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Selling your Boat Process


jslipher

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Has anyone had any experience selling their boat that had an outstanding lien on it? What was the process you went through assigning the title to the new buyer?

I will likely be selling our boat outright soon and since it has an outstanding lien on it, I know this will make things more difficult. I don't want to do a trade in because I will be purchasing a different used boat and I don't want to take the trade-in vs private party price difference.

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If you don't have the cash to pay off the lien and get the title in your hands you'll have to go to the bank (or whoever holds the lien) with the buyer. The buyer will give the lien holder payment for the amount owed on the loan (usually by cashiers check but some banks may require EFT). The buyer then pays you whatever the difference is. The lien holder then signs off on the title and gives it to you to sign and then give to the buyer. In most states it is up to the buyer to do all the registration work after that. You might want to (the buyer may also) execute a simple bill of sale listing the hull number, price, "sale as is," time, and date. This will protect you from liability after that time and also from having the buyer come back and claim that you misrepresented anything.

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One more thought. In many states you save the sales or excise tax on the value of your trade in - so you only pay tax on the difference between the new boat price and the $ you get on boat you're trading in. This is a little law that the dealers (car and boat, etc.) got passed to encourage people to do their trading in at dealers. Check on the laws in your state.

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It was a PITA for me, I bought a boat with a lien on it. There was a lot of required trust in our transaction, I went to his bank and paid off his portion of the lien. I needed proof that it went to the loan, and that I paid the correct amount to pay off the principle. After that it took 15 days for the lien to clear, and I didn't see the pink slip for almost 45 days. And even with all the paper work I couldn't get the title transferred in my name until 30 days after the lien was cleared, or until I got the pink.

I'd do all the research you can at the DMV to ensure you have all the required paper work filled out to protect yourself and the new buyer.

Edited by Joeprunc
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I have done this more than once and each time I completed bill of sale with buyer and had them wire the money into my bank acct. The buyer takes delivery when money is in my bank.

Btw, there is no title in these boats that I know of. The trailer title is always mailed to me and I keep them tucked away.

Edited by BamaLSV
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Has anyone had any experience selling their boat that had an outstanding lien on it? What was the process you went through assigning the title to the new buyer?

I will likely be selling our boat outright soon and since it has an outstanding lien on it, I know this will make things more difficult. I don't want to do a trade in because I will be purchasing a different used boat and I don't want to take the trade-in vs private party price difference.

It'll get more complicated if your buyer is getting a loan (where the boat is collateral) - because their lender will want to supervise the payoff process. It'll most likely take the form of a couple of wire transfers that take place at their banks office.

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It'll get more complicated if your buyer is getting a loan (where the boat is collateral) - because their lender will want to supervise the payoff process. It'll most likely take the form of a couple of wire transfers that take place at their banks office.

If both buyer and seller have good banks, it can actually make the process easier for both buyer and seller since the banks start working to handle everything.

I used a Credit Union on my first boat purchase and they actually handled everything from the sellers bank. They even got my trailer tags for me and the boat registration, only thing I did was sign the my loan documents, we met at his bank after I test drove the boat and I handed his bank the check from mine along with the cash I was paying.

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Btw, there is no title in these boats that I know of. The trailer title is always mailed to me and I keep them tucked away.

This varies state to state. In wa you have a title for the boat AND a title for the trailer and when buying or selling you need bill of sales for both.

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You will need to get a statement with payoff amount and per day interest added for the seller. Then the seller has to get their finance/cash together to pay your loan off. The title will be released to you then you sign it and mail it to the buyer. (if your state even titles boats.)

It is a headache for sure but worth it. I did this process with the boat and with a truck.

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I have done this more than once and each time I completed bill of sale with buyer and had them wire the money into my bank acct. The buyer takes delivery when money is in my bank.

Btw, there is no title in these boats that I know of. The trailer title is always mailed to me and I keep them tucked away.

We have titles for both the boat & trailer in WA, OR & ID.

I've always found it easiest to hook up a representative from the buyer's bank (assuming their getting a loan) with someone at your bank (assuming thats who the lien holder is). They are familiar with how to do the transfer (I've done it with a cashiers check & with a wire transfer). And everyone ends up happy.

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When I bought mine it had a lien on it. I also had to use a loan to purchase. We ( seller and I) met at my bank. They wired the loan payoff amount to the sellers bank and gave them a check for the difference.

Both the seller and my bank had been in contact with the sellers bank before hand.

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This varies state to state. In wa you have a title for the boat AND a title for the trailer and when buying or selling you need bill of sales for both.

Yup. Both boat and trailer have title on mn and lien could be on one or both.

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I did something similar with a Corvette a while back when I lived in California. It was similar to what oldjeep and chris4x4 stated. It might make you feel better to call your lender and tell them what you are looking to do. They will likely tell you that once they (your bank/credit union) are paid off, that side will be wrapped up. They told me that the new buyer, if taking a loan, would likely want to contact their bank first to explain the transaction. The buyer's new bank will be motivated to make it work since they are going to want to earn the business from their client...aka your buyer. Keep in mind, all the lenders want is 1.) satisfaction of payment for your loan-your bank and 2.) guaranteed collateral (aka the ability to put a lien on a title) for the new owner's loan-his bank. In California, when you trade in a vehicle at a dealer, the DMV usually takes time (30-45 days) to issue a new title anyway, so it's not like you get handed a title when you buy a vehicle. In my scenario, the buyer had cash. I met him at my credit union and he paid them for the car. They helped us with the DMV paperwork so he could re-register it and gave him a document showing that the lien was cleared on the spot. I believe I also signed a power of attorney which allowed my bank to communicate with him and the DMV/ take the necessary steps to complete the transfer. The bottom line is that if someone wants your boat, there may be an extra step or two but your bank should be willing to sit down with you and the new buyer to help out...remember...you are paying off the loan and they like that! Now...if your new buyer needs a loan, it is very possible that he/she can take a loan with your bank/credit union and you can one-stop shop it! Also, just like a dealer, your buyer could potentially execute the transaction with a loan from your bank and then just call their bank to take over the loan, but your buyers bank will tell him their opinion on that (or what steps they prefer). I think the bottom line is that if you call your bank they should be able to explain how they can help. Be up-front when selling it and tell them you have a loan/lien on it. Many people buying "big toys" like boats will have patience with the process, and the banks are very familiar with making it work!

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If I were buying a boat from a private party with a lien on it, even if I were paying cash, I would finance at least some portion of the purchase with my bank.

They know how to deal with liens, and would get everything taken care of correctly.

It would give the buyer and you peace of mind knowing the title work was handled professionally.

Might be something you want to suggest to the buyer.

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I just bought a boat that had a lien on it. I paid cash. We did it all at the bank. I paid the seller. The seller paid off the loan. They handed me the title. I went home. If your lending bank isn't local it's harder.

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