How to Buy a Boat (and Avoid
Working With Me)

by Twain Braden

Welcome to my first column on admiralty and maritime law. I’m honored to be taking over from my friend and colleague Nico Walsh, who has written this column steadily and skillfully since 2011, and, as of this writing, is out of sight of land, en route to Florida, sailing his Cabo Rico 34 on a well-deserved junket with his wife Ellen. Like Nico, I’m a maritime lawyer based in Portland, and share his love of the sea and boats. Also like Nico, I plan to write about topics that are of practical use, but also that may be of historical interest, since so much about maritime law is founded upon eons of precedence.

This month’s column is about how to buy a boat, and most importantly, how to avoid working with me (or one of my admiralty colleagues of the bar). In other words, this column is about how to buy a boat so that you can avoid the likelihood of litigation. Nico’s first column in these pages had the same title as this one, but his first column (in the Archives from Nov. 2011) was about commissioning and building a new boat and taking steps to avoid losing it in the event the builder files bankruptcy midway through construction. This column, on the other hand, offers a few tips about how to responsibly buy a used boat. This column covers basic steps in purchasing any vessel, whether documented (over five net tons) or state-registered, and whether the vessel will be used for commercial fishing or for pleasure. I also present specific considerations for purchasing smaller boats that are not large enough to be documented and therefore of no interest to the Coast Guard’s National Vessel Documentation Center.

First, no matter how well you think you know boats, have it surveyed. It does not matter if you, the prospective boat owner, are a marine mechanic or an ABYC-certified technician. Have it surveyed by a marine professional whose impartiality will serve you well. For a couple of hundred dollars, you will potentially save yourself thousands in unknown problems and future headaches. Explain to the surveyor your intended use, recreational or commercial, near-coastal or offshore. If you don’t tell him or her the intended use, it will be mere guesswork and diminish the value of the written report.

If the survey simply confirms what you already know, that she’s a good boat, so much the better, since you’ve bought yourself peace of mind and made your first sensible investment in the boat. You will also receive a prioritized checklist of recommended maintenance items that may help you negotiate the purchase price. Additionally, when you go to resell the boat, you will have a pre-purchase survey that shows its condition when you bought it to the prospective owner. It also suggests to the new owner evidence of your due diligence and is therefore likely to reflect positively in its resale value. If the surveyor rejects the boat, you have still made a sound investment by not incurring the responsibility for a boat that would have only caused you problems. If the surveyor’s report does not adequately address a specific concern you had about the boat, call the surveyor and ask him to specifically address your concerns and revise the report.

A SAMS or NAMS surveyor will draft a comprehensive report that will itemize the vessel’s condition and make recommendations for maintenance items. The report will also provide the boat’s fair market value, which serves several purposes: it shows your insurance carrier that the boat is a good risk, and it establishes a baseline in the event of a future insurance claim. (A word to the wise when presenting the boat to the carrier for hull coverage: if possible, request coverage for the boat’s “agreed value.” This is a hard number that the insurance carrier must pay to you in the event of a total loss, regardless of its fair market value. Even better is to get “replacement” value coverage, but both of these stipulations in the policy will likely drive up your premiums.)

Surveyors come in a variety of shapes and sizes and don’t necessarily need to be SAMS- or NAMS-certified to be who you need for your prospective boat. For example, a 20-year-old Boston Whaler with a late-model outboard may only need a trusted mechanic to check out the operation and run a moisture meter over the hull, since the systems may be relatively simple. (Caveat: I am not a boat mechanic or a surveyor; I’m a lawyer. So you should find a person you believe will best inspect the boat prior to purchase.)

After commissioning a survey and deciding to pay the money, you will need assurances that the vessel is not subject to an outstanding lien, whether for personal injury, wharfage, storage, or engine repairs, for example. A lien on a boat adheres to the boat herself (“in rem”) as a matter of law and not only to the owner personally (“in personam”). Because of this, a maritime lien can be said to stick to the boat like a barnacle, and you, the purchaser, doesn’t know it unless and until the person who claims the lien comes forward, perhaps months after the purchase. Plus, maritime liens survive a sale to a good-faith purchaser, even if they have not been recorded with the National Vessel Documentation Center.

Therefore, it’s a good idea to perform your due diligence by finding out from the former owner where the vessel has been stored in recent years, and then calling the yard(s) independently to learn if they had a good relationship with the seller and are owed any money for services. You should also get the seller to attest to the best of his or her knowledge that there are no liens. There is boilerplate language to this effect on the Coast Guard’s Bill of Sale (CG-1340, available online), which can be used to transfer title whether the boat is documented or state-registered. One final note bears consideration for state-registered boats: make sure that the person selling the boat actually has good title. Inspect the registration of the trailer, and inspect the state registration to be sure it matches the seller’s name. For small boats without motors in Maine, you’ll need additional caution, since Maine does not require a title for engineless boats. In this event, ask the owner to send you a note promising that he or she actually has good title (100%) that can be legally transferred to you. Again, the CG-1340 can be used as the bill of sale template.

Needless to say, if you can afford it, hire a lawyer to coordinate a purchase if you’re spending real money on a boat. Drafting purchase and sale agreements, reviewing first preferred ship’s mortgages, establishing an LLC to own the boat, and / or negotiating warranty language on a bill of sale, for example, all have real consequences in the event a purchase goes wrong and ends up in court. In the meantime, however, the above description should serve as a basic template for negotiating a smooth purchase of the right boat for you.

Twain Braden is an admiralty lawyer and a partner at Thompson Bowie & Hatch, LLC, in Portland, Maine. He can be reached at tbraden@thompsonbowie.com.