Bought boat with a mortgage on it ( Hypothetical)

maby said:
The rules for Part 1 registration are quite strict - every boat must have a unique name - plus hull number - not hard to search.
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Seriously? :D

Ok, here's my boat, it's an XYZ Turbo called Waverider. I'm selling it to you for £100,000, a bargain I'm sure you'll agree.

Of course when I bought it, it was called Wavedancer, which is what the finance company Part One registered it under. Didn't like it much so I changed it, it was just a transfer stuck to the boat after all.

I got the notification saying my Part One number was 123456 but I didn't affix a plaque, couldn't be bothered.

Or maybe I did do it all properly, but since I've got a mortgage of £80,000 that I don't want you to know about, I'll just quietly remove that (it was only stuck on with a bit of glue/screwed on with a couple of self tappers/not fixed at all).

So there you go, you're the buyer, you've got the name Waverider and I'm telling you there's no registration and no finance.

I've got the Builders Certificate and a complete set of Bills of sale that you're welcome to see, heck, you can even have copies of them. Look, here's the original invoice too, she's all VAT paid and everything. Complete service records, marina berthing invoices, the invoice for the new VHF, all in a ring binder, this is the most complete paperwork you've ever seen.

So go on, search away. :)
 
I didn't say it was foolproof - it's the only checks we can carry out, but it is certainly not that hard to get round them if you are trying to cheat somebody.
 
Precisely! Which is why it always amazes me that people place so much store in checking the Part One register.

And why some people feel a proper central finance register that includes hull, engine and gearbox serial numbers, and that finance companies can only claim from future owners if they've logged their interest on, is the way to help protect buyers.

Still not fool proof, but a blimmin sight harder to fake all the serial numbers without leaving trace, and every chance they'll be on original paperwork anyway.

Currently all a dodgy owner needs to do if he doesn't want you to know he owes a hundred grand on the boat is change the name and remove the official number, if he put it up in the first place (does anyone check this is done)?
 
ari said:
Precisely! Which is why it always amazes me that people place so much store in checking the Part One register.

And why some people feel a proper central finance register that includes hull, engine and gearbox serial numbers, and that finance companies can only claim from future owners if they've logged their interest on, is the way to help protect buyers.

Still not fool proof, but a blimmin sight harder to fake all the serial numbers without leaving trace, and every chance they'll be on original paperwork anyway.

Currently all a dodgy owner needs to do if he doesn't want you to know he owes a hundred grand on the boat is change the name and remove the official number, if he put it up in the first place (does anyone check this is done)?
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I discussed this in some detail with a solicitor specialising in marine conveyancing some time ago when we were thinking of buying a second hand boat with a bit of a chequered past. He suggested that the majority of boats spend their lives in marinas or on club trot buoys. If he is asked to run checks for a prospective purchaser, he goes to the marina or sailing club owning the trot buoy and asks the management/membership how long the boat has been there and if it has always had its current name. If he cannot get a reasonable history trail on the boat, he will suggest to the buyer that they might to look elsewhere.
 
Thepipdoc said:
As Henry said, the hull serial number should be used.
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I don't want to repeat the other thread on this, but remember serial numbers on hulls (moulded into the gelcoat) can easily be changed. I had mine cut out and remoulded on my previous boat, my 2009 Sq58, as explained on that other thread
 
jfm said:
I don't want to repeat the other thread on this, but remember serial numbers on hulls (moulded into the gelcoat) can easily be changed. I had mine cut out and remoulded on my previous boat, my 2009 Sq58, as explained on that other thread
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Honest John's Cut'n'Shut Boat Sales! I bet it actually started out as a pair of written off Bayliners, and the Volvo tachos were replaced to reduce the engine hours...
 
Outstanding finance

It is this that has stopped me buying a second-hand boat. What is needed is either a register or some form of insurance so that, in the realtively unlikely event of a problem, the poor innocent buyer is protected.

Does anyone know of some who would write that kind of policy? A price of 1-2% of the value would seem fair and would quickly get factored into market prices.
 
acbruce said:
It is this that has stopped me buying a second-hand boat. What is needed is either a register or some form of insurance so that, in the realtively unlikely event of a problem, the poor innocent buyer is protected.

Does anyone know of some who would write that kind of policy? A price of 1-2% of the value would seem fair and would quickly get factored into market prices.
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Ask William Hill for odds on you being sold a dodgy boat, then lay a sufficient bet?
 
Boat with mortgage

As a marine lawyer I can give you the current legal position, which is unsatisfactory but quite clear.

If the boat is on Part 1 of the Registry, the mortgage should be registered and you can check.

I agree that it doesn't end there. If the boat is not registered on Part 1 or is on Part 3, the lender should physically take the documents (a bit like unregistered conveyancing).

Nevertheless, if none of this has happened and it turns out that someone has lent on the boat, the mortgage will still be valid, even if you, as an innocent purchaser bought the boat without knowing about it or could not have found this out). This is very unsatisfactory is the current state of the law - it was the ruling by the Court of Appeal and it stands. In a nutshell, it means that as a buyer, you can never be 100% certain that you are getting clear title to your boat.

If you are unfortunate enough to buy a boat that does have a mortgage, the position is that you buy subject to the loan so the lender/ bank will not necessarily take the boat away - they will just ask you to pay the loan.

The best (but not foolproof by any means) way to get round this is to ask the seller for a warranty that there is no mortgage or liens on the boat. If you buy from a company ask for a personal guarantee from a director. In this way you can sue for the amount lent. All very good if the person you are suing has the money to pay.

