If you plan to sell your boat, you must satisfy the terms of a mortgage, if you’ve used one to finance the vessel. This lets the United States Coast Guard know that you have sold the boat and that the lien on the boat is no longer in effect. If you fail to do this, the fine can cost you up to $10,000. It can also prevent you from being able to buy a new boat in the future. Use this guide to help you navigate the mortgage lien release form so you can stay within legal regulations when you sell your boat.
What is a Mortgage Lien?
When you buy a boat, with financing, there is a lien placed on the vessel that will remain in place until you pay it off. The lien offers protection for the lender and ensures that you don’t skip out without meeting the terms of your mortgage. This lien process is a part of maritime law and something that you can’t get around. If a loan isn’t cleared before the boat is sold, the new owner becomes responsible for paying back the mortgage.
What is the Mortgage Lien Release Form?
This piece of paperwork proves that you have met the obligations of the loan and that the lien on your boat is no longer in effect. This makes it legal to sell the vessel to someone else and must be done if you want to avoid hefty fines. This can take a couple of forms. It could be a certificate of satisfaction that details how and when you have satisfied the mortgage financing. It might also be correspondence directly from your lender that shows that you have paid off the loan for your vessel.
If you can’t provide evidence that the lien has been satisfied, you may find it difficult to sell your boat, as buyers don’t want to buy a vessel with a lien that they may become responsible for. If you are selling a commercial vessel and don’t have evidence that you have satisfied the lien, you could be sued or you could have to buy the boat back. For legal reasons, it’s best to go through the lien release form process correctly. It can also save you a lot of time, hassle and money down the road.
Completing the Form
Boat documentation paperwork can sometimes feel overwhelming, but being sure your mortgage lien release form is filled out and submitted properly is important. For that reason, it’s important to be prepared. You should have relevant documentation on hand, which may need to be submitted with the form. Take the time to be ready and then check and double check that everything is correct before you submit the form.
Do you need help with processing a mortgage lien release form? We’re here to help you facilitate it each step of the way and can answer all of your questions. Contact the US Vessel Documentation Center today and we’ll walk you through the paperwork.
