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USCG Documentation or State Title - What's the Difference?

February 27, 2017

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Citizenship Requirements for U.S. Vessel Ownership

Not just anyone can own a U.S. Documented Vessel.  There are very specific citizenship requirements for owners of U.S. flagged vessels, and failing to follow these requirements can have disastrous consequences.  So who can, and who cannot, own a U.S. Documented Vessel?

 


First and foremost, as a general rule only United States Citizens can own United States Documented Vessels.   Any U.S. documented vessel which is sold to a foreign citizen must be deleted from documentation.  There are no exceptions to this rule - a vessel must be wholly owned by U.S. citizens.  That means that if a vessel is owned by multiple individuals, all owners must be United States citizens.  If you have dual citizenship, you qualify as a U.S. citizen.  On the other hand, if a husband and wife want to own a boat together and only one is a U.S. citizen, they cannot own the boat jointly if it is to be U.S. flagged.

 


The situation gets more complicated when it comes to corporate ownership.  A corporation meets the citizenship requirements if it is incorporate under the laws of the U.S. or a state, if its executive officer by whatever title is a citizen, if the chairman of the board of directors is a citizen, and the number of non-citizen directors is no more than a minority of the number necessary to constitute a quorum.  As an additional requirement, if the vessel seeks a fishery or coastwise endorsement, at least 75% of the stock interest in the corporation must be owned by U.S. citizens.

 

For a Limited Liability Company (LLC), all the members of the LLC must generally be U.S. citizens, and/or any person who has management authority over the LLC must be a U.S. citizen.

 

There are some small exceptions to these rules but the general theme is, if you intend to document a vessel and there are any foreign interests in the vessel, you will have to make sure the ownership structure satisfies the U.S. citizenship requirements.  If you have any questions about the citizenship requirements for U.S. documented vessels, feel free to email us at yachtdocsonline@gmail.com, or call us at 1-855-922-4836.

 

 

 

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