Just as real estate titles are subject to registration errors, pre-existing liens and other encumbrances, ship and boat titles can have hidden problems that can create liability for new ship owners. The best way for watercraft, yacht and boat buyers to protect themselves from these liabilities is to purchase property insurance. Agencies offering this type of insurance conduct thorough property history investigations to ensure the vessel’s title is “in good faith”. Ship title insurance also ensures the financial protection of ship owners in the event of litigation or other financial loss due to title complications.
Why do watercraft need title insurance?
There are different types of problems that can occur with boat titles. Ship buyers are usually unaware that any of these problems exist – until they are hit with a property lawsuit or charges related to previous liens. Insurance agencies hire insurers and attorneys to examine the title’s chain of ownership to uncover these issues — and resolve them — before the sale occurs.
Common issues related to yacht and ship titles include:
Fraud. Fake or fraudulent documents can appear at any point in the ownership history. Shipbrokers or previous owners sometimes attempt to sell ships under false titles, thereby defrauding both the ship’s mortgage lender and the new owner. In some rare cases, the mortgages in the ship’s ownership history may be exposed as fraudulent. Additionally, watercraft may be registered with both the US Coast Guard and the state, allowing vessels to have more than one “valid” title. Multiple titles can trigger multiple mortgages for which the shipowner can be held responsible.
property disputes. Even when a vessel owner carries a valid certificate of deed and state boat registration, ownership disputes can still arise. These documents do not have the ultimate authority to determine ownership; Only the underlying contract of the yacht or ship can determine ownership. If the underlying contract of the ship’s title is based on fraudulent documents, the buyer’s ownership could become void.
Pre-existing mortgages or liens. The new Vessel Owner will be responsible for all unpaid taxes, unpaid mortgages and unpaid contract labor associated with title to a Vessel even if he or she was not privy to them at the time of purchase.
Watercraft buyers may obtain a legal opinion before completing the sale. While a good appraisal provides some security against disputes, ship title appraisals and summaries may not always be reliable. Faulty records, improper documentation, fraud, and human error can cause insurers to produce erroneous title reports. The only way for a yacht or boat buyer to protect themselves against these complications is to take out marine legal protection insurance.
How does boat insurance protect me?
In addition to conducting a thorough investigation into the vessel’s ownership history before the sale is completed, title insurance companies offer monetary compensation in the event of a dispute. The ship title insurance usually covers the costs of legal defense against attacks on the ship title; In addition, the insurance pays compensation for financial loss and damage caused by an incorrect title.
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