Clifford Chance

Resolving Vessel Ownership And Lien Issues Through New Act

3 August 2012

Recordation of ownership of and liens on motor vehicles is a fairly straightforward affair. Each of the 50 states has a certificate of title statute and these vary only nominally from state to state.

By contrast, the situation is entirely different when it comes to boats and other vessels. Only 33 states currently have certificate of title laws for vessels, and there is significant variation among those title statutes, including as to items such as size and types of vessels covered and basis for registration. In addition, existing title laws pre-date revised Article 9 of the Uniform Commercial Code (UCC), and the lack of harmonization between the current provisions of the UCC and these title statutes hampers vessel financings. Finally, federal regulations overlay vessel ownership, operation and financing, and do so without effective coordination with state statutes. For example, federal law accords preferred ship mortgage status (see below) to security interests perfected under state title statutes approved by the Coast Guard.1 However, none of the existing title statutes has been approved.

With these considerations in mind, the Uniform Law Commission (ULC, formerly NCCUSL) resolved in 2008 to formulate a uniform certificate of title statute for vessels. A number of interested parties with diverse expertise participated in the drafting process. These included representatives of the Department of Homeland Safety (U.S. Coast Guard), the U.S. Coast Guard’s National Vessel Documentation Center, the National Association of State Boating Law Administrators, the National Marine Bankers Association, and the Maritime Law Association of the United States.

This article was published on 2 August 2012, New York Law Journal - Corporate Update (Volume 248—NO. 23)

 

Download PDF