The benefits of federally documenting an eligible vessel are numerous. Most marine lenders require that their collateral be documented in order to confirm their security interest by way of a recorded First Preferred Ship’s Mortgage. The recordation of such lien at the U.S.C.G. level allows assurance that they are protected in the event of default or loss, allowing for more financing options and enabling them to lend more money to more customers. More often than not these days, if the vessel can be documented, a commitment to lend will be conditional upon applying for a Certificate of Documentation after funding.
From a vessel owner’s perspective, other than the mere prestige it offers, having a vessel documented is the only way to show undisputed identity when cruising into foreign territory. A Certificate of Documentation is universally recognized by Customs officials. Documentation also expedites transfers of ownership and refinances by incontrovertibly establishing a history of record of all previous transactions that are associated with that particular vessel. Much like having title insurance as with home ownership, a Certificate of Documentation assures boat buyers that their boat is free of any outstanding liens or encumbrances that would affect their ownership interest. All transactions including bills of sale, mortgages, and satisfactions are recorded by the National Vessel Documentation Center of the U.S.C.G.When a vessel is initially documented with the U.S.C.G., it is ‘awarded an official number’ which will remain with the life of the boat; through transfer of ownership, etc. The vessel owner must affix that number to the interior structure of the hull. This allows for a more elegant appearance of the vessels’ exterior. The Certificate of Documentation that is issued to the vessel owner is valid for 1 year, and must be renewed on an annual basis, which is free of charge.
Some benefits of Federal documentation are:
The Maryland Department of Natural Resources requires all boats primarily used in Maryland waters to be registered, and have excise tax (5%) paid. When you buy your boat through Martin Bird & Associates, we will collect and remit Maryland taxes and fees due, issue temporary tags, and follow up to be sure your permanent stickers and title are mailed to you. If you are taking the boat elsewhere, we’ll have you sign an affidavit to that effect. For more information see the Boating Registration page at the Maryland Department of Natural Resources website.
Common questions are answered below:
How do I know if my vessel must be registered in Maryland?
Your vessel, whether commercial or recreational, must be registered in Maryland if it is:
Note: US Coast Guard documented vessels using Maryland waters are NOT exempt from the vessel excise tax. When used principally in Maryland, documented vessels must display a documented use decal.
If your vessel was purchased in Maryland and will use Maryland waters a majority of the calendar year, you are liable for vessel excise tax and must register the vessel within 30 days of purchase to avoid assessment of penalty and interest.
If your vessel was purchased elsewhere or previously registered in another jurisdiction, is now in Maryland waters, and will use Maryland waters more than any other single jurisdiction during the calendar year, you are liable for vessel excise tax and must register the vessel within 30 days of entering Maryland waters.
If your vessel is duly registered in another jurisdiction but remains in Maryland waters more than 90 days in a calendar year, you may be liable for vessel excise tax unless you can prove principal use in another jurisdiction.
What is “principal use?”
§8-701(p) of the State Boat Act:
“State of principal use” means the jurisdiction on whose waters a vessel is used or to be used most during a calendar year, which is the period from January 1 through December 31.
“Use” means to operate, navigate, or employ a vessel. A vessel is in use whenever it is upon the water, whether it is moving, anchored, or tied up to any manner of dock or buoy. A vessel is also in use if it is kept in any structure in readiness for use.
When must I apply?
Vessel excise tax must be paid within 30 days of Maryland tax liability to avoid the assessment of penalty (10% of vessel excise tax due) and interest (1.5% per month).