Ask a Maritime Attorney
I am in the process of buying a 40 foot motor yacht that was a bank repo. The broker disclosed that the previous owner was a couple years behind on his property tax payments, and I am concerned that the county may assert a lien against the boat or take some kind of action against the boat after I take title. In a normal purchase I could probably get the seller to pay the back taxes but the bank won’t negotiate. What are my legal rights in a case like this?
We are interested in starting a charter business with the purchase of a 50 foot sportfishing yacht that is currently located and registered in Mexico. I have done some research and I understand that a boat must be built and registered in the United States to legally carry passengers for hire. The boat we are buying was built in the U.S., but it was taken to Mexico when it was first sold and has always been Mexican flagged. Assuming we transfer the boat to U.S. documentation after we take delivery, would there be any legal restrictions against operating the boat in a charter business?
I work as a chef aboard large motor yachts, mostly in the Caribbean. I have a job lined up for three months aboard an American flagged yacht, but I am a little concerned about the owner’s track record when it comes to paying crewmembers on time and withholding tips. Can I do anything to prevent this from happening? What can I do if he fails to pay me when I leave the boat?
Q: I made an offer to buy a boat several months ago but we had to back out of the deal before closing. My mortgage broker conducted a title search and determined that the boat’s Hull Identification Number was a duplicate of another boat and the boat I was looking at was stolen. I obviously withdrew my offer but I am out several thousand dollars in expenses for surveys, travel and time off to attend the surveys. The purchase agreement was a standard form contract from the California Yacht Brokers Association and it includes a provision for the buyer to recover reasonable expenses if the seller defaults. We believe the failure to provide clear title to us is a default and have demanded that the seller pay our expenses but he refuses to respond. Before we pursue this any further can you confirm for us that this was a default under the contract?
Q. My boat sank a couple of months ago due to the negligence of boat mechanic and I’m looking for advice on how to recover at least a part of my loss from him. He was working in my engine room and he apparently broke a through-hull fitting for an old knotmeter. The fitting did not have a valve, and when it broke the old sending unit was dislodged, allowing water to enter the engine room. The boat sank very slowly and nobody noticed that it was low in the water until it was too late. The marine surveyor who investigated the loss found the broken fitting but he did not really say anything as to how or why it happened, and he did not place any blame. I spent a little over $30,000 to repair the boat, and I am now considering a lawsuit against the mechanic to recover my loss. Since this is a maritime case, would the lawsuit need to be filed in federal court? What is the federal statute of limitations for a claim such as this? What are the other significant issues that I should look out for?
I have read a couple of your articles in recent issues of The Log about the private repossession and sale of boats, where the procedure is completed without judicial oversight. I have a preferred ship mortgage recorded against a documented boat and I am preparing to repossess the boat, but I want to be sure that I don’t overlook anything. Can you provide a general overview of the procedure?
I bought a 41 foot power boat two years ago with the help of a friend who loaned me the money for 80 percent of the purchase price. He funded the transaction by taking out a home equity loan, and our arrangement called for me to make the payments on his loan. Unfortunately he never showed me his loan paperwork and I recently discovered that the amount of his home equity loan was substantially more than the amount that he gave to me for the boat purchase. This entire deal was done on a handshake and at this point I have no idea how much I owe him. He refused to give me a detailed accounting of my payments or of his home equity loan, so I stopped making my payments to him. He responded by putting a lien on my boat through the Coast Guard. What are my legal rights at this point?
I own a deep draft racing sailboat and several weeks ago the boat ran aground at high speed in shallow water near a harbor entrance. The force of the impact caused the rig to fail and the mast fell overboard in two ugly pieces. We had to cut it loose to be towed to safety and the rig and part of the destroyed mainsail remain at the site of the grounding. Yesterday I was contacted by the harbor patrol and advised that I had to retrieve the rig and dispose of it immediately. What are my legal obligations under a circumstance like this? I should note that my insurance company concluded that the rig failed because several key components showed signs of extensive corrosion so they denied my insurance claim.
I own a construction company that is performing seismic upgrades and electrical work on a fuel dock at a marina in the Bay area. I have workers compensation insurance for my employees but my insurance broker now tells me that I need insurance to cover employees under the federal Longshore and Harbor Workers Compensation Act. Do I really need that coverage or is he just trying to sell me more insurance?
I purchased a Vessel and originated a loan with an institutional lender in 2003. At the time of the purchase the lender recorded a “Preferred Ship Mortgage” with the Coast Guard. Unfortunately the boat sank several years ago and the insurance company refused to pay the claim. We filed suit against the insurance company but we lost, and the claim denial was upheld. Several months after the completion of the lawsuit, my lender filed a notarized "Satisfaction of Preferred Ship Mortgage" with the Coast Guard. The Coast Guard subsequently provided me with a certified copy of that document, but apparently that was not the end of my journey. Last month I was served with a lawsuit by a company that had purchased my loan from my lender, demanding payment of the balance of the boat loan. Can a lender demand payment of a loan after a "Satisfaction of Preferred Ship Mortgage" has been notarized, recorded and signed off by the Coast Guard? If so, what does the filing of the satisfaction trigger? What additional documents must be filed to release a mortgage other than a recorded "Satisfaction of Preferred Ship Mortgage?"
I was horrified to learn last month that my boat had sunk while it was tied up in its slip. Now I am having a dispute with my insurance company because they are refusing to pay the claim. Apparently the boat sank after a thru-hull valve failed. They hired a surveyor to investigate the incident, and he believes that the failure was caused by corrosion in the valve assembly , which developed because it was constructed of inferior metals and it was not properly connected to the boat’s corrosion bonding system. However, the boat is relatively new and both the valve and the corrosion bonding system were installed by the builder. To complicate matters further, I had the boat surveyed last year at the insurance company’s request and with a surveyor approved by them. They accepted the surveyor’s report and took my insurance premium without saying anything about a possible problem. I am not an expert when it comes to corrosion aboard a boat, so how can I be expected to identify or repair a problem that their approved surveyor did not identify? Now they are accepting the report of a different surveyor as the basis for denying my claim. In light of the fact that they agreed to insure the boat after reviewing a report prepared by the first surveyor it seems that they should be required to pay the claim. What am I missing here?
I am seeking an escrow service for a yacht purchase but the services that I have contacted are not interested in working with the parties in a yachting transaction. I know yacht brokers are authorized to hold funds in trust but the boat we are interested in is being sold without a broker. Can you refer us to an escrow agency that would be able to perform the service?
I recently purchased a 38-foot charter boat that is located in South Carolina. The prior owner operated the boat in an active charter business with a Coast Guard Certificate of Inspection that expires in 2017. I plan to move the boat Lake Michigan to start a charter business on the Great Lakes, but I’m not sure if I can do that with the existing Certificate of Inspection. Do I need to start from scratch with a new COI? Who should I contact to make this happen?