you purchase a vessel you should always do so in writing. Ideally, you will have a contract of sale and at the very least you must have a Bill of Sale. A basic bill of sale is available through the United States Coast Guard -- it covers most of the particulars including the identity of the seller, buyer and boat. Also, do not forget to put the agreement with the yacht broker in writing. Typically a broker's commission is approximately 10% of the sales price, which may be a substantial sum of money. In addition, you want to know whom the broker is representing. Does the broker represent your interest, the other parties' interest, or both? Make sure this information appears in writing.


6. Beware of Boat Theft: Theft of boats, trailers and boat engines is a significant problem, particularly with trailerable powerboats and in the high-performance market. Every vessel is supposed to include a permanently affixed Hull Identification Number, much like the Vehicle Identification Numbers in automobiles and trucks. Unfortunately, however, there is far less uniformity in the HINs. For vessels manufactured after August 1, 1984, the HIN should consist of a three letter manufacturer's code, followed by a 5 digit serial number, then a letter number (H4) combination representing month and year of build (H4 = August, 1984), then the model year (85). A vessel built in August 1984 as model year 1985 will look like BMA34567H485. Examine the HIN Plate carefully to be sure that: 1. it has not been defaced or removed; 2. accurately reflects your expectation of year; 3. has not been covereed over with a different plate. If you have suspicions, have a surveyor or law enforcement officer examine before purchase. For more information, contact the International Association of Marine Investigators (IAMI).