State Vs. Coast Guard Registrations
Published on August 10, 2022
Is it best to register your boat with the state, or the U.S. Coast Guard?
Unlike other types of vehicles, when it comes to registering your Sea Ray boat you may have a choice between going through the state you live in, or federally documenting your boat with the U.S. Coast Guard. If you document with the USCG, you’ll essentially be titling it on a national basis. Usually this is an either-or proposition, though in some states you’ll also have to follow state boat registration guidelines even though it’s been federally documented.
Requirements for documenting a boat with the USCG
In order to document your boat with the USCG as opposed to the state, two basic requirements have to be met:
The boat’s displacement must be five tons or more.
The boat’s owner must be a citizen of the United States.
As long as these two criteria are met, you can fill out a CG-1258 form and title your boat with the federal authorities.
Reasons to document a boat with the USCG
Why would anyone want to register with the USCG instead of or in addition to state registration, in the first place? If you finance your boat the lender may require it, because changes in the federal documentation can’t be made without consent from the lender and documented vessels qualify for preferred mortgages (which gives the lender preference over other contractual obligations). Another important reason is that you may want to use your boat in international waters and a USCG documentation is recognized all across the globe. That can make it easier to get permission to enter and leave foreign ports.
State vs. federal documentation
Both methods of documenting your boat work, and will fulfill the rules for registering your boat. There are, however, some pros and cons that should be considered in addition to fulfilling the requirements of lenders and the ease of international travel. Obtaining state registration is often quick and easy and can be done in person. But the USCG will reject applications with minor errors, such as typos or forgetting to check a box, which can lead to long delays in completing the paperwork. As a result, some boat owners pay a service to handle the process, which can add hundreds of dollars in expense.
Speaking of expense, it's important to remember that federally documenting your boat as opposed to titling it with the state doesn’t excuse you from paying any sales tax or fees associated with buying a boat in that state. Also note that if your boat is documented and you sell it, you’ll need to fill out some additional paperwork for the USCG to transfer ownership.
Federal documentation, state registration, or both?
If you don’t travel overseas and you’re not financing with a lender that requires it, using state channels is probably the path of least resistance. But if you have international ports you want to visit or your lender says it’s a must, USCG documentation is the move.