27 registration - USCG vs state?

[wes]

Hi 27 guys - of the two 27s I've recently considered buying, one carried state registration numbers and the other USCG documentation (no state numbers). So clearly the 27 is big enough to qualify for the federal documentation. Is this a choice at the owner's discretion? If so, what are the pros and cons? I sure do like the idea of not putting those ugly numbers on my bow.

The boat with USCG docs was in coastal waters, and the one with state reg was inland on a river. Is that the distinction?

Inquiring minds need to know!

Wes

[brackish]

Wes, I bought a Columbia 8.7 (29 ft.) once that was USCG documented and transfered the documentation.  Other than not having state registration numbers, I can't recall any pros of cons during the 16 years I owned the boat.  I did not have to pay the registration fee every three years, and replace the year sticker, however I seem to recall that Mississippi is now requiring you to register even if documented, so you might check that.  I was told that a documented boat can be pressed into military service if needed in the event of an invasion.

[nies]

Oh boy, I can see it now a 26 year old boat and a 71 year old captain pressed into military service and being fully expendable....................nies

[EclipseGuy]

From my experience with having a USCG documented vessel the pros and cons weren't that big of a deal unless you are financing the vessel.

Most small banks and credit unions will only finance state titled vessels because that is what they are familiar with. They cough up a lung once you start talking about USCG documentation (at least from my experience). This limits your ability to shop for the best financing rate, and can often push you to the larger banks that typically will not deal directly with a USCG documented vessel loan, so in turn you end up working with a third party (BoatUS, Essex Credit, Newcoast Financial, etc...).

USCG documentation changes (change of ownership, change of financing information) can be very pricey (a few hundred dollars depending on whether or not you have a third party helping you).

If you are paying cash then it isn't such a big deal because you will only pay the pricey change of ownership fee once, then you shouldn't have to alter the documentation again.

In Michigan, I still have to register the vessel with the state, and receive registration numbers even though I don't put them on the vessel. I imagine most states are like this. You will also have to pay sales tax to your state for the purchase. So basically, you will not save any money by having a USCG documented vessel. You still have state registration fees to pay. The only difference is that you will not have a state title.

When selecting a boat I personally wouldn't let USCG documented vessel versus state titled influence my decision. They are basically just different ways of proving ownership

An interesting thing about USCG documented vessels is that they are documented according to date of manufacture. This means that if your boat is a model year 2005 (as seen in your HIN), yet the manufacture date is in 2004, it will be documented as a 2004. This confused me at first but then again I guess the USCG doesn't care what model year a destroyer is, they just want to know when it was made!

Here is an FAQ on USCG documentation:

http://www.uscg.mil/hq/cg5/nvdc/nvdcfaq.asp#28

- John

[brackish]

I further recall that the Columbia was located in Rhode Island but the individual who "owned" it set up a Delaware corporation to buy and own the boat and we bought it from that corporation.  Not sure of the details but that complex arrangement with the USCG documentation and the out of state corporation may have had something to do with the avoidance of sales and/or property tax.  My experience was in 1980, so relevance today would be questionable.

[Allure2sail]

Hi Wes:
I think every state is different and here is what happened with my purchase of Allure. The boat was both registered and titled in the state of Rhode Island and had registration numbers displayed on the hull. It was also USCG documented as well with a numbered plate mounted in the galley. When I went to register and title it in the state of Massachusetts they said it has to be one or the other. In other words Coast Guard documented or state registered and state titled, in MA you cannot have both. I decided to keep the USCG documentation and pass up on the state registration and title process. I still had to pay the state sale tax but that was it. In reality it was best for me to keep the USCG documentation, in the long run it was more economical. I ended up saving money not only from no state registration, no state title fees and no property tax every year. Even if if it was all equal (money wise) I think I would rather have it USCG documented but that's my opinion. Check your state laws and Best of luck.
Bruce
S/V Allure
P.S. This state is weird. My friend who at the time lived and worked in MA bought his new Catalina from the dealer in Rhode Island. paid the sales tax in RI, registered it, titled it and kept it in a marina in RI. The state (MA) alleged that since he lived in MA and did most of his sailing in MA (which was not true) that he should pay the MA sales tax as well. He had to get a lawyer to fight it and did win his case. They don't call Massachusetts "TAXACHUSETTES" for no reason !!! And they wonder why the state population is dropping !!!

[EclipseGuy]

I can see how a vessel could end up both USCG documented and state titled....

When I went through the process I did a lot of research before going to the state to register.

