Glossary
Glossary
The definitions provided for the terms listed below are specific and limited to the vessel industry. They are provided as a brief reference guide and can be expanded upon by any of our staff.
A
Abstracts of Title: When a vessel is first documented, the Coast Guard creates an electronic index or ledger wherein all transactions are recorded. These include transfers of ownership, mortgages, and claims of lien. Abstracts also contain notational information such as changes in the vessel’s name, build information when presented, recording cross-references and entry corrections. Any party involved in a documented vessel transaction should obtain an abstract of title, even if the documentation is no longer active. Abstracts are important because mortgages, lien claims and methods of ownership are not shown on the Certificate of Documentation itself.
Admeasurement: The manner the Coast Guard implements for calculating a vessel’s dimensions in order to determine its net weight by volume using a displacement method. It determines whether a vessel meets the five (5) net ton requirement for documentation eligibility.
Admiralty Law: A field of law relating to, and arising from, the practice of the admiralty courts (tribunals that exercise jurisdiction over all contracts, TORTs, offenses or injuries within maritime law) that regulates and settles special problems associated with sea navigation and commerce.
Advantages of Documentation: Coast Guard vessel documentation is only required for commercial operations and whenever a preferred mortgage is called for by the lender. However, there are advantages to voluntary documentation on recreational vessels. Vessel documentation establishes a complete chain of ownership, may allow the vessel to be exempt from state registration in some jurisdictions, removes the requirement for state numbers and is considered to be “prestigious.” It is especially important to have documentation for offshore cruising, as this offers evidence of nationality and certain protections under the U.S. flag.
American Vessel Documentation Association (AVDA): A trade association composed of professional documentation companies from across the United States.
Application Process: The Coast Guard’s documentation application form requires that certain supporting items be provided, depending on the specifics of the transaction. Instruments presented for recording, such as bills of sale and preferred vessel mortgages, must contain specific citations and be properly executed and notarized. Any applications that do not meet such standards are rejected by the documentation center.
Application Requirements: There is considerable disparity among state agencies when it comes the items required for registering or titling a boat. Some states, especially those that do not issue boat titles, may settle for a simple bill of sale as proof of ownership. Others are more stringent and demand a prior title, registration or builder’s statement. Most states require that their respective jurisdiction will be the principal place of operation. Rules also vary with respect to abandoned boats, foreclosures and lien sales. Conditional or bonded registrations and titles may be available in some cases, but a court order is often the only solution where no other evidence is available. Hull number inspections are also necessary in most cases when they are questionable. Citizenship or owner residency is not typically an issue when registering or titling a boat on the state level.
Attorney-in-Fact: One who is designated to transact business and act as legal agent for another. The scope of authority may be broad or limited as described in the “power of attorney,” the instrument executed to define the agent’s right to act for the principal.
B
Bareboat Charter: A charter in which the vessel owner surrenders possession and control of the vessel to the charterer. Under certain circumstances, bareboat charter usage is considered recreational use by the Coast Guard and does not require a commercial endorsement. Bareboat charters are similar in nature to car rentals, versus limousine rentals.
Bill of Sale: An instrument used to convey title to a vessel, executed by a seller to transfer ownership to a buyer. To meet Coast Guard requirements it must uniquely identify the vessel, state the consideration paid, properly identify the sellers and interest owned, name the buyers and interest transferred and be notarized.
Broker: A party who arranges the sale between a buyer and seller of a vessel and receives compensation.
Builder’s Certificate:A certificate used as the initial title document and to provide build evidence. It is issued by the manufacturer or builder and references the vessel by a unique hull identification number, identifies the first owner, verifies the origin of the vessel parts, verifies the place the vessel was built and lists the vessel specifications. To be used as build evidence by the Coast Guard it must contain these elements and be completed on the accepted form.
C
Certificate of Documentation: A Certificate of Documentation is issued on first time or re-documentation of every qualified vessel. It serves as evidence of nationality and indicates all trade endorsements under which the vessel is entitled to operate. The Certificate must remain on the vessel whenever it is operational. Certificates of Documentation must be renewed annually and a new one is issued upon such occurrence. (As of January 2016, there is pending legislation to extend the renewal period.)
Certificate of Ownership: The form issued by the Coast Guard that verifies the current owner of record and any active liens against the vessel. Unlike the abstract of title, it lists only the current owner and current active liens, rather than a complete history.
