selling boat with lien

[boatman37]

Decided to sell our boat but have a few questions. Boat has a lien on it (trailer does not have any liens). I called the lender but thought I'd ask real world folks here.
So owe about 60% of the boats value so good there. Lender has no physical institutions anywhere near me.
How have others gone about this? I COULD pay off the loan but would rather not take that route as it would involve selling stocks, etc.

I'm in PA just in case that matters.

Can I sell the boat with a Power of Attorney authorizing the buyer to sign the title for me once they get it? Or do they have to pay off the loan, wait until the title gets to me then we transfer the title at the notary? And until that point the boat stays in my 'custody'?

If I can do the Power of Attorney thing that would seem to be the easiest route? Then the buyer could take the boat right away?

Would like to sell it before we pull it for winter storage but that would be a long shot

 

[Skybolt]

You can't do what your trying to do. I don't think any buyer would buy a boat with a lien on it either, but you never know. Is the sale in cash?

Either way the lien either has to be re-assumed by the new buyer, which needs a letter(s) from the lending institution granting the new owner to do so. If that can even be done. I can't imagine the state allowing this either from a DMV point of view.

Is there going to be a "closing" with a title agent or some 3rd party acting as such? If so the best way to approach this would be to get a pay off letter from the bank and pay it off at the closing.

The new buyer cannot get another loan against this boat with out handling the payoff at closing.

I am not a lawyer, so you may want to find one in your area that can advise you properly. The above is just from past experience in various states, but mostly NY. Other states make this a lot easier at times. I know MD is one of them that does. But PA requires notaries for a lot of things like this. So doing this remotely may not be possible.

 

[Stee6043]

I don't think power of attorney is the tool you'd use here.

I've purchased a boat from an owner who had it financed at a virtual bank (Lightstream). The buyer gives a certified check to you, made out to your lender, you sign the title with buyers info and then you send the title to the bank for them to sign as "lien released" along with the check. Your bank would either return the title to the buyer or forward it directly to their bank (if they are also financing the boat).

That's been my experience. My bank simply needed to see the signed title (from the title) and a bill of sale and they were fine. A month or so later the title came back, I concluded registration with the state and we were good to go.

EDIT - the second time I did this all the money moved via ACH. Both banks can basically be on the phone waiting to confirm receipt of funds. I want to say my second time through the sellers lender simply sent a "lien release form", we didn't even need to send the title to them. Not super painful. If you want pain - try terminating documentation. That makes dealing with virtual banks look downright pleasant...

 

[mdolesh]

You could take out a loan from Lightstream with no lien, pay off your lender and get free and clear title, and then pay off the Lightstream loan when the buyer pays you.

 

[KevinC]

Rules are probably going to differ from state to state. When I purchased my 260DA the title needed to be sent to the bank to have it stamped and released (NJ) by the old owner. In NY when the loan is satisfied a lien release is generally issued by the bank and you use that and the old signed over title to register. Have not handled this with documentation except for holding a lien release from the Bank.

Sometimes the tricky part is when the boat is sold in one state and being registered in another and the two states do not agree on what satisfies the old lien.

You are on the selling side so you will have less worries than the buyer but that may also limit your pool of interest. A good brokerage will handle all this for you but at the expense of a commission.

-Kevin

 

[KevinC]

You could take out a loan from Lightstream with no lien, pay off your lender and get free and clear title, and then pay off the Lightstream loan when the buyer pays you.

This is not a bad idea unless there are origination costs or the interest is much higher than is being paid now. But - holding a boat that is clear of any liens will be much easier to close and will appeal to buyers.

-Kevin

 

[Skybolt]

... Sometimes the tricky part is when the boat is sold in one state and being registered in another and the two states do not agree on what satisfies the old lien. ...

Yep, just went through this with PA and MD. It was a real PITA to settle. PA wants everything notarized in person. I had to go to the DMV with the buyer and fix it all. Never again.

 

[Strecker25]

If this is a private sale I would agree with paying it off. The lightstream unsecured loan is a good route and if you pay it within 30 days of instantiating the loan, interest will be minimal. Just be sure to check with whichever lender you use, lightstream or otherwise, that they allow full prepayment that quickly. Home equity another short term option, possibly?

