Documentation is the federal registration of vessels five net tons and over (approximately 28' and up) with the U.S. Coast Guard, and is generally a requirement of banks and finance companies who may be financing a portion of the purchase price. The documentation procedure here in the United States is patterned after the British system of registering yachts with the primary purpose being the establishment of an internationally recognized maritime title for the yacht. The Certificate of Documentation acts as a vessel's "passport" in foreign waters.
Unlike real estate, there is no title insurance for yachts except to document any and all transactions (i.e. bills of sale, mortgages, liens, etc.) form the time of manufacture. That means obtaining the Builder's Certificate from the builder of the vessel, as well as Bills of Sale from each owner down the "chain of title" to the current owner.
Unfortunately, since 1982 recreational yacht documentation is now exempted from the requirement of establishing chain of title, and one may now elect to use the simplified procedure for documentation. This means relying upon the current registration (State of Florida, Delaware registration, etc.) information with regard to validity of ownership of the vessel. The Coast Guard acts as a recording agency only and relies on the presumed validity of the document submitted to them for recordation.
Due to the fact that documentation allows the recordation of preferred mortgages on the Abstract of Title of vessels, banks and finance companies are assured of a federally recorded lien, as well as protection against fraudulent transfer of the yacht.
A Certificate of Documentation may be issued for any or all of the following uses:
Recreational - Pleasure use, including bareboat charter. Vessel could have been foreign built or owned.
Coastwise - Commercial use in U.S. waters only. Vessel must have been U.S. built and always owned by U.S. citizens.
Registry - Commercial use in foreign waters only. Could have been foreign built or owned.
Fishery - Commercial fishing. Vessel must have been U.S. built and always owned by U.S. citizens.
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