Buying a Boat? Here’s What the Law Says You Need to Do

There’s something exhilarating about buying your first boat—the promise of weekends on the water, exploring new coastlines and enjoying the freedom of open seas. But before you cast off and enjoy that first cruise, there are important legal steps you must take to ensure your purchase is legitimate, safe, and fully compliant with state and federal regulations.

Buying a boat isn’t as simple as signing a check and sailing away. Like any major asset purchase, it involves paperwork, legal obligations, and sometimes financing arrangements that need careful attention. Whether you’re buying from a dealer or a private seller, understanding what the law requires is essential for a smooth and secure ownership experience.

Here’s a breakdown of the key legal steps you need to know when purchasing a boat.

Conduct a Title and Lien Check Before the Purchase

Before finalizing any transaction, you need to confirm that the seller has legal ownership of the vessel. This means verifying the boat’s title and ensuring there are no outstanding liens against it. Much like with used vehicles, boats can be financed, and the lender may hold a lien until the debt is paid off.

If you buy a boat that still has an unresolved lien, you could become liable for the debt or risk losing the boat altogether. Request the official title from the seller and verify its authenticity with your state’s boating or wildlife agency. Many states provide an online database where you can check vessel records, including lien status and reported theft.

Also, confirm the Hull Identification Number (HIN) on the title matches the one physically stamped on the boat. Discrepancies can be a red flag for fraud or previous damage that wasn’t disclosed.

Register the Vessel With the Appropriate Authority

Once you’ve completed the sale, you must register the boat in your name. Registration requirements vary by state, but most require you to file paperwork within a specific timeframe—often 15 to 30 days after purchase. Registration is usually handled by the Department of Motor Vehicles (DMV), Fish and Wildlife agency, or another maritime authority.

You’ll typically need to submit the signed title, a bill of sale, and payment for registration fees. Some states may also require proof of sales tax paid or a certificate of inspection for certain classes of boats. Upon approval, you’ll receive registration decals and a certificate that must be kept on board during operation.

Failure to register your boat properly can result in fines, legal complications, and even impoundment if you’re stopped by maritime authorities.

Secure Adequate Insurance Coverage

While not every state mandates boat insurance, it’s highly recommended—and often required if you’re financing the purchase. Insurance provides financial protection in case of accidents, theft, or damage to your vessel or someone else’s property.

Basic boat insurance typically includes liability, collision, comprehensive, and medical payments coverage. Depending on where you plan to operate the boat, additional options like towing assistance, uninsured boater coverage, or fuel spill liability may also be worth considering. If you’re exploring financing options, such as through SeaDream boat financing, your lender may require proof of insurance before finalizing the loan. Ensuring you have adequate coverage in place from day one protects both your investment and your peace of mind. Taking this step early also makes it easier to get on the water without delays.

Know the Licensing and Safety Requirements

In many states, boat operators are required to complete a boating safety course and carry a boater education card, particularly for powered vessels. Age restrictions and licensing requirements can vary significantly depending on your location and the size or type of boat.

Even if your state doesn’t mandate formal training, completing a course through the U.S. Coast Guard Auxiliary or other certified organizations can make you a more confident and responsible boat owner. Courses cover navigation rules, emergency procedures, docking techniques, and maritime laws that apply to recreational boaters.

Also, be sure your vessel is equipped with all legally required safety equipment. This includes life jackets for all passengers, fire extinguishers, distress signals, navigation lights, and a sound-producing device such as a horn or whistle. Failing to meet safety requirements can lead to fines or citations if you’re inspected on the water.

Understand Sales Tax and Use Tax Obligations

Boat buyers often overlook the sales tax or use tax that applies after purchase. If you buy from a dealer, the tax is usually included at the point of sale. However, private sales may not include tax, and you’ll be responsible for reporting and paying it when registering the boat.

Sales tax rates vary by state and sometimes even by county. Some jurisdictions also apply a use tax if the boat is purchased in a state with no sales tax but used in a state that requires it. Failing to pay the correct tax can delay your registration or result in penalties.

Check with your local tax authority or boat registration office to ensure you’re in full compliance. Keeping accurate records of the transaction—including the purchase price and date—is essential for reporting purposes.

Buying a boat is an exciting milestone, but it also comes with legal responsibilities that shouldn’t be overlooked. From verifying ownership and registering the vessel to securing insurance and meeting safety standards, each step ensures your time on the water is as enjoyable as it is compliant. By taking the time to understand the rules and follow through with the right paperwork, you can enjoy your new investment with confidence, knowing you’ve done everything by the book.