Can Debt Collectors Record a Court Judgment Through the Coast Guard?

I have a judgment against a boat owner for his breach of contract on a business deal. He owns a home, and I recorded the judgment in the county where the property is located. I tried to take the same action against his boat, but when I submitted the judgment to the Coast Guard for recording it was rejected. Can I record the judgment as a lien against the boat? If so, what steps are required?
We have devoted quite a few columns over the past several years to maritime liens, but there is always a new twist. In this case, the reader is interested in claiming the debtor’s vessel in partial satisfaction of a court judgment. And, the judgment is not related to a maritime lien.

In previous installments of this column, we have discussed the general nature of maritime liens and some of the differences between maritime liens and liens against real property. See, for example, “Ask a Maritime Attorney — A Lesson on Liens,” Aug. 24, 2006 and “Ask a Maritime Attorney — No Recording Is Required for Maritime Liens,” The Log. Dec. 13, 2007.

The issue presented by our reader in this case is one more example of the different treatment afforded to maritime liens, when compared to liens against real property. For real property, a judgment may be recorded with the County Recorder’s office for the county in which the debtor owns property. That claim then takes its place alongside the mortgages and other liens recorded against the property, ranked in priority according to the date the judgment is recorded.

The Coast Guard, however, will not accept a judgment for recording, whether it is related to a maritime lien or not. The lien recording system for Coast Guard documented vessels serves a different purpose than the recording system for real property. The Coast Guard recording system was established to accommodate the recording of vessel mortgages, but since a non-mortgage lien will be valid without recording, the recording system mostly functions as a device to give notice to the outside world of the existence of those claims. It has no effect on the validity or priority of the claim.

Notwithstanding the confusion relating to the recording system, a non-maritime judgment may be enforced against a vessel using the judgment enforcement tools available under state law. These tools are available, even if the boat is a documented vessel registered with the Coast Guard.

A creditor may apply to the court for a Writ of Execution to seize and sell a vessel, to satisfy a judgment. This procedure is similar to the procedure used to seize a car or a television set or any other item of personal property. In most cases, the court will issue the writ as a routine matter for any valid judgment. The writ is then delivered to an enforcement officer such as a sheriff, who will take custody of the boat and, unless otherwise ordered by the court, sell it to satisfy the judgment.

The Writ of Execution procedure differs from the foreclosure procedures for a maritime lien in several ways. First, a non-maritime lien is junior in priority to all maritime liens and mortgages. As such, a maritime lienholder may bring an action to stay or otherwise interfere with the writ, and then demand that the maritime liens be satisfied prior to taking care of the state court judgment. Second, a state court has no power to order a vessel to be sold free and clear of all liens. As such, the purchaser of a boat at a lien sale conducted under the authority of a state court may find that the boat is subject to unsatisfied maritime liens, both recorded and unrecorded.

A boat is an item of personal property, similar to a car or a television, which may be used to satisfy a state court judgment. An attorney experienced in debt collection should be contacted for assistance with this process, but that attorney should be aware of the maritime issues that may complicate the attachment and sale of the vessel.

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