logo

FREQUENTLY ASKED QUESTIONS

What is Coast Guard Documentation?

May all vessels be documented with the Coast Guard?

When is documentation required?

When is documentation not necessary?

What are the benefits of documentation?

What are the types of documentation available?

What are the requirements for documentation?

How is ownership established?

How is citizenship established?

What is Build Evidence and when is it required?

What are the vessel name and hailing port requirements?

What are the marking requirements for the official number, name and hailing port?

What is a preferred mortgage?

Are documented vessels exempt from state registration?

What determines whether a vessel should be state titled or documented with the Coast Guard?

What is the difference between a state title and state registration?

What are the advantages of a closing agent and settlement services?

How does the closing develop and proceed?


 

WHAT IS COAST GUARD DOCUMENTATION?

The National Vessel Documentation Center, an arm of the US Coast Guard, administers a national form of registration for vessels.  Coast Guard Documentation establishes conclusive proof of nationality helpful in international situations; facilitates trade between states; and authorizes vessels to act in certain restricted trades, such as coastwise and fisheries.

MAY ALL VESSELS BE DOCUMENTED WITH THE COAST GUARD?

In order to be eligible for Documentation, a vessel must measure five net tons and be wholly owned by a US citizen.  (There are some exceptions to the citizenship requirement for certain oil spill response vessels.)

The measurement of the vessel is completed on the vessel’s volume not its weight (which is also reported in tons).  Typically, a vessel 26 feet in length will meet the five net ton requirement.

back

WHEN IS DOCUMENTATION REQUIRED?

Documentation is required only on vessels five net tons or over that are engaged in certain commercial activities.  Vessels used for fishing on US navigable waters or in the Exclusive Economic Zone, or used in coastwise trade (transporting goods or people from one US port to another or within the EEZ) must be documented.  Any question regarding a vessel’s usage should be addressed to the Coast Guard to determine whether Coast Guard Documentation is necessary.

back

WHEN IS DOCUMENTATION NOT NECESSARY?

Vessels that are not used on US navigable waters, or in the EEZ, are not required to be documented.  Vessels that are qualified for Coastwise used within a harbor, on US rivers or lakes, or on the internal waters or canals of any state need not be documented.  Again, the Coast Guard should be contacted to determine and decide any questions regarding the documentation requirements for the usage or locality of usage for any vessel.

back

WHAT ARE THE BENEFITS OF DOCUMENTATION?

There are several reasons that it may be beneficial to document a vessel.  Firstly, documentation is required in order for a vessel to be used in certain commercial activities.  Secondly, marine financiers often required documentation on eligible vessels in order to secure interest with a preferred marine mortgage which establishes a maritime lien against the vessel, the highest contractual lien allowable. 

Documented vessels are considered US possessions and are, therefore, offered certain protections when in international or foreign waters.  In addition, Coast Guard documentation is an internationally recognized manner of establishing not only ownership, citizenship and title for a vessel.

Lastly, ownership of documented vessels is supported by a detailed history of owners, perfected liens and claims of liens established on the abstract of title administered by the National Vessel Documentation Center.

back

WHAT ARE THE TYPES OF DOCUMENTATION AVAILABLE?

The Certificate of Documentation, issued to documented vessels, may carry an endorsement for fishery, coastwise, registry or recreational usage for a vessel.  All documented vessels may be used for recreational purposes whether endorsed for this or not.  However, vessels endorsed solely for recreational purposes may not be used in any other capacity. 

Coastwise generally covers transportation of goods or people between US ports.
Fishery allows fishing upon US navigable waters (or the EEZ).
Registry for usage in foreign trade.

back

WHAT ARE THE REQUIREMENTS FOR DOCUMENTATION?

Vessels seeking a recreational endorsement must prove the five net ton measurement, establish ownership of the vessel, and demonstrate that the owner is a citizen of the US.  Additional requirements are necessary to obtain Coastwise, fishery and registry endorsements.

back

HOW IS OWNERSHIP ESTABLISHED?

Ownership can be determined on a new vessel by submitting a Builder’s Certificate showing the applicant as the owner or linking the builder’s certificate to the applicant through bills of sale.

On a used vessel that has not been previously documented, ownership may be established using a state title, registration or other persuasive evidence.

On a previously documented vessel, ownership may be proven through bills of sale from the last documented owner of record.

back

HOW IS CITIZENSHIP ESTABLISHED?

Citizenship is attested on the Coast Guard application for documentation and submitted to the National Vessel Documentation Center.  Individuals, corporations, partnerships, LLCs and any other entity capable of holding legal title must established citizenship for documentation purposes.

Corporations must be registered in a state or the US; the chief executive officer and chairman of the board of directors must be US citizens and no more than a minority of the number of directors necessary to establish a quorum may be non-citizens.  At least 75% of the stock must be owned by US citizens to qualify for a coastwise or fishery endorsement.

back

WHAT IS BUILD EVIDENCE AND WHEN IS IT REQUIRED?

In order to obtain a fishery or coastwise endorsement on a Certificate of Documentation, it must be established that a vessel was built in the US using US parts.  Typically, a builder’s certificate is used to demonstrate build evidence.  The certificate is completed by the person who built, supervised the building, or is an agent of the company that built the vessel.

back

WHAT ARE THE VESSEL NAME AND HAILING PORT REQUIREMENTS?

Documented vessels are assigned an official number for the vessel, but it is not displayed on the vessel’s exterior.  Instead, the vessel is identified as documented by its name and hailing port marked on the exterior hull.  The vessel name must be composed of letters of the Latin alphabet, or Arabic or Roman numerals that do not exceed 33 characters.  The name may not be identical (actually or phonetically) to any word used to solicit assistance at sea; it may not be obscene, indecent or profane (actually or phonetically); and it may not contain racial epithets.

