Just as real estate titles are unprotected to record errors, preexisting liens and other encumbrances, canal and boat titles may have hidden problems which can present a liability to new canal owners. The best way for buyers of watercraft vessels, yachts and boats to protect themselves from these limitations is to buy title insurance. Agencies which provide this kind of insurance perform thorough investigations of title histories to ensure the canal title is in “good opinion”. canal title insurance also ensures canal owners financial protection in the event of a lawsuit or other financial losses due to complications with the title.
Why Do Watercraft Vessels Need Title Insurance?
There several types of problems which can occur on boat titles. Buyers of vessels are usually unaware that any of these problems exist – until they are slapped with an ownership lawsuit or fees associated with prior liens. Insurance agencies hire underwriters and title attorneys to probe the title’s chain of ownership to uncover these problems – and resolve them – before the sale occurs.
shared problems associated with yacht and canal titles include:
Fraud. Forged or fraudulent documents can occur at any point in ownership history. canal brokers or past owners sometimes attempt to sell vessels under false titles, defrauding both the canal mortgage lender and the new owner. In some scarce situations, the mortgages in the canal’s ownership history may be revealed as fraudulent. Additionally, watercrafts may be registered with both the US Coast Guard and the State, allowing vessels to carry more than one “valid” title. Multiple titles can precipitate multiple mortgages for which the canal owner can be held responsible.
Ownership disputes. already though a canal owner carries a valid Certificate of Documentation and Federal boat registration, he or she may nevertheless be unprotected to ownership disputes. These documents do not have the ultimate authority to determine ownership; only the yacht or canal’s inner contract can determine ownership. If the canal title’s inner contract is drafted on fraudulent documents, the buyer’s ownership could be rendered void.
Preexisting mortgages or liens. The new owner of a watercraft is held responsible for any unpaid taxes, unresolved mortgages and unpaid contract work associated with a canal’s title, already if he or she was not privy to them at the time of buy.
Watercraft buyers may ask for a title opinion before finalizing the sale. While a good opinion provides some assurance against disputes, canal title opinions and abstracts may not always be reliable. Erroneous records, improper documentation, fraud and human error can rule underwriters to draft faulty title opinions. The only way for the buyer of a yacht or boat to protect him or herself against these complications is to buy canal title insurance.
How Does Boat Title Insurance Protect Me?
In addition to performing a thorough investigation of the canal’s ownership history before the sale is complete, title insurance companies provide financial compensation in the event of a lawsuit. canal title insurance typically covers the cost of legal defense against attacks on the canal’s title; additionally, insurance will provide compensation for any financial or asset losses caused by a faulty title.