Claims of Liens: Claims of lien can be filed against any vessel that is actively documented. These are unilateral filings on behalf of a claimant, and written consent of the owner is not required. Such recordings do not afford validity to any particular claim, but they do place a cloud on the abstract of title. Most lenders and potential buyers will insist on having these dealt with before proceeding with a loan or purchase. Such claims are discharged or offset by implementing a release or satisfaction of lien.
Coastwise Endorsement: An authorization from the Coast Guard, notated on the Certificate of Documentation, allowing a vessel to engage in the commerce, or the transporting of goods or passengers, among different coastal ports or navigable waters of the United States.
Commercial Fishing: Operating under a currently valid commercial or charter fishing license, with the appropriate Coast Guard endorsement, if required.
Commercial Operations: Although Coast Guard documentation is optional for recreational boats, it is mandatory for vessels over five (5) net tons that will engage in commercial activities. These include operations such as carrying passengers, hauling freight and commercial fishing. Certificates of Documentation for commercial vessels must be endorsed for the respective types of usage. Vessel build and owner citizenship requirements are considerably more stringent for commercial vessels.
Commercial Vessel: A vessel that is used in a commercial manner for carrying goods and/or passengers or for commercial fishing. The vessel must be a minimum of five (5) net tons to qualify with the Coast Guard for this usage, and the Certificate of Documentation must show the appropriate endorsement.
Comparisons: Boat registrations are similar to those for vehicles in that they are periodic, involve tabs or stickers and registration numbers are issued for both. However, some boats are prohibited from displaying their assigned numbers and others may be exempt from registration altogether. Such contradictions are brought about by the federal government’s involvement in vessel documentation that is another form of boat registration.
D
Dealer: A person or entity that sells vessels at wholesale or retail.
Declaration of Value Form: A form used in some states when a vessel is acquired by lease, gift or brought into the state subsequent to purchase to declare the value of the vessel for the purpose of assessing state taxes.
Deed of Gift: An instrument used to transfer ownership of property from one entity to another without any consideration.
Dinghy:> A secondary vessel used to carry passengers or goods from the main vessel to shore. Typically carried onboard the main vessel.
Documentation Number: A six (6) to seven (7) digit number issued by the Coast Guard upon initial application for documentation. Remains with the vessel through subsequent owners. Must be marked on the interior hull. Also called Official Number or Coast Guard Number.
Documentation: U.S. Coast Guard documentation is a federal registration system for recreational and commercial vessels. It is designed to provide evidence of nationality and facilitate commerce throughout the United States. Vessels that meet the required qualifications are issued a Certificate of Documentation that serves as evidence of ownership, which entitles the vessel to engage in certain activities
Documentation Changes: Changes can be made in documentation status, such as the vessel’s name, hailing port, trade endorsements, specifications and transfers of ownership. If a change is made due to an error on behalf of the Coast Guard, they will re-issue the Certificate of Documentation at no charge. Otherwise, an application for re-documentation must be submitted along with the appropriate fees. A new Certificate of Documentation is then issued showing the respective changes. Re-documentation is not required for a change of address as this can be implemented with a simple notification.
Documentation Company: A company that assists in obtaining Coast Guard documentation for a vessel. Typically researches the existing title to a vessel, prepares the transfer documents, prepares the Coast Guard forms and files all items required to obtain a Certificate of Documentation.
Documentation Fees: One of the more endearing aspects of vessel documentation is that application fees are one time only, with a minimal cost for yearly renewals. The Coast Guard does not collect taxes or customs duties as part of the application process.
Documented Boats: Federal regulations prohibit documented vessels from becoming state titled. State jurisdictions are not allowed to issue a title if the subject boat is actively documented. However, the Coast Guard does not view state registrations as titles. Certain states have therefore elected to register documented boats whereas others may allow an exemption under such circumstances.
E
Encumbrance: A recorded or unrecorded claim or liability against a vessel.
F
Federal Administration: Vessel documentation is administered by the U.S. Coast Guard’s National Vessel Documentation Center. Although previously fragmented into several districts, this operation is now centralized into a single facility. Everything is processed electronically, which makes for efficient handling of recordings, research and the documentation process in general.
Fishery Endorsement: An authorization from the Coast Guard, notated on the Certificate of Documentation, allowing a vessel to engage in commercial fishing.
