Thinking about getting a used boat? When purchasing a boat—whether it's your first one or maybe you have years of experience on the water—you need to be vigilant. Buying a used vessel is riskier than getting a new one, and it's important to know what to look for when buying a used boat.
Two potential trouble areas when buying a used boat are: engineering issues and title problems. Read on to learn how to avoid pitfalls in these areas.
To ensure that the used boat you're considering doesn't have structural or engineering issues, you'll want to consider doing your own inspection, getting a survey completed, doing a sea trial, obtaining a warranty, or some combination of these options.
Anyone buying a boat should conduct a careful inspection. You should be sure to, for instance, sight down the hull in good light to look for evidence of significant repairs, inspect the bilge for evidence of flooding or bad leaks, and give the rudder a hard shove to see if it moves much in the bearing. The general condition of the boat is a good indicator of its quality too. If the owner was obviously messy and careless with the areas you can readily see, there's a good chance preventive maintenance was ignored too.
It's a good idea to ask the owner whether the boat ever flooded or sank, or was ever involved in a collision, fall, or fire. You might learn something that makes you think twice about making the purchase. And, if the seller answers in the negative and you later learn that there was such an incident, depending on state law, you might have a case for fraud or misrepresentation.
If the boat passes your inspection and you decide to buy the vessel, you and the seller should sign a purchase and sale contract. The contract should identify the boat, as well as state the price, the terms, the closing date, and whether your obligation to buy the boat is contingent upon a satisfactory survey. Often, a purchase and sale contract gives the buyer a set amount of time to arrange for a survey of the boat. If you're satisfied with the survey—or if the survey deadline passes and you didn't get the survey done—you commit to closing the sale or forfeiting the deposit. With most contracts, if the survey turns up anything you don't like, you can back out of the deal.
Keep in mind that a survey will not normally include a survey of the engine, drive train, and generator. Though, you could arrange to have those items inspected separately. (A survey should be performed even of a new-built boat. It's rare that a survey won't turn up something that was overlooked or that might have been done better, and it could be something critical.)
For boats that are relatively small, simple, and cheap (and if you're knowledgeable), you might consider skipping the formal survey. But a sea trial is necessary when buying anything larger than a kayak or canoe.
A "sea trial" is basically a test drive of the boat. A simple sea trial will normally include going from full ahead to full astern, steering from hard over to hard over, and a full-power run for a few minutes. Surveyors offer this service and will generally test the boat's speed and maneuverability, as well as check for vibrations and assess other systems that can be tested only in the water. Running up the engine pier-side is not a reasonable substitute for a sea trial.
You should check the sale and purchase agreement carefully to make sure you're entitled to withdraw from the sale if you're not happy with the boat after the sea trial.
Understand whether you're buying the boat as is, with no warranty except as to title, or with some sort of warranty. "As is" is typical for a used boat sale. So, you need to be knowledgeable and have a skilled surveyor to ensure that any potential problems are revealed.
In a used-boat purchase, you also need to check the title to make sure it's clear. (A "clear" title means there are no liens on the vessel.)
If the boat is documented and subject to national registration, you will check the title through the National Vessel Documentation Center, a branch of the Coast Guard. You may call them at 800-799-8362, or go online, and order an abstract of title for the vessel. Have the boat's official number handy—it's on the boat and is on the boat's papers.
Go to the appropriate state agency for state-titled boats.
The abstract of title begins with the builder's certificate, and contains a list of sales, liens, name and home port changes, arrests, and other events in the life of a vessel. In the case of an older commercial craft, the abstract could be many pages long. You need to study the abstract to confirm that all mortgages and liens are discharged. If you can't confidently read the abstract, consult a professional.
Even if the abstract of title is clean, you should check the Secretary of State's office of the seller's residence and the ship's state of registration for IRS liens. (The IRS records liens with the Secretary of State.)
Also, watch out for hidden liens. When a yard does work on a boat, or a fuel dock pumps it full of diesel on credit, or one boat crunches another while coming alongside, the yard or supplier or damaged boat gets a maritime lien on the boat. The lien might be recorded with the Coast Guard, but it doesn't have to be recorded to be effective.
For a state-registered vessel, check with the Secretary of State for the seller's state of residence and the state where the boat is registered to look for IRS liens. The risk of hidden liens applies here too.
Of course, even when you take precautionary steps, buying a used boat carries some risk. If you have any questions about the legalities of the process or how to protect yourself, consider speaking to a maritime lawyer.