Buying a boat from Alabama

[BCBassman]

Hello

I'm from British Columbia Canada I'm looking at buying a Legend V20 from a gentleman from Alabama State. He says there's a lien on the boat but I've read that Alabama doesn't issue titles on boats or motors. How then does the bank lien the boat and what's the safest way for me to purchase this boat.

I know I need the registration paperwork a bill of sale notarized or witnessed and signed by two people.

Also if I'm not registering the boat in Alabama I've read I don't have to pay sales tax. Can anyone confirm this?

I appreciate any help on this.

I know it sounds weird coming all the way from the west coast a buddy of mine drove to Oklahoma to get his Legend not sure I want to do that in the winter.

Thanks
Shawn Smith

[Ranger RT]

You buying from an individual or dealer?

[Bamaman]

Liens in nontitle states are filed on a UCC-1 Financing Statement at the Secretary of State in Montgomery. You would probably need to get the seller to contact his lienholder and give them the authority to talk to you. Hopefully they are local and not in another city/state.

The finance company can tell you their preferred.way to be paid. Many will want funds wire transferred into their checking account. All will take cash but you wouldn't want to go that route if the payoff is $10,000 or more USD. You can pay the seller for anything over the payoff directly.

The seller would give you a bill of sale. The lienholder would give you a copy of the UCC-1 Financing Statement with a signature releasing the lien. Technically you could send that form to the Sec. of State and they would remove the lien from public records. If you are taking the boat to Canada, the UCC form would be not applicable. Sales taxes are also N/A, as they are usually paid in states when the boat is licensed. I would assume it would be the same in Canada.

I would suggest you contact your local boat licensing authority and ask what documentation is required from a nontitling U.S. state.

If you are careful, the sales process can run smoothly. The main thing individuals buying mortgaged equipment need to do is make sure the finance company is paid.

Those buying boats in nontitle states, especially expensive boats, need to put it on the seller to document their purchase and the source of funds where they purchased the asset. Otherwise the buyer would need to file a UCC-11 Search by name and serial number to verify the boat is not mortgaged and that the seller is not "converting" the bank/finance company's collateral and not forwarding the payoff. It happens from time to time.

[BCBassman]

Thanks for the advice it's a private sale I emailed the seller stating I would need a lien release and asked for the name of his lien holder but so far I haven't heard back.

[Skeeter-14]

Or he can borrow the funds to pay the boat lien and clear the confusion then sell it to you with no lien.

[mikeaugustine]

Mr. Smith, unless you are getting an amazing deal I wouldn't recommend buying a boat with a lien on it. And if you are getting an amazing deal that would draw you to buy it from Canada I would have to wonder why. Sounds like the guy is at least being up front and letting you know there is a lien, but who knows how hard it will be for you to import it and register it until that lien clears. If it were a cheaper boat I might take the gamble. Also, is this boat coming from the coastal area/salt water? Just something else to consider. Good luck, I hope things work out or you find what you are looking for.

[cp3434]

I have bought many boats and several were as u stated If the seller has a loan get all the bank info including wiring info. Have all your money sitting with lawyer or bank official Once u seller with boat and all is good have bank/lawyer wire funds Transfer usually takes less than hour

[Keith6628]

Mr. Smith, unless you are getting an amazing deal I wouldn't recommend buying a boat with a lien on it. And if you are getting an amazing deal that would draw you to buy it from Canada I would have to wonder why. Sounds like the guy is at least being up front and letting you know there is a lien, but who knows how hard it will be for you to import it and register it until that lien clears. If it were a cheaper boat I might take the gamble. Also, is this boat coming from the coastal area/salt water? Just something else to consider. Good luck, I hope things work out or you find what you are looking for.

Ridiculous statement!!!! Fact is if you are buying a high end boat its probably going to have a lien on it. Ive bought boats out of state and sold boats to people out of state and they all had liens on them. Ive never had a issue that couldn't be handled by a phone call or email. The only thing you need to worry about is pick the boat up on a work day so the 2 of you can go to the bank and pay the lien off and the bank will give you paperwork stating such. You personally don't have to do anything with the State of Alabama, any issues in the future they would contact the Seller not you. The last boat I bought I purchased from Illinois and my bank just wired the money to his bank and it was that simple. Drove about 800 miles and picked it and brought it home. Do not be nervous Alabama is very easy to deal with on these matters. The only thing I would research if I were you is making sure I had what I needed to get it into Canada.

[Keith6628]

I forgot "No you do not have to pay sales tax".

[Bamaman]

And what happens if buyers pay the seller for a boat and the seller doesn't payoff the lienholder? That's called conversion of collateral. The bank has the right to send a heavily tattoo'd 6'7" 300 pound repo agent named Bubba to your house, and he is going to take possession of the bank's boat.

Some of my close business friends were Bubba's.

[Keith6628]

That's exactly why I said pick it up when the bank is open and take care of it. This is not something to just trust some ones word. Or do what I did and wire the money to the bank. Very simple nothing to be scared of.

[tharris811]

I have bought a lot of things when there was a lein. Talk to the bank get a 10 day pay off and then cut 2 checks. 1 check to the leinholder and 1 the the person for the rest of the balance.

[F150owner]

The buyer can send a check directly to the bank/lien holder with a signed letter from the borrower to release the lien to the individual purchasing the boat (name, address, phone#, etc.). The bank will send the title/certificate to the new owner. Any overage paid will go to the current owner. Everyone happy. The buyer just needs to be sure that the payoff information is accurate.