Fleet Mortgage: A preferred ship mortgage that covers more than one vessel owned by the same mortgagor. Each vessel may be discharged separately.
Foreclosure: The legal proceeding to terminate a mortgagor’s interest in a vessel, which is instituted by a lender to either gain title or force a sale in order to satisfy the unpaid debt secured by the vessel.
Foreign Flag: The term used when describing a vessel that is registered with a foreign government, the equivalent to our Coast Guard Documentation.
H
Hailing Port: The city and state that a vessel owner declares as a vessel’s hailing port, to be marked on the vessel’s exterior hull and referenced on the Coast Guard records. It is not dependent upon the vessel’s location.
Home Port: Archaic term, often confused with a vessel’s “hailing port.” It was previously used to designate the Coast Guard port where a vessel was registered.
Hull Identification Number (HIN): The number, unique in nature, assigned to a vessel by the manufacturer and marked on the vessel’s hull. It typically contains the MIC (Manufacturer’s Identification Code) assigned by the Coast Guard, the length, the internal hull number, the month, year and model year. Since 1972, it generally contains 12 digits.
J
Joint Tenants: A manner of ownership with two (2) or more co-owners who take identical interest in the vessel simultaneously and with the same right of possession. Each tenant has a right of survivorship to the others’ share. (Some states require that this right be clearly expressed in the conveyance or title document, as in Joint Tenants with Right of Survivorship).
L
Legal Owner: The party recognized by law as the owner of the vessel. It may be one holding a secured interest in a vessel and referenced as either legal owner or lienholder on a vessel title. When there is no secured lien against the vessel the “registered” and “legal” owner are one and the same.
Lien: A legal right, interest or claim, either secured or unsecured, against a vessel.
Lifeboat: A craft used exclusively for lifesaving purposes.
Limited Liability Company: A company, whose requirements and acceptability are statutory in nature, that is defined by limited liability to its owners and direct management by its members or managers appointed by its members
Listing Agreement: A contract entered into by the owner of a vessel and a vessel broker that authorizes the broker to offer the vessel for sale in either an exclusive or non-exclusive manner.
LLC: Acronym for Limited Liability Company.
M
Managing Owner: A managing owner must be designated for contact purposes whenever there are multiple owners of a documented vessel. In the case of two or more individuals this can be any one of the parties. As for legal or business entities, the name of such entity will itself be shown as the managing owner. The managing owner’s name and address are then listed on the Certificate of Documentation.
Manufacturer’s Statement of Origin (MSO): A statement issued by the manufacturer of a vessel that acts as the original title document. It typically contains the vessel’s dimensions and lists the first owner of record.
Maritime Lien: A lien on a vessel granted to secure a creditor’s claim for maritime services provided to a vessel or to one who suffered an injury from the usage of the vessel.
Markings: The Coast Guard requirements to have the vessel name, hailing port and official number “marked” on the vessel.
Marshall’s Bill of Sale: The bill of sale used when a vessel is foreclosed on in a federal maritime court. It is executed by a federal marshal in compliance with a federal court order to sell the vessel at auction.
Master Carpenter Certificate:> A form used previously as an original title document. It has been replaced by Builder’s Certificate on the form required by the Coast Guard.
Mortgage Amendment: A form used to change or alter the terms and/or conditions of a preferred marine mortgage.
Mortgage Assignment: A form used to transfer the rights of a preferred marine mortgage to a new mortgagee.
Mortgagee: The party (lender) to whom a secured interest and certain rights in a vessel, as described in the preferred marine mortgage, are granted by a vessel owner.
Mortgages & Supplements: A lender’s security interest in a documented vessel is evidenced by a preferred vessel mortgage. Such recordings establish a rank and priority that is superior to other means of collateralization. Any number of mortgages can be filed against a particular vessel, with the earliest ones having priority. Supplements to mortgages can also be recorded and include such instruments as amendments, assignments, addendums, assumptions and subordinations. A mortgage is discharged or offset by implementing a release or satisfaction recording.
Mortgagor: The vessel owner that grants a secured interest and certain rights in a vessel as described in the preferred ship mortgage.
N
Name and Hailing Port: Every documented vessel must display a name and hailing port on the exterior of the hull where it can be easily seen. Vessel names are not exclusive and can be of the owner’s choosing so long as they are not profane or in conflict with safety signals. Hailing ports may consist of any city with a U.S. postal code. These can be completely arbitrary as the Coast Guard no longer maintains home port designations.
