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Buying a Foregn Flagged boat that's never been exported from US

Discussion in 'General Yachting Discussion' started by Dleighton, Mar 8, 2016.

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  1. Dleighton, Mar 8, 2016
    #1
    Dleighton

    Dleighton New Member

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    We need some help! We are attempting to buy a Foreign flagged (Canada) boat from a Canadian couple who bought the boat in the US 7 years ago and the boat has remained in the US except for yearly visits to Bahamas. The boat was Originally imported and sold in the US and documented in the US by all previous owners. The boat was never exported to Canada. The questions are:

    1. Some say we need to do an offshore closing, is this really necessary and why?

    2.Are there any rules against this sort of transaction?

    3. Is there any way to prove the original duty was paid? We have exhausted phone calls to customs and the original broker without real proof, the records are over 15 years old.

    Any and all help would be much appreciated as we absolutely Love this boat!
    D L
  2. Pascal, Mar 8, 2016
    #2
    Pascal

    Pascal Senior Member

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    I am no lawyer (thank god) and do not intend on playing one....but... AFAIK

    Yes, you need an offshore closing if the vessel is foreign flagged. No big deal.... Just go in international waters, sign the papers, take a picture of the gps lat Lon with the day's paper of your choice

    If the vessel was documented, you may be able to get the info from the USCG documentation center. I m not sure how long they keep the records

    That said your best bet to make sure it's all done right would be to use a documentation agent... Cost a few hundred dollars.
  3. olderboater, Mar 8, 2016
    #3
    olderboater

    olderboater Senior Member

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    You did not indicate where the boat was built? If your other information is true, however, that really doesn't matter. Documentation in the US would serve as evidence duty was paid.

    Regardless, you don't need to go offshore for closing due to NAFTA. Note he was referring to Canada as foreign flagged.

    Simply because of the complexity of paperwork, documentation and state registration as well as title protection, I would recommend using a documentation agent as Pascal did. They make life much simpler and can quickly sort through all details in a worry free and expeditious manner.
  4. Capt Fred, Mar 8, 2016
    #4
    Capt Fred

    Capt Fred Senior Member

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    People in California do offshore closing and then keep the boat out of California for 360 days to avoid sale's tax, don't know if that would apply in your situation.
  5. olderboater, Mar 8, 2016
    #5
    olderboater

    olderboater Senior Member

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    What state is it currently registered in and what state will you be registering it in?
  6. RER, Mar 8, 2016
    #6
    RER

    RER Senior Member

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    If it has been a USCG documented vessel the records will be recoverable when returned to USCG documentation and it will be assigned the same official number that it had before.

    If the vessel is in Transport Canada registry and the sale takes place in Canadian waters there could be Canadian tax liability.

    What is the value of the boat? In other words, how much exposure are you putting yourself in? If it's a lot of money, spend a little money and consult with a maritime attorney. There are many who specialize in such transactions.

    Sale of a foreign flagged yacht while in the USA on a cruising permit is typically done offshore.

    It's doubtful there would be an issue with duty. Sales tax is another matter however.
  7. dennismc, Mar 8, 2016
    #7
    dennismc

    dennismc Senior Member

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    The vessel cannot be US documented and owned by Canadians, not possible, if it was sold to Cdns while US documented, it would have been removed from documentation, if you wish to have it documented it may be an issue to do that as it used to need to need an act of Congress to do that (assuming US hulled). There was no issues with me selling my Hatteras Cdn flagged to a US customer, the closing took place in Florida at the brokers office.
  8. RER, Mar 8, 2016
    #8
    RER

    RER Senior Member

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    A non US citizen can own a USCG documented vessel by holding title in a US entity such as an LLC with a US citizen installed as director.

    In this case the Op stated that it is a former USCG documented vessel now in Canadian registry and owned by Canadians.
  9. olderboater, Mar 8, 2016
    #9
    olderboater

    olderboater Senior Member

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    Yes, the only thing the OP didn't state was his citizenship and where he intended to keep it and register it. However, if the boat was ever documented in the US, then it's tax paid and the fact it's been flagged in Canada since then does not change that. However, there may be intricacies specific to the facts in this situation that require a professional who deals with it every day.
  10. dennismc, Mar 8, 2016
    #10
    dennismc

    dennismc Senior Member

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    Like I said, the vessel cannot be US documented and owned by Canadians, holding title in an LLC is proof of ownership by a US entity not a foreign entity.
  11. olderboater, Mar 8, 2016
    #11
    olderboater

    olderboater Senior Member

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    No one has ever said it was. It was US Documented prior to ownership by the current Canadian owners.
  12. JWY, Mar 8, 2016
    #12
    JWY

    JWY Senior Member

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    NAFTA applies to boats built in North America, not its flagging. The op didn't say she was a Canadian built vessel.
  13. ChesterLee, Dec 15, 2019
    #13
    ChesterLee

    ChesterLee New Member

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    reviving this thread as we have an identical situation. Boat originally imported into US with duty paid. After a couple of owners sold to Canadian owners via broker, registered in but never exported to Canada. Therefor no Canadian import duties/U.S. export document. Canadian flagged since under new ownership. Now U.S. citizen wishing to buy this boat. Could someone point us in the right direction for accurate advice?
  14. Pascal, Dec 15, 2019
    #14
    Pascal

    Pascal Senior Member

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    You have to prove duties was paid. Your best bet is to hire a documentation agent to handle the paperwork and advise you accurately. There are many good ones depending on where you are.
  15. JWY, Dec 15, 2019
    #15
    JWY

    JWY Senior Member

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    I highly recommend Howard (Steele) Reeder. I have used him as my customs broker for decades. Easy to find on web search.
  16. Danvilletim, Dec 23, 2019
    #16
    Danvilletim

    Danvilletim Senior Member

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    We used Reeder and was like $500 in fees since the boat was previously us flagged before it was flagged foreign to Canada.

    I do remember a potential issue of having to redo the load line / tonnage cert. some how we barely got away w not doing it, but that would have been some dollars. Call Reeder. We used Trey Reeder.