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Legal Advice needed

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Old 02-21-2006, 10:54 PM
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Default Legal Advice needed

My buddy is in a jam. Last July, he bought his boat. He went to the local bank and applied for a loan to buy it. He was approved, and they gave him a check. He filled out all the paperwork regarding the boat, bill of sale, etc. It was a Coast Guard documented boat, so no title. The previous owner made out a bill of sale to my buddy, etc, etc. Well, here's the problem.

Number 1, the bank cannot get the boat re-documented/ titled with the CG because the previous owner that my buddy bought it from never registered the boat in the 4 years he owned it. So now, the bank people are trying to locate the original owners so they can get signatures to get a title.

Number 2. My buddy who has the boat is extremely angry. He has no proof that this is his boat, no title, registration, nothing. But the bank doesnt care about that. They just keep calling him saying they need a payment on the loan, but disregard the title issues.

So, my question is, since the bank technically cant put a lien on the boat, if they dont have the proper paper work, and my buddy cant get his registration done, who wins here? At this point my buddy just wants out of the boat, and the loan. They are threatening to garnish his wages and put a lien against his house if he dont pay up! He was recently laid off, wants to sell the boat, but cant do that becasue he has no proof he owns it! What a mess!
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Old 02-21-2006, 11:01 PM
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Default Re: Legal Advice needed

Rule #1 Don't ruin your credit.
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Old 02-21-2006, 11:07 PM
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Default Re: Legal Advice needed

call CG documentation people, http://www.uscg.mil/stcw/ this should help.

Ask them what to do to get documentation. They should be able to help, I am guessing he will have to go through documentation process again. hope this helps.
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Old 02-21-2006, 11:33 PM
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Default Re: Legal Advice needed

He hasn't been making the payments?
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Old 02-21-2006, 11:39 PM
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Default Re: Legal Advice needed

He has, but he didnt make the last payment or two. I think his credit was poor from the get go. Thats why he went to this place. "American General"
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Old 02-21-2006, 11:45 PM
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Default Re: Legal Advice needed

Quote:
Originally Posted by MILD THUNDER
He has, but he didnt make the last payment or two. I think his credit was poor from the get go.
That definatly won't help his credit any.
Hopefully it is just one of those things that will take some time to get all the paper work up to date. Being a government involvement, I'm sure it will move right along.
Good luck to your buddy
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Old 02-22-2006, 12:02 AM
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Default Re: Legal Advice needed

Why would he not make the payments? Sounds like some buyer's remorse to me.
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Old 02-22-2006, 12:12 AM
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Default Re: Legal Advice needed

Quote:
Originally Posted by noboat
Why would he not make the payments? Sounds like some buyer's remorse to me.

He's broke right now. Trying to get back on his feet since he got laid off. Suppose to go back to work in a few weeks.

I gotta try and help him get this paperwork straightened out so he dont lose his boat, or anything else.
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Old 02-22-2006, 12:25 AM
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Default Re: Legal Advice needed

first just because the bank can't perfect the lien doesn't mean the contract for payment isn't valid. He signed the note he owes the money.

It's the buyers responsibility to assure marketable title. Sounds like he didn't get an abstract of title search on the boat before he bought it to know who owned it. He may find out that the guy that sold it didn't own the boat...see the National Marine thread for reference.

He owes the money and if he can't produce the documentation to perfect the lien the finance company can probably demand payment in full if they want under default terms.
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Old 02-22-2006, 12:51 AM
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Default Re: Legal Advice needed

I feel for your friend. This is complicated.

I Coast Guard document my boats and keep them in a state where the state law does not require that boats be registered if they are Coast Guard Documented.

When I sold a boat last fall my Coast Guard documentation on the boat served as the only legal means of proving that I actually owned the boat and had the legal right to sell it. It served as my Title.

When I sold my boat, right there on the back of my coast guard documentation was a form that served as the legal means for transferring ownership of the boat - when signed by me (the sole owner) and properly notarized. However, I owned this boat free and clear - no bank loan. The previous owner of the boat also had it Coast Guard documented, but he had a bank loan on it. So before I could get Coast Guard documention on the boat when I bought it, his loan on the boat had to be payed off and the lean-holder clearly identified on the documention form (his bank) had to inform the coast guard that they were releasing the lean on the boat.

Here is where it got complicated. I had the owner of the boat fill out a bill of sale stating that I was going to pay off his bank loan on the boat, and at the point where his bank received the money that he had already agreed in writing that his bank was to send notice to the coast guard that the loan was payed off, and that the bank acknowledge that fact, and that I was the new owner free and clear.

So for this transaction I had a bill of sale in hand from the seller, a signed letter from the bank that it was me paying off the loan, and that the previous owner was selling his interest in the boat to me, and that the bank would inform the coast guard of all of this when they received the payoff from me. Complicated but protect thy ass I say.

When his bank received the funds, as already agreed upon by myself, the owner, and the bank, they notified the coast guard of this transaction and the coast guard then began the process of getting the boat documented in my name. Again, complicated, but I felt better safe than sorry.

Ok, now on to your friends situation.

Quote:
Originally Posted by MILD THUNDER

Number 1, the bank cannot get the boat re-documented/ titled with the CG because the previous owner that my buddy bought it from never registered the boat in the 4 years he owned it. So now, the bank people are trying to locate the original owners so they can get signatures to get a title.

Number 2. My buddy who has the boat is extremely angry. He has no proof that this is his boat, no title, registration, nothing. But the bank doesnt care about that. They just keep calling him saying they need a payment on the loan, but disregard the title issues.
A: I don't understand your first point because banks are not in the habit of giving out loans on boats unless THEY HAVE ESTABLISHED CLEAR TITLE or paper-trail in hand (forged documents from the likes of Nat Marine Scum not withstanding). Previous registration by the previous or not, how did your friend get a loan from the bank on this boat unless he or the seller had presented a clear title to the bank in the first place at the time when your friend was requesting the loan? The fact that the previous seller didn't register the boat in his state has nothing to do with the title issue because you said the boat was Documented.

Point 2. When a boat is Documented, THE Coast Guard DOCUMENTATION SERVES as the TITLE and the proper form for transferring title. If your friend has a Bill of Sale in hand, and the previous owner had properly transferred his ownership of the boat over to your friends bank VIA THE BACK OF THE DOCUMENTATION FORM, I dont see why your friend has any trouble in establishing ownership. His bank owns the fregging boat until he pays off the fregging loan. Again, I just don't buy your friends story about the title because without first establishing ownership and then transferring it to themselves, and the money to the seller, the BANK would not have given a loan on this boat to your friend in the first place.

Are you sure your friend isn't just making up the title business story because he can't or doesnt have the means to pay off his loan? Because somewhere this just don't all add up.
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