The purchase of an unfinished boat that has never been registered is similar to the purchase of any other type of unregistered personal property. If you buy a refrigerator at a garage sale, you don’t really know whether the person selling the property has the right to sell it — so, you look at as much of the surrounding information as you can, and you only buy it if you think it all looks OK.
For a boat, the biggest questions would involve how and why the boat is unregistered, and whether the circumstances of the sale are such that the person who is selling the boat appears to have a legitimate right to sell the boat. The most significant risks faced by a potential buyer would be that the person selling the boat is fraudulently in possession and therefore has no right to sell it; and that the real owner will show up some day and claim that the purchase should be voided. For the most part, this is not a legal inquiry. It is instead a research project that the buyer must complete through investigation of the surrounding facts.
For our reader, the purchase seems pretty safe. With all due respect to our reader’s taste in boats, an unfinished 39-foot sailing yacht stored for five years in a cradle on a vacant lot will probably look like an abandoned derelict, in which case, the seller’s story probably rings true. Conversely, a boat in pristine condition would not conform to the circumstances presented by the seller.
Assuming the circumstances of the sale are credible, the buyer will need to obtain a title for the boat. This process starts with the assignment of a hull identification number (HIN). Every boat sold in the United States must be assigned a unique HIN by the builder, even if the boat is built by a private party in a vacant lot. The HIN is a 12-digit number similar to the vehicle identification number (VIN) stamped onto the dashboard of a car. The number includes a three-digit manufacturer’s identification code (MIC), followed by a serial number, the model year and the month and year that the boat was manufactured.
Established boat builders have a unique MIC assigned by the Coast Guard, but the builder of a homemade boat must apply to the agency that governs the registration of boats in their home state. In California, this responsibility falls on the Department of Motor Vehicles. The application process will include the preparation of a form (in California, DMV form BOAT 101), which asks for much of the information that is included on a Builder’s Certificate generated by a commercial boat builder. The DMV is looking for a complete description of the boat, including the basic type of boat, the hull construction material, the propulsion type and the identity of the builder.
After processing the application, the DMV will issue a HIN and will require it to be permanently affixed at two locations aboard the boat. The number will include a three-digit MIC that consists of the postal abbreviation for the state, followed by the letter “Z.” All home-built boats that are first titled in California will, therefore, have a hull identification number that starts with “CAZ.”
People who consider the purchase of an unregistered home-built boat will always face a certain amount of risk. The investigation process and the steps for creating a title can be complicated, and buyers should consider retaining an experienced maritime attorney to guide them through the process.