Q: I bought a used 44-foot sailing yacht and brought it to a boatyard in the San Francisco Bay area for service. The yard gave me an estimate for the work, and I told them repeatedly not to exceed the estimate without calling me. They never said a word to me during the course of the project, but when I picked up the boat they presented me with an invoice that exceeded the estimate by more than 30 percent. I happened to complain about the over-charging to the manager of another yard and he told me that California law limits the amount a boatyard can charge for a project to 10 percent above the estimate. Is this accurate?
A: The answer to our reader’s question depends upon whether the boat is registered in California through the Department of Motor Vehicles or documented with the U.S. Coast Guard.
The vessel repair laws for California registered vessels are set forth in various sections of the California Harbors and Navigation Code, distinguishing between repair estimates and the establishment of a lien against a boat to secure payment for the services.
The guidelines for issuing repair estimates for California registered vessels are set forth in the code at sections 410 through 418. These guidelines require a written estimate and written invoice, set forth the required elements of the estimates and invoices, and provide a procedure for issuing the paperwork when a problem needs to be diagnosed prior to the commencement of the actual repairs.
Liens against California registered vessels are established under the “Boaters Lien Law” are set forth at section 500 and related sections of the Harbors and Navigation Code. It provides the legal framework for a lien against a California registered vessel; it provides a procedure for the sale of the vessel through the DMV, and sets forth certain limitations which restrict the amount of the underlying claim.
As suggested by our reader, those restrictions include section 502(c), which limits the amount of a lien so that it cannot exceed the original estimate by more than 10 percent. Section 502(b) further limits the amount of a lien to $1,500.00 if a lender is identified as the “Legal Owner” of the vessel, unless the lien claimant has written authorization from the lender to exceed that amount.
Notably, the restrictions on the lien do not restrict the service provider’s claim against the boat owner personally. The purpose of a lien is to pledge the boat as collateral for payment of the amount claimed, but a limit on the lien amount is not the same as a limit on the claim amount. The enforceable amount of a claim may exceed the amount of a lien, in which case the service provider may file a lawsuit against the boat owner for the difference. Unfortunately the procedures for collecting on that part of the claim are beyond the scope of this article.
This discussion has provided an overview of vessel repair and lien laws as they apply to California registered vessels, but U.S. Coast Guard documented vessels are expressly excluded from those laws and are instead regulated by Federal statutes. Rules for the establishment and enforcement of maritime liens against documented vessels are set forth in Title 46 U.S. Code, section 31301 and related statutes. These rules are in some ways much easier for the service providers to work with. They do not require written estimates and they do not limit the amount of a claim or lien. But those advantages disappear quickly when we consider the enforcement of a lien against a documented vessel, which requires the vessel to be seized and sold through a complicated and expensive federal court procedure.
The rules for lien enforcement differ significantly between California registered boats and Coast Guard documented boats, but the procedures for both are very complicated. Boat owners and service providers should each consult an experienced maritime attorney with questions that are specific to their claims.
David Weil is licensed to practice law in the state of California and as such, some of the information provided in this column may not be applicable in a jurisdiction outside of California. Please note also that no two legal situations are alike, and it is impossible to provide accurate legal advice without knowing all the facts of a particular situation. Therefore, the information provided in this column should not be regarded as individual legal advice, and readers should not act upon this information without seeking the opinion of an attorney in their home state.
David Weil is the managing attorney at Weil & Associates (weilmaritime.com) in Long Beach. He is an adjunct professor of Admiralty Law at Loyola University Law School, a member of the Maritime Law Association of the United States and is former legal counsel to the California Yacht Brokers Association. If you have a maritime law question for Weil, he can be contacted at 562-438-8149 or at firstname.lastname@example.org.
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