National Vessel Documentation Center: The facility that administers vessel documentation on behalf of the U.S. Coast Guard.
Non-Judicial Foreclosure: Generally referred to as “self-help” repossession, the process used to recover collateral by statutory authority rather than court action.
Notice of Claim of Lien: Typically, an unsecured claim filed with the Coast Guard against a documented vessel.
Numbering System: A uniform numbering system for non-documented vessels devised and implemented by the U.S. Coast Guard. The Coast Guard subsequently allowed individual states to take over such activities on the condition they would adhere to the established system.
O
Official Number: When initially documented, every vessel is assigned a unique official number that becomes its primary identifier. This must be affixed to the inside of the hull or an integral part thereof and be preceded by the letters “NO.” It must also be secured in a permanent manner and located where easily accessible upon an inspection. An official number remains with the vessel for life and is never changed. The Coast Guard maintains official numbers and their corresponding abstracts of title indefinitely, even for vessels that are no longer documented.
Operational Requirements: Operational requirements can vary considerably from state to state with regard to boat registration. As a general rule, boats over a certain size and those that are mechanically powered are subject to registration. However, some exemptions may apply, including for documented boats, government owned vessels and those designed for specialized usage.
Owner Qualifications: Owners of documented vessels must be US citizens. This also applies to legal and business entities such as corporations, limited liability companies and partnerships. Principals who own and operate such entities must be U.S. citizens. An individual person who owns all or part interest in a documented vessel must be native born, naturalized or a derivative U.S. citizen. Coast Guard documented vessels may be operated or placed under the command of a foreign citizen only if the vessel is used for recreational purposes.
P
Paperless Titles: When a lender secures an interest on a state titled boat, s/he usually holds the title. When the loan is paid off, the lender will then endorse the title and forward it to the owner. Some states have now adopted a process where this is implemented electronically and issuance of a title is withheld until the lender files a release.
Perfected Interest: A loan is perfected when the security interest in the vessel is recorded with the appropriate state or federal recording agency.
Personal Property Register (PPR): The register used in Canada to show a claim against personal property. Used on vessels that are not flagged under the Canadian Registry.
Personal Property Tax: A tax placed on personal property by state/county/city that is typically levied annually. Rate is typically based on the value of the vessel.
Pleasure Craft (Recreational): A vessel used solely for non-commercial, pleasure endeavors.
Power of Attorney: An instrument executed to authorize an agent to act for the principal in certain named activities.
Preferred Ship Mortgages: An instrument recorded against a vessel documented with the United States Coast Guard. It is protected under the Ship Mortgage Act of 1920 and takes precedence over all liens, other than preferred Maritime Liens.
Provincial License: The form of licensing pleasure craft in Canada when the vessel is not flagged by Canadian Registry. This is a simplified license and is not absolute proof of ownership.
R
Recreational Endorsement: The endorsement shown on the U.S. Coast Guard’s Certificate of Documentation indicating that the vessel is eligible for recreational or pleasure use only.
Registered Owner: The party listed on a state title or registration as holding possessory ownership of a vessel. The registered and legal owner are one and the same when there is no lien against the vessel. In non-title states, the registered owner merely shows the party to whom the vessel is licensed and is not absolute proof of ownership.
Registration Agencies: Many states administer boat registrations or titles through the same department that handles motor vehicles. Others may utilize their department of fish and game, natural resources, department of revenue, secretary of state or other agencies. Boat titling in some states is also handled by a different department from that which administers registrations and some use local county clerk offices or private businesses as sub-agencies. This is especially true for boat dealers and certain brokers who can register boats from their own transactions.
Registrations as Titles: State boat registration certificates may have the same appearance as titles, but they are not intended for this purpose. This becomes problematic in the states that do not provide boat titling services. Under these circumstances, the respective registration certificates are widely accepted as proof of ownership when issued on non-documented vessels.
Registration Data: In states that issue boat titles, the registration certificates will usually reflect the same information as shown on the title. This typically includes the registered owner and any legal owners or secured parties. This may not always be the case however in non-title states as loan interests on non-documented boats are usually recorded via a Uniform Commercial Code filing. The vessel’s year model, make, overall length, type of usage, hull identification number and other details are typically shown. A boat registration certificate will always show the expiration date, whereas a title does not.
