How a lien affects the transfer
When a boat is financed, the lender is recorded on the title or, for a documented vessel, a preferred ship mortgage is recorded with the Coast Guard. The title cannot pass cleanly to us until the lender releases that interest.
In some states the lender holds the paper title until the loan is paid. In others you hold it with the lien noted on it.
The usual path
- Ask your lender for a payoff amount good through a specific date
- Pay the loan off, or confirm it will be paid at transfer
- Get the lien release or a satisfaction of mortgage
- Sign the title over to us with the release attached
When donation does not make sense
If you owe more than the boat is worth, paying off the loan to donate it may cost more than it returns. We will look at the numbers with you and say so honestly if donating is not the right move.
Working out whether it makes sense
Start with two numbers: the loan payoff and a realistic sale price. If the boat is worth clearly more than you owe, paying off the loan and donating can still work well. If you owe about what it is worth, or more, donating may cost you money. We will help you think it through honestly.
Liens from storage yards and mechanics
Not every lien is a bank loan. Storage yards, marinas, and repair shops can sometimes place a lien for unpaid bills. These also need to be settled or released before the title can transfer.
Documented vessels with a mortgage
For Coast Guard documented boats, a preferred ship mortgage is recorded with the National Vessel Documentation Center. The lender files a satisfaction of mortgage when the loan is paid. We cannot record the transfer until that is on file.
Questions
Can you pay off my loan out of the sale?
Generally no. The lien needs to be released before the title transfers to us. Call us to talk through your situation.
I paid the loan off years ago but the lien still shows. What do I do?
Ask the lender for a lien release letter. If the lender no longer exists, your state has a process for clearing an old lien, and we can point you to it.
Does a paid-off loan change my deduction?
No. The deduction is based on the donation itself, generally the sale price on Form 1098-C. The loan balance does not change it.
How long does a lien release take?
It varies by lender and state, from days to several weeks. Ask your lender when you request the payoff.
Can I donate a boat I am still making payments on?
Only after the loan is paid and the lien released.