If it's a brokered sale, or you can find one locally to simply perform the 'closing' they can take the buyer funds into escrow and pay your lien off to release the title. The broker/agent would play middle man and can even assist with registration, which eases the worry for both parties.

FWIW, this scenario is one example of where an unsecured loan like lightsteam is a benefit if the asset ever needs to be sold before the loan is payed off. We used lightsteam on our 410 and if I had needed to sell before the loan was paid it would have been easy since the transaction is independent of the loan and we held the 'title' (USCG Doc in our case). The buyer wouldn't have even been aware there was a loan in place and all funds would have been transferred directly to us

 

[mdolesh]

This is not a bad idea unless there are origination costs or the interest is much higher than is being paid now. But - holding a boat that is clear of any liens will be much easier to close and will appeal to buyers.

-Kevin

No origination costs and the interest is in line with most banks. At least it was when I did something similar a few years ago. Within 1 day I had 100K in my account. It was painless. There were no prepayment penalties either. Paid it off in a month when the other transaction cleared.

 

[ttmott]

Depends upon the type of lien - Is it a Mechanics Lien or a Note with principal due?
If it's a Mechanic's Lien you are SOL until it is satisfied and removed from record.
If it is a Loan (Note) as an encumbrance on the title then the buyer's payment must first satisfy the encumbrance and clear the title then any residual gets distributed to any agent then you.
If the boat is Documented then the encumbrance must be satisfied with the Dept. of Homeland Security and cleared before it can be Re-Documented to the new owner.

I wouldn't want to be a buyer and issue an owner a check hoping the owner will pay off the lien and clear the title without an agent. The Lien holder can be the agent in the case of a bank.

 

[Pirate Lady]

Why selling?

 

[boatman37]

Good info.

Selling cause we have hardly used it the past 2 seasons and feel its time to get out of boating. We bought a convertible Mustang GT and have been having fun with it and taking trips about every weekend.

There is no buyer yet as we haven't officially listed it yet. Have a minor repair I want to take care of first. Just a very small leak in the outdrive. Gonna try to get it to the shop this week but the oil is leaking into the bilge so suspect a cracked hose from the monitor but can't see it myself.

Sale will most likely be me selling it privately. Don't even know of any brokers in this area and not sure it's worth it for a 25' boat. Sale price will likely be around $38,000 for boat and trailer.

Thought about the Lightstream solution too. I used them when we bought our Sea Ray in 2015. Had the funds the next morning. But my current loan is 5% and Lightstream is over 10% now so would have to sell pretty quick to not get blasted by interest. Being this late in the year there is a good chance we won't sell it until spring so don't want to pay high interest all winter so if it doesn't sell by March or so then I may go that route. I only owe about $21,000 so wouldn't be a huge loan. Just looking for a way to sell it now if we find a buyer. Bank said it would take 24-48 hours to process the payoff if done by wire transfer. Went through Bank of the West with this loan in case anyone is familiar with their process?

I just think it would be hard to sell if the buyer has to wait a week or two to take possession. I'm not sure I would have that patience. I'm too impulsive...lol

 

[FootballFan]

I have always included language in my offer requiring free and clear of any liens.

When I bought the 340 years ago the seller had lien on the boat. We met at his bank, he paid off the loan, gave me a copy of the documentation from his bank the lien was satisfied. I then had my bank initiate a wire transfer to the seller for the purchase amount. Was at his bank about an hour. But clean.

 

[bbwhitejr]

Sold our 420DA in May. Owed about 30% of what I sold it for to a cash buyer. Following the survey, we signed the CG docs, GA registration, and a GA Bill of Sale for a Marine Vessel. He wired the payment if full to my bank. I turned around same day and wired payoff to other bank. Sent him a copy of the of the payoff and done. There needed to be a certain amount of trust during the entire process. He had flown up here from FL 3 times, gave me a personal check for the initial deposit, etc. The boat was going nowhere until I had payment and he had to trust me to pay it off. I guess we could have gotten a broker involved, but neither wanted the hassle....

Just my experience....

Bennett