A vessel’s name may only be changed by submission of a new application for documentation, fees, the consent of any lienholder and the approval of the NVDC director.

Vessel names are not exclusive.

The hailing port must be marked on the vessel with the vessel name.  The same requirements for changing a vessel name are necessary for a change of hailing port.

back

WHAT ARE THE MARKING REQUIREMENTS FOR THE OFFICIAL NUMBER, NAME AND HAILING PORT?

The official number must be marked in block style Arabic numerals, preceded by “NO”, at least three inches in height on some clearly visible interior structural part of the vessel’s hull.  It must be permanently affixed, making alteration, removal or replacement obvious and cause scarring or damage to the surrounding area.

The name and hailing port must be marked adjacent to another on some clearly visible  exterior portion of the vessel’s hull for a recreational endorsement.  On a commercial vessel, the vessel name must be marked on the port and starboard bow and the name and hailing port must be also be marked on the stern of the vessel.  The markings must be made in some durable fashion; must at least four inches in height; must be clearly legible letters of the Latin or Arabic alphabet or Roman numerals.  The hailing port must include both a US city and state, territory, or possession.  The state may be abbreviated.

back

WHAT IS A PREFERRED MORTGAGE?

Since 1920, the Coast Guard has offered the availability of preferred mortgages on documented vessels to assist in vessel financing.  A preferred mortgage has the status of a maritime lien, and, as such, it has the benefit of certain priority in the event of default.  The Coast Guard cannot make certain changes in the documentation of a vessel covered by a preferred mortgage.  It cannot, for example, change the ownership, the vessel name or hailing port without the consent of the mortgagee.  Many financiers require documentation on eligible vessels for these protections.

back

ARE DOCUMENTED VESSELS EXEMPT FROM STATE REGISTRATION?

Documented vessels must comply with any and all regulations of the state in which they are operated.  Some states require documented vessels to be registered and to display its decals to show compliance and others do not.  State registration numbers are not typically displayed on the hull of a documented vessel.

back

           
WHAT DETERMINES WHETHER A VESSEL SHOULD BE STATE TITLED OR DOCUMENTED WITH THE COAST GUARD?

Preference of the owner and/or lender and usage help determine whether a vessel will be state titled or documented with the Coast Guard. 

Different lenders have different requirements for documentation.  Some call for it on any vessel that is eligible (five net tons or more); some on the size of the loan; and some on the usage of the vessel.

Some owners that are not required to document the vessel because of a lender, choose to do so anyway because of where the vessel will be traveling or simply because they do not choose to mark the state registration number on the hull.

Any vessel five net tons or larger that will be engaged in a commercial usage, carry passengers or freight or fishery, must be documented with the Coast Guard and must have the proper endorsements to engage in these activities.

As more and more states are titling vessels, the titles are becoming stronger and stronger. It is usually a good form of titling, especially for the smaller vessels that will not be venturing into international or foreign waters.  As stated above, it is not desirable, or even allowable, to state title vessels over five net tons that will be used in any commercial activity that requires documentation (fishery, coastwise use etc.).

back

WHAT IS THE DIFFERENCE BETWEEN A STATE TITLE AND STATE REGISTRATION?

While most states now issue titles for vessels, some merely register the vessels for use on its waters.  A state title demonstrates ownership of a vessel, and the title routinely lists any active lienholders. 

State registration, on the other hand, is merely a manner to number and track any self-propelled vessel used on the country’s navigable waters.  The Coast Guard requires this numbering to be administered by the state of principal usage. 

Most vessels are registered by the appropriate state agency, whether titled or documented.  Some states require separate registration for documented vessels, since they already hold a federal identification number, others do not. 

Although the information on a state title and a state registration is often the same, the two do not serve the same purpose.  A state title evidences ownership of a vessel and is issued only at the time ownership is taken while state registration is the instrument used to number a vessel and collect appropriate fees and it is typically issued on an annual basis.

back

 

WHAT ARE THE ADVANTAGES OF A CLOSING AGENT AND SETTLEMENT SERVICES?

As described above, the issues surrounding vessel ownership, lien perfection, titling and registration are quite complex.  Add to this mix the coordination of researching the existing manner of title, disclosure of recorded liens, collection of the appropriate funds, disbursement of seller proceed and the payoff of recorded liens and commissions, taxes etc. 

A third-party closing agent is not only familiar with the various state regulations that must be addressed with a transfer of vessel ownership, but can, in addition, coordinate all of the complex issues that must be dealt with to complete the transfer properly.

back

HOW DOES THE CLOSING DEVELOP AND PROCEED?

Once our office has been given a transaction to close, it is assigned to a title agent and a file is opened.  The necessary information to begin our research is collected and the research is initiated. 
Once the research is completed, the title agent contacts the pertinent parties to coordinate signing the transfer documents, the new titling documents, any lender documents needed to perfect the maritime lien and the closing statements.  The closing statements outline the funds needed to complete the transfer and the manner these funds will be disbursed at closing. 

Once the seller has signed the release documents; the lienholder has provided the payoff information; any broker has confirmed the sales numbers, commissions, and any other items to be paid from the proceeds; the buyer has signed all of the new title documents and any item needed to secure the new lender; the buyer has provided cleared funds; the lender has provided cleared funds; the transfer occurs.  The sales proceeds are disbursed as agreed, liens, commissions and taxes are paid and ownership is transferred.

back

 

Credentials | Privacy Policy | Contact Us | ©2005 - 2016 Pacific Maritime Title avda nwyba nmta notary