Registration Records: Anti-disclosure laws are in effect for most states with regard to both vehicle and boat ownership records. Boat records can be obtained upon written application, and the requesting party must have due cause for needing such information.
Registry Endorsement: The endorsement shown on the U.S. Coast Guard’s Certificate of Documentation that authorizes the vessel to carry goods or passengers from a U.S. port to a foreign port.
Regulatory Changes: Changes in boat registration or titling regulations can occur without notice.
Release of Interest: A form signed by an entity holding an interest in a vessel that releases that interest.
Repossession: The act of recovering collateral covered by a security interest that is in default.
S
Sales Tax: A tax imposed by a state on the retail sale of a vessel. The rate is usually based upon the actual sale price of the vessel.
SAMS: Society of Accredited Marine Surveyors, a national organization of professional marine surveyors. Most lenders require that any surveyor used to determine a vessel’s value belong to either SAMS or NAMS.
Satisfaction of Mortgage: The form used to reflect the payoff of a lien against a vessel that was secured by a preferred mortgage.
Ship Mortgage Act of 1920: Federal legislation that allows marine lenders to acquire a priority security interest in a documented vessel through a preferred ship mortgage.
Six-Pack: A term used when carrying six passengers or less for hire in a commercial vessel activity.
Skippered Charter: A term used to describe a charter arrangement in which the vessel is rented with the owner acting as skipper or captain. A coastwise endorsement is needed to provide a skipper charter.
State Registration: Boat registration is a process by which state and territorial jurisdictions grant operational privileges for all types of watercraft. This is evidenced by a certificate of registration that must be present on the boat when underway.
State Registration Number: A number given by the appropriate state agency to all vessels registered for use on the state’s waters. It is unique in nature and must be affixed to the exterior hull of the vessel, unless the vessel is documented with the U.S. Coast Guard. In that case, the number is used strictly to track ownership and payment of taxes and fees.
State Titling: Differing from registration, this is a service provided in certain states that affords an owner with a certificate of ownership for the subject boat. Although boat titles are typically issued in conjunction with a first time registration, this is not always the case. They may be attained on a stand-alone basis under certain conditions. Boat titling is mandatory in some jurisdictions, optional in others and not offered by all states.
Survey: A marine surveyor inspection to determine the condition of a vessel and define its value.
T
Tax Lien: A claim against a vessel by a state agency for uncollected taxes.
Taxes and Fees: Boat registrations are often used by states for fee and tax collection purposes. These are collected when a boat is initially registered and when its registration is renewed. Such costs will however vary considerably with each jurisdiction. Registration service fees are always required, but excise, use and sales taxes vary broadly. Although Coast Guard documented boats may become exempt from registration costs in some states, this rarely applies to tax assessments.
Tenants by the Entirety: A manner of ownership limited to married couples in which each partner owns an equal share of the vessel but neither may sell or give away an interest without the other’s permission. Upon the death of one spouse, their share automatically passes to the surviving spouse. In some states, it is referred to as “husband and wife as community property.”
Tenants in Common: A manner of ownership for two (2) or more persons in which, upon the death of an owner, that owner’s share passes to his heir or estate, not to the co-owners. Any transaction regarding the vessel requires all owners’ written permission.
Tender: A craft used exclusively to furnish transportation from a larger vessel to shore and back.
Territorial Registration: Boat registration in U.S. territories such as American Samoa, Guam, the Northern Marianas Islands, Puerto Rico and the U.S. Virgin Islands. Their registration requirements and procedures are typical of those here in the states.
Title: A certificate issued by a state agency to evidence ownership of a vessel. Should not be issued on documented vessels, as they already hold federal documentation.
Trade Endorsement: An authorization noted on a Certificate of Documentation that qualifies a vessel for a particular trade usage, such as Coastwise, Fishery and Registry.
Trade Restriction: A limitation noted on a Certificate of Documentation preventing a documented vessel from engaging in certain commercial trade usages.
U
Uniform Commercial Code: The body of laws that cover the method for securing interest and providing constructive notice of a claim on non-titled and/or non-documented vessels. Typically filed and recorded on the state or county level.
V
Vessel Qualifications: A vessel must measure in volume at a minimum of five (5) net tons. Vessel tonnage is determined by a formula involving the vessel’s length, width, and depth. Most vessels need to be approximately 25 feet long to qualify. The country in which a vessel was built is only an issue for commercial documentations.