I hope that this is of help.

Brian
 
jfm said:
I don't want to repeat the other thread on this, but remember serial numbers on hulls (moulded into the gelcoat) can easily be changed. I had mine cut out and remoulded on my previous boat, my 2009 Sq58, as explained on that other thread
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Quite agree, which is why it needs to be engine and gearbox serial numbers too.

Ok, it's theoretically possible to change all, but a hell of a job to do without leaving trace. And bear in mind that the Builders Certificate and original invoice will have these numbers also.

At the moment it's just too damn easy for someone in financial difficulties to think "I'll just keep that loan on the boat going, inject the cash into the business, and when things pick up I'll clear it", only to go bust a few months (or even years) later leaving the new innocent owner exposed, because all they have to do is deny it's registered and remove the plaque and there's no mechanism to check.
 
ari said:
Seriously? :D

Ok, here's my boat, it's an XYZ Turbo called Waverider. I'm selling it to you for £100,000, a bargain I'm sure you'll agree.

Of course when I bought it, it was called Wavedancer, which is what the finance company Part One registered it under. Didn't like it much so I changed it, it was just a transfer stuck to the boat after all.

I got the notification saying my Part One number was 123456 but I didn't affix a plaque, couldn't be bothered.

Or maybe I did do it all properly, but since I've got a mortgage of £80,000 that I don't want you to know about, I'll just quietly remove that (it was only stuck on with a bit of glue/screwed on with a couple of self tappers/not fixed at all).

So there you go, you're the buyer, you've got the name Waverider and I'm telling you there's no registration and no finance.

I've got the Builders Certificate and a complete set of Bills of sale that you're welcome to see, heck, you can even have copies of them. Look, here's the original invoice too, she's all VAT paid and everything. Complete service records, marina berthing invoices, the invoice for the new VHF, all in a ring binder, this is the most complete paperwork you've ever seen.

So go on, search away. :)
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How does the finance company find the boat again?
 
I guess by using an investigator or similar, especially if it's a six figure sum at stake.

Perhaps Brian Legal could tell us, because that is an interesting question.
 
Originally Posted by Thepipdoc
Would that mean the mortgagee (or any other interested party) could not take the boat from me?

No it wouldn't. A contract between A and B has no bearing on C's position

I am getting confused by the negatives...
A lends the money to B. C later buys the boat.
Is C now liable to meet A's loan, but A cannot reclaim the actual asset itself?
I am just reading Brian legal's later comments

If you are unfortunate enough to buy a boat that does have a mortgage, the position is that you buy subject to the loan so the lender/ bank will not necessarily take the boat away - they will just ask you to pay the loan.
 
What numbers you choose to use are largely irrelevant. The hull number, engine numbers and if you like gearbox numbers would seem a good start with the hull number being the main one used. The others are used as confirmation.

The fact remains that the marine industry is appalling in not having implemented some form of central data base.

Henry :)
 
ari said:
I guess by using an investigator or similar, especially if it's a six figure sum at stake.

Perhaps Brian Legal could tell us, because that is an interesting question.
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Ari - Just to reply, the lenders do their best to restrict (in the mortgage deeds of covenant) where the boat can operate and I have even known one install tracking equipment.

I accept that it is just as easy to switch of a tracker as it is to leave port without telling your lender. However, at the end of the day (and particularly in respect of larger boats) the main marine lenders have very good contacts in most Med, Baltic and USA ports and can locate and re-possess boats very quickly if the mortgage falls into arrears. They generally know their business and if a boat is re-possessed and sold, all sorts of charges will be added to the loan!

Best wishes

Brian
 
henryf said:
What numbers you choose to use are largely irrelevant. The hull number, engine numbers and if you like gearbox numbers would seem a good start with the hull number being the main one used. The others are used as confirmation.

The fact remains that the marine industry is appalling in not having implemented some form of central data base.

Henry :)
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Completely agree Henry. You will very shortly be told that as no serious history of problems exist it would be a waste of time. You will also be told that as it's so easy to change the HIN, there is no point.

It's not too much bother for some people to change the identity of a car, so perhaps we shouldn't have a register for those either.
 
gjgm said:
Originally Posted by Thepipdoc
Would that mean the mortgagee (or any other interested party) could not take the boat from me?

No it wouldn't. A contract between A and B has no bearing on C's position

I am getting confused by the negatives...
A lends the money to B. C later buys the boat.
Is C now liable to meet A's loan, but A cannot reclaim the actual asset itself?
I am just reading Brian legal's later comments

If you are unfortunate enough to buy a boat that does have a mortgage, the position is that you buy subject to the loan so the lender/ bank will not necessarily take the boat away - they will just ask you to pay the loan.
Click to expand...

The post to which I was replying asked if (or suggested that - I can't remember) a "boat-is-free-of-encumbrances" warranty given by seller to buyer meant that lender's ability to enforce the mortgage was frustrated, and I was replaying to say it most certianly did not. That's all. (C is the lender in my post, A and B are buyer/seller)

Brian Legal was making a quite different point in the bit you quote, which is that if you happen to buy a boat that is security for someone else's borrowings the lender will generally not take the boat from you provided you "just" (Brian's word) repay the loan out of your own pocket. TBH, on that specific point i share Ari's sentiment, ie "Well thanks a bunch Brian, that's a lot of comfort matey!"
 
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