How to sell a boat you still have a loan for

Is the boat documented? If not, what state is it titled in?

You will need a settlement of the sale including your lien holder in the process. Typically the sales agreement should work just like the sale of a home and there should be payment made by the buyer to the lien holder for the balance owed plus payment made to you for the additional sales price. The lien holder then submits the paperwork to the National Vessel Documentation Center evidencing satisfaction of the lien. A sample form is available on their web site.

USCG National Vessel Documentation Center, Forms Page

Also on that same site, you can find a Bill of Sale. This is the document that will transfer ownership of the boat.

The actions necessary for the state vary by state. New York actually has a "Statement of Transaction" form. New York does require registration of documented boats.

The lien holder can provide you assistance and details of how to best handle the transaction.

It works great if the buyer uses a documentation service (and if they are getting a, loan the bank will usually require it. Then the service handles all the closing issues , very much like selling a house. Just having bought and sold boats with loans, this works out really well. Your broker should be very familiar with the process and able to drive it.

I was guessing he wasn't using a broker. Still your comments are good and the use of a service can be most beneficial. If a broker is used, they could, as you suggest, drive the process.

If your buyer is getting a boat loan to buy your boat, their lender will likely coordinate the existing loan payoff and re-documentation. If its a cash purchase I would encourage the buyer's employment of a yacht documentation service which will handle the re-documentation and related paperwork and can also act as an escrow agent to collect and disburse the funds, make the payoff and secure the release from the bank.