Guide to Buy a Boat with a Lien on It

This publication explains how to buy a boat with a lien. The lienholder is typically any financial institution known as the lender. A lien on the boat means that the title is not registered in the seller’s name.

how to buy a boat with a lien


To buy a boat with a lien, you must pay off the lien. Work directly with the seller’s bank, pay the lien, pay the difference to the seller and obtain the boat title to put in your name.

Buying a boat that has no title is a bit more complicated than a boat with a title. The seller may want the check payable to the lender and then make up the difference to pay it off.


How to buy a boat with a lien

Follow the steps below to buy a boat that has no lien:

  1. Do a HIN check

Use a title company, the DMV (Department of Motor Vehicles), or the police to complete a HIN (Hull Identification Number) check, including the hidden numbers.

You also need proof of the remaining loan balance. Verify that the loan balance you see matches the model, year, make, and HIN of the boat.

If the boat has a trailer or motor, ensure to verify it as well.


Read also: NY residents can register trailers with no title

  1. Contact the lender

Contact the lender or bank with the seller and obtain a written payoff good for 10 days.

The bank or lender may require written notice from the seller to confirm the transaction. From here, you get the exact payoff information from the bank. The boat seller should also come up with their part of the deal.

  1. Get insurance for the boat

You may want to insure the boat before the transaction. In unfortunate cases, buyers buy and clear boats with DMV with the boat title.

After some months up the creek without a paddle, only for the waterways patrol to haul the boat claiming it was stolen. You lose the boat and your money.

  1. Pay the lender or bank

Have the seller sign all the documents required to transfer the boat at the time of sending the payment.

Wire transfer may be the way to go with your transaction to pay off the loan. Just set it up with the lien-holding bank. Perhaps, better than cash and instant. The seller or owner will also wire their part.

Read also: Marylanders can title boats with no title

You could also make a cashier’s check to the bank holding the lien, and pay the difference to the owner who makes out to the bank.

Meanwhile, some people use bank checks and cashier’s checks interchangeably, but they are not the same thing. Some banks stopped issuing or accepting cashier’s checks as payment method due to fraud.  The bank can refuse a cashier’s check if the branch officials have legitimate doubt.

  1. Obtain the documents from the bank

Get the documents from the bank. If the current owner or seller does not pay the bank, the bank will not release the title. The lien has to be satisfied before you get the title.

If the seller is upside down on their loan, they must come up with the remainder of the balance, the bank will keep the lien. The bank may add necessary fees and penalties.

  1. Get a notarized bill of sale

Get a notarized bill of sale. If the bill of sale is not notarized, there may be a problem with the transaction, and so the bank may refuse to release the lien.

In Florida, for example, itemize your bill of sale to separate boat and motor. These are separate line items, and you only pay FL tax on the boat, not the motor.

  1. Obtain the boat title

While waiting for the title to be sent by the bank, you need to cover how you will get the seller to sign the title.

A Power of Attorney (POA) allows you to sign the title on behalf of the seller. This prevents the risk of getting an unsigned title from the seller for whatever reason.

  1. Hire a marine title company

If the process seems Greek to you, employ the services of a marine title company to purchase the boat with a lien on it.

Meanwhile, follow these steps to sell a motorbike with a lienholder.

Buying a boat with a lien and no local bank (out of state)

If the lien boat seller is out of state, have someone local check out the boat condition.

Contact the bank with a lien and explain the situation to get the payoff amount. After a sea trial, meet the seller at their local bank where they may obtain a certified check.

You may bring a certified check from your bank for the full purchase price of the boat. The seller’s bank will confirm your check with your bank. The sum of your check and the seller’s check should equal the payoff amount.

You could bring a postal envelope from a postal company like FedEx with your shipper account number to overnight the checks to the lender. An overnight check uses UPS to deliver an official bank check.

Sign and have the bill of sale notarized at the seller’s bank. Tow the boat to your state since you have no tag. The bank will send the title to the seller who will forward it to you.

Check your state law to know what can be done if the seller does not mail you a signed title of the boat. Typically, you obtain the power of attorney to sign the title on behalf of the seller.

You must also register the boat within the grace period specified by your state.

Read aslo: know these when buying a boat with your business!

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