- Registration – most boats are required to be registered in their state of use and all states have special boating laws and regulations. Registration is not the same as a title, which is required in most of the states where boating is a major recreation. A good place to find details is from members of the National Association of State Boating Laws Administrators. Lenders and buyers will want to assure that a boat they loan or borrow on is registered and titled to make sure that there is only one borrower/owner and no other loans against it.
- Documentation – owners of larger boats (those that qualify are typically 25- to 27-feet long and up) document their craft with the U.S. Coast Guard through the National Vessel Documentation Center. Most lenders will require a qualifying boat to be documented because it gives them a greater level of lien protection. There are advantages to the boater, such as the ability to cruise in international waters under protection of a US flag, which includes aid from the US consulate when you are in need. Marine lenders, vessel documentation specialists, and maritime attorneys are good sources for information and to get the job done.
- Boat Insurance – Boat owners need boat insurance, and lenders will require boats on which they lend to be insured to cover losses to their collateral. All boaters should seek out an “All Risk” policy with “Agreed Value” or “Stated Value” coverage, which pays the full insured amount in the event of a total loss. Lenders generally want the boat insured for the full market value or sales price and not more than a 2% hull deductible. P&I liability coverage should be for a minimum of $300,000 and includes Harborworkers and Longshoreman’s coverage and Jones Act (crew) coverage. Check with the lender or dealer for guidance, search for marine insurance on line or contact an NMLA member insurer.
Sales, use and personal property taxes - In most states, a privately-owned recreational boat must be registered in the state where it is principally used, and any sales and use taxes paid to that state. However, boaters must be aware further taxes could be imposed when the boat leaves this principal-use state and enters a new one, for a long visit, extended cruise or lengthy repairs. Boat Owners Association of The United States (BoatUS) has online state tax information at www.BoatUS.com/gov/states that will help keep boaters on the right side of the law and out of hot water with the taxman. To help you understand this issue, BoatUS' online map highlights state sales and property tax rates with links to state tax departments, as well as registration information and "grace periods".
BoatUS says boaters may be subject to various sales, use, excise, or property taxes when they remain in one location for a consecutive number of days, or over-stay their visit for a certain number of aggregate days per year. This "grace period" is often 60 to 90 days but as little as 30 days in two states (CO, NH). Also, if the principal state's sales and use tax is not comparable to the tax in the state the boat is visiting, the second state can levy their own tax making the boat owner liable for the difference.
- Boat Surveys – A marine surveyor should be hired by every prospective buyer of a pre-owned boat to verify condition prior to purchase. Marine lenders generally require a marine survey to confirm condition and verify hull, engine, and registration numbers of a boat before they will loan against it. Surveys can also help owners determine if they are carrying the proper amount of insurance coverage. There are national marine surveyor organizations whose members provide these services. Lenders usually can direct borrowers to local professionals to carry out a marine survey. An engine survey is a separate procedure that analyzes the engine components and systems, including transmissions, and should be done by an authorized engine mechanic.