I initially did the USCG documentation. The USCG sent me a temporary document to keep on board that basically said my vessel was pending final documentation. I didn't go to the state to register and pay my sales tax for the vessel until I had the final documentation from the USCG, which took almost 4 months to process.

When I went to the state (Secretary of State in my instance), the agent acted like she knew what she was doing but she didn't. She initially tried to get me to sign an application for title, which I refused. She then called her manager over, and they ended up calling Lansing. After the call to Lansing they then understood that my vessel was not to be titled.

After the title application screw-up they attempted to keep my USCG vessel documentation because it looked "official". Once again I had to be pushy and tell them that the documentation stays on the vessel, it does not go to the state. I wouldn't let them have it.

- John

[Koinonia]

Id think if your going out of the country it would be easier to clear their customs.  Though if your not going out of the country with the boat it wouldnt matter.

[CaptRon28]

You are not allowed to display a state registration number when the boat is documented by the Feds, even though most states may require you to pay a registration fee. Ditto for having a state title - the CG Documentation becomes the official title. And a state title and/or registration is nearly worthless if you leave US waters, but Canada could be an exception to this.  In my experience most banks would prefer the Fed documentation over a state title. It's much easier for them to track it down if they had to. Larger boats are usually documented for this reason alone.

It's very easy to document a boat by yourself. No reason to pay a 3rd party several hundred dollars to do it for you. Last time I did it the total cost was maybe $100 or so, and it is a one time fee. This is the link - http://www.uscg.mil/hq/cg5/nvdc/nvdcforms.asp.

I suppose that some states without ocean or Great Lakes access may not be familiar with some of the above. But it is the law.

[EclipseGuy]

When I was researching USCG documentation I learned that banks prefer USCG documentation over state titles for the reason that Ron states above, but I don't think it means that in practice it is actually easier to get a loan for a USCG documented vessel (especially at a competitive interest rate). At least it wasn't easier for me.

There is an excellent article in May 2012 Practical Sailor that talks about financing a USCG vessel. I think that what I experienced was similar to what PS found; major banks like USCG documented vessels, but they prefer not to work with the buyer directly.

The article is here:

http://www.practical-sailor.com/issues/37_17/features/funding_the_dream_10791-1.html

When I was purchasing a boat I was shopping for a low rate on a loan. Since I am a member at two credit unions I went to the credit unions first because they both had lower rates than the major banks.  Neither credit union would finance a USCG documented vessel.

I then went to four major banks in my area. It was a similar process for each of them. I start out by talking to the initial finance person, they call a manager, they say sorry we aren't doing USCG documented vessels.

I then went to a marine financing company (third party), and they did the financing for me. Unfortunately their rates were high (twice that of the credit union). The funny thing is that once they completed the process my loan ended up being financed through one of the banks that I had originally went to previously in person. How irritating!

Once the financing was complete, and once the USCG finished my documentation I looked into refinancing. I was hoping this would be far less hassle. I planned to shop the finance companies, and also visit the bank that currently held my loan and ask for a rate adjustment.

I went to a major boat show and visited the booths for the marine financing companies to see their best rates. The marine finance company I originally worked with was there, and they pulled up my account at the boat show and said that I indeed qualify for their lowest rate (which they did not originally give me during the initial purchase). They said that I should contact them after the show and they would do paperwork for a rate adjustment.

After going to the boat show I went to Costco and noticed that they were advertising boat and RV loans. I decided to give them a call before committing to a marine finance company, or visiting the bank that held my loan. I was shocked to hear that Costco would indeed finance a USCG documented vessel, and their rates were lower than the banks!

I ended up refinancing through Costco!

Had the boat been state titled, it would have been as simple as going to my credit union for a loan. It just didn't turn out to be that simple with a USCG documented vessel for me.

[EclipseGuy]

I think the moral of the story is that if you need bread, milk, a flat screen TV, and a new yacht, just head to Costco!

[MacGyver]

What if you dont have a Costco?
Sam's club maybe?...................Inquiring minds need to know!

(My head is spinning after all this stuff......glad I just reg with state )

Mac

[skip1930]

Sailing into CANADA? Have a USCG documented vessel. Much easier through customs...

skip.

[Koinonia]

Wes,  Good to see your buying the boat!  One other little tidbit of advice would be to pull the heat exchanger soon as your home and have it cleaned out.  Its great that its a fresh water boat but its in the muddy mississippi and Id bet on there being a decent bit of silt in the exchanger.   My boat had been in saltwater all its lift but my only problem was slightly rust colored stainless.  Spotless stainless took care of that, boat looks great.