Documented Vessel with a lien.

bassviking · #1 (**permalink**) 02-10-2011

Last summer I was about to buy a sailboat that had been USCG Documneted in the past but was not at the time of the proposed sale. I spent money on a survey and haulout and was very happy with the boat. But I was concerned about the possibility of a lien so I had a documentation guy run a check on it. He ordered the abstract of title from the USCG and discovered a lien from 2005 for over twice what I was going to pay for the boat. That obviously stopped the sale from my end. The owner of the boat spent quite a bit of time trying to track down the lien and never got anywhere with it. The abtract had a name and address of the owner of the lien but he never was able to get ahold of anybody. The other kicker is that the boat had changed hands at least two times since the lien was placed in 2005 and me trying to buy it last summer.

Is there anything the current owner of that boat can do in this situation to get the lien cleared?

sailingdog · #2 (**permalink**) 02-10-2011

Bass--

I don't know how the boat sold as a documented boat with a lien still on it. The purpose of USCG documentation is to prevent that from occurring. The lien may no longer be valid, but you really do need to find out what the status is. When a boat sells, it is generally a requirement of the sale that the boat's title be free and clear of all liens, and this is pretty standard verbiage in any P&S contract for a boat. If the boat has been sold twice since that lien was placed, it is likely, but not certain, that the lien has been cleared.

Good luck.

catamount · #3 (**permalink**) 02-10-2011

I can imagine a scenario how this might have happened... Maybe the first sale (after the lien was placed) was a private sale cash deal (it was probably a very good "deal!"), and the "original" owner had let the documentation lapse (perhaps hoping the lien would disappear), and the buyer didn't know enough to do a title search (no lender, no broker, and the documentation had lapsed), and never pursued re-documenting the boat in their own name (or attempt to but discovered the apparently un-resolved lien and so gave up). The subsequent sale was probably also a private sale cash deal, so with no lender and no broker, and a now un-documented boat, again no one thought to do a title search.

Caveat Emptor!

newhaul · #4 (**permalink**) 02-10-2011

i had that scenario happen in my repo business some guy traded his truck to a dealer then dealer sold it without checking for liens we showed up to new owners dads place to repo it took a couple hours to resolve. the dealer had to pay lien to bank so this does happen even when dealers are involved. talk to local repo company they may be able to assist in determining validity of lien.

hellosailor · #5 (**permalink**) 02-10-2011

"The abtract had a name and address of the owner of the lien but he never was able to get ahold of anybody."
And was that a private party, or a business? I suspect the current owner didn't try very hard. If the lien was paid off, a "satisfaction of lien" would be on file, someplace, somewhere. Otherwise it is all malarkey and no one wants to really touch the tar baby (contact the lien holder) because they might come take the boat.
I'm sure the local (county ?) courts have a provision to nullify a lien and set it aside IF the owner really can't be contacted, i.e. by service with a certified letter, etc.
Can the current owner get the lien cleared? Of course. But if the lien was and is valid, the current owner may still have to pay it off--or surrender the boat. So they've got a very good reason to NOT contact the lien holder.

sailingdog · #6 (**permalink**) 02-10-2011

Of course, if the P&S agreement said that the boat was sold with the title free of all encumbrances, then the person responsible for the lien is whomever either bought the boat without that phrasing/wording in their P&S agreement or the original owner, if every P&S agreement said that.

Quote:

Originally Posted by hellosailor

"The abtract had a name and address of the owner of the lien but he never was able to get ahold of anybody."
And was that a private party, or a business? I suspect the current owner didn't try very hard. If the lien was paid off, a "satisfaction of lien" would be on file, someplace, somewhere. Otherwise it is all malarkey and no one wants to really touch the tar baby (contact the lien holder) because they might come take the boat.
I'm sure the local (county ?) courts have a provision to nullify a lien and set it aside IF the owner really can't be contacted, i.e. by service with a certified letter, etc.
Can the current owner get the lien cleared? Of course. But if the lien was and is valid, the current owner may still have to pay it off--or surrender the boat. So they've got a very good reason to NOT contact the lien holder.

catamount · #7 (**permalink**) 02-10-2011

What's with this P&S agreement stuff? Can't you just sense that this was a cash sale on a handshake, bill of sale written out on a napkin, hell of a deal -- really cheap, (the "original" owner skating out on the lien...)? (evil grin)

sailingdog · #8 (**permalink**) 02-10-2011

It probably was, but even in a cash deal, a smart person will have a P&S agreement, even if it is a boilerplate one, since most of the boilerplate ones will have the "free and clear title" part as a requirement.

Quote:

Originally Posted by catamount

What's with this P&S agreement stuff? Can't you just sense that this was a cash sale on a handshake, bill of sale written out on a napkin, hell of a deal -- really cheap, (the "original" owner skating out on the lien...)? (evil grin)