The Certificate of Documentation issued by the National Vessel Documentation Center to a vessel serves a dual purpose. It is both a certificate of nationality and an authorization for the vessel's use in general or specific trades.
Documentation is statutorily required for all eligible vessels engaging in United States commerce, the Coastwise Trade and/or American fisheries, and is an optional registration alternative to pleasure vessels. An endorsement for Coastwise Trade is required to do what is commonly referred to as "Six Pak Charters", and restricted to United States-built hulls. Any vessel not used in commerce applies for a Recreational endorsement. Multiple endorsements are allowed for eligible vessels. United States Citizenship of the owner is required, whether it is an individual, partnership, corporation or limited liability company. The Code of Federal Regulations outlines the criteria of citizenship for each owning entity.
Once documented, and as long as documentation is retained, the vessel is considered to be a "Merchant Vessel of the United States." This term applies to vessels in a commercial capacity, as well as those used exclusively for pleasure. Documentation also establishes an official basis for vessel identification and control. It serves to facilitate trade and commerce by classifying vessels for regulation, safety, pilotage, fee assessment, and taxation purposes.
Documentation of pleasure vessels is important to the marine industry in a number of ways. It provides a yacht significant protection when operating in international waters; it simplifies customs procedures for entering a U. S. port and facilitates the recovery of stolen boats. Most importantly, however, documentation appears to be the best available method of providing some assurance of ownership. While documentation does not guarantee title, it is a method that the banking community, in the financing of boats, utilizes to assure a certain degree of security.
The financing of a vessel usually requires documentation so that the lender may record a First Preferred Ship's Mortgage. The Mortgage protects the lender under Federal Law, and makes the marine industry an attractive business market. In the alternative, a State registration does not allow for the recording of liens in States where there are no Titles. Massachusetts, Rhode Island and Vermont issue Titles, like a car Title, however New Hampshire and Maine do not issue Titles to boats. The uniformity of the Federal protection is extremely important to lenders in this industry.
A documented vessel is marked with her Official Number on the interior of the vessel, usually on a main beam, or on hull inside of a locker. This Number identifies the vessel in the Federal documentation system for its life. When the vessel leaves documentation, and is later returned, the Official Number is revived for the new documentation. Some States require registration of documented vessels, which requires the display of a decal. Usually this decal when displayed indicates that the vessel has complied with the relevant State statutes for payment of sales tax and/or use tax.
A State registered vessel is marked with her State number on the port and starboard bows, with a decal affixed at the end. Depending on the State of registration, the vessel may also have a Title, which is required to transfer ownership.