Bought boat with a mortgage on it ( Hypothetical)

[ari]

If that is the case then that's very reassuring. At least there's a chance of discovering whether a boat is Full Part One registered even if the plaque has been removed.

Anyone else want to check and see if their HIN (not official number) is on their Full Part One registration document?

I dont see where you're going here Ari. The HIN being missing from the doc doesn't affect your search. You'd get the HIN from the boat, nowhere else, and search from there. If the seller was hiding the mortgage and part 1 reg, he isn't going to show you the part 1 reg docs.

Of course it affects your search if you've nothing to search!

If the HIN is not part of Full Part One and someone doesn't want you to know he's got a mortgage registered on there it's dead easy, take the plaque off (if it were ever fixed) and stay schtum.

If the HIN is part of Full Part One and you can search against it then even if Mr. Dishonest removes his plaque and tells you it's not Part One you can still contact Part One, give them the HIN and it'll show up the registration and mortgage.

That's the difference.

However given that the very first registration doc that Brian Legal picks up shows no HIN, I do wonder how many boats are registered including the HIN. If you have a look at the form required to Ful Part One register it says on the HIN entry "if known", suggesting you don't need it to register so I wonder how many do. Have a look here:

http://www.direct.gov.uk/prod_consu.../@dg/@en/documents/digitalasset/dg_184508.pdf

And if it isn't every boat then you're back to the same problem, that it's impossible to search a registry if you have no (easily removed) Official Number.


Please note, I'm not talking about master criminals "ringing" boats by changing serial numbers here. I'm talking about Mr Bloggs who's flogging his boat cos he's in financial schtuk and thinks

"I know, rather than paying off the boat mortgage I'll plow that £90K I owe on the boat into the business, everything will then be OK and I'll just keep paying the loan"

Only six months later he goes bust anyway, and you have his old boat that you've paid for in full, and now "just" have to pay off his £90K loan too in order to keep it.

That's got to be a genuine concern surely?

 

[Mariner69]

The term "I hereby confirm the vessel to be free of encumberances and liens" and signed/dated by the seller in the Bill of Sale would I suggest move the matter from the civil to the criminal law; S17 Theft Act 1968 False Accounting.

Whilst the expense of testing the law is nothing one would wish to undertake, I would suspect that a lender who failed to insist that the vessel was fully registered and the mortgage listed therein would find themselves in a very difficult position should they seek to enforce a claim.

May be best tested in maritime arbitration rather than the High Court.

 

[jfm]

The term "I hereby confirm the vessel to be free of encumberances and liens" and signed/dated by the seller in the Bill of Sale would I suggest move the matter from the civil to the criminal law; S17 Theft Act 1968 False Accounting.

It's not a sec 17 offence because sec 17 (including subsection 2) only applies to false documents that are used in accounting. But that's maybe academic becuase it is still prima facie criminal fraud (deceit for financial gain) which is criminal too

Thing is, you don't get the luxury of prosecuting. CPS make that choice. Sure there is such a thing as private prosecution but that's a huge hurdle to get over because CPS have first dibs on any case

I would suspect that a lender who failed to insist that the vessel was fully registered and the mortgage listed therein would find themselves in a very difficult position should they seek to enforce a claim.

They wouldn't be in as difficult a position as you say, alas. There is plenty of precedent where a mortgage has been upheld even when the lender did little to "advertise" it. See Brian Legal's post above. Sure you can run the arguments and say their actions/inactions estop from enforcing their security, but that's a pretty high hurdle and their omission to part 1 register the mortgage isn't, on its own, enough of a failing on their part to let you win on this one

FWIW, if buying a new boat i would email specific questions to the sellign dealer and see on co house files to see their balance sheet and see if they are in the habit of financing their stock with secured loans, and also see if they are in the habit of granting floating charges. also this would give me the identity of their lenders so I could ask them

If buying 2nd hand, jeeze, you just have to have your wits about you. Do all the usual things as spelled out above, but also ask for vendor's original bank statements last 6 months (not possession of them, just a look at them in his presence then hand them back) to see any direct debits to lombard etc. Not foolproof i know...

 

[davidej]

FWIW, if buying a new boat i would email specific questions to the sellign dealer and see on co house files to see their balance sheet and see if they are in the habit of financing their stock with secured loans, and also see if they are in the habit of granting floating charges. also this would give me the identity of their lenders so I could ask them

.

Sorry to butt in and be pedantic when such excellent advice is being given but I dont think floating charges are relevant. They only bear against the assets of the company at the time the charge is enforced. If an asset (boat) has been sold, the charge cannot be enforced against the new owner,

Hence the word floating - it floats over the assets at the time while a fixed charge remains fixed against the asset, whoever owns it.

 

[jfm]

Sorry to butt in and be pedantic when such excellent advice is being given but I dont think floating charges are relevant. They only bear against the assets of the company at the time the charge is enforced. If an asset (boat) has been sold, the charge cannot be enforced against the new owner,

Hence the word floating - it floats over the assets at the time while a fixed charge remains fixed against the asset, whoever owns it.

Yes that's generally true and I considered the perils of making that comment without further comment when typing that post. You've touched on a very complex topic - so complex that many countries dont even allow floating charges. As you say, the charges are "floating" over assets present at the time and so they don't attach to particular assets, and an asset bought from the borrower in the ordinary course of business is automatically freed from the charge. But the flexibility of English security law is such that these charges can float and then become fixed on the assets present in the comany, like a snapshot, at the moment of the defualt event under the loan agreement. Thus, if you unwittingly bought a boat from a dealer who had the day before missed a loan repayment and was in defualt you could find the lender claiming he has security over your boat (a position you could argue agianst of course). It all depends on the precise wording of the floating charge agreement as between bank and borrower.

Going back to my earlier comments on buying new boats, in a funny kind of way it's nice to find a charge over a boat you're buying. Reason is that there can usually only be one, becuase these arrnagements are entered into by borrowers in good times when they wouldn't dream of breaking the law by pledging the same assets to TWO lenders. Thus when I made the final payment on my boat (which I had ordered from the keel up; it wasn't a stock boat) it was nice to find it pledged to a particular bank. The bank told me how much they were owed, and I paid them that money and the rest to the dealer, and I reckon I was secure. You're less secure I'd argue if the dealer tells you there is no charge over the boat because he could be lying if his business is Peters-esquely distressed