Transferring ownership of a yacht—whether during a luxury sale or a distressed off-market deal—can be deceptively complex. In California, brokers, buyers, and sellers often overlook essential steps in documenting and finalizing a vessel transfer. These omissions can later lead to registration conflicts, title disputes, or even rescinded sales. This article highlights the most common legal pitfalls in yacht ownership transfers and how to avoid them.
📄 1. The Bill of Sale Isn’t Just a Formality
The Vessel Bill of Sale is the primary document proving legal transfer of ownership. But too often, it’s completed improperly or not delivered at the time of transfer. Mistakes include:
- Omitting the CF number or Hull Identification Number (HIN)
- Failing to list the correct seller of record
- Using outdated or handwritten forms that are later challenged
- Not specifying whether the sale is “as-is” or subject to conditions
Best Practice: Always use the latest DBW or USCG Bill of Sale form and have all signatures notarized.
⚓ 2. Conflicts Between State (DMV/DBW) and Federal (USCG) Registration
In California, smaller vessels (typically under 5 net tons) are registered with the Department of Motor Vehicles (DMV) and are issued CF numbers. Larger vessels (generally over 5 net tons) may be federally documented through the U.S. Coast Guard (USCG).
Key Points:
- You cannot register the same vessel under both systems simultaneously
- Net tonnage ≠ weight — It’s a volumetric measure used for documentation
- A 30’ Catalina may still fall below 5 net tons depending on design
Conflicts arise when buyers attempt to register a federally documented vessel with the DMV or vice versa—often triggering delays, rejection, or worse, dual-claim disputes.
🚩 3. Hidden Liens and Unrecorded Encumbrances
Even if a Bill of Sale is executed, the vessel’s title may not be “clean” if there are:
- UCC-1 financing statements filed against the boat
- Recorded maritime liens (often not visible to DMV/DBW)
- Disputes over mechanics liens for unpaid repairs
Solution: Always perform a lien search through the USCG National Vessel Documentation Center (NVDC) or request seller indemnities if not documented.
🛠️ 4. Off-Market and Distressed Sales: Unique Risks
Off-market deals often skip broker oversight or use incomplete paperwork. This can lead to:
- No formal acceptance protocol (e.g., sea trial waivers)
- Oral agreements that violate California’s Statute of Frauds
- Difficulty proving ownership history during litigation or insurance claims
For distressed sales, vessels may be sold by lienholders, insurers, or estates, each requiring different legal protocols and court approvals.
✅ 5. Checklist for a Legally Sound Transfer
- ✔️ Confirm seller is the titled owner (DMV or NVDC database)
- ✔️ Use official Bill of Sale (DBW or USCG format)
- ✔️ Record transfer with correct agency: DMV or USCG
- ✔️ Run lien and encumbrance checks
- ✔️ Include sale conditions and disclosures in writing
- ✔️ Notarize signatures, even if not required
📞 Need Help with a Vessel Transfer?
Whether you’re buying a sailboat, selling a yacht, or resolving a title issue, it pays to have experienced legal counsel. At Brainard Law, we offer strategic guidance for brokers, private parties, and investors involved in vessel transactions throughout California.
Schedule a consultation today to ensure smooth sailing in your next transfer.