Floating Docks: California or Federal Law

Ever wonder if the floating docks in San Diego Bay are governed by California law or federal admiralty law, or if they are real or personal property? Suppose you want to sell a marina – how do you transfer title to a floating dock? Do you use a grant deed recorded with the county, an unrecorded bill of sale, or transfer documents filed with the Coast Guard? If you are taking back a note for part of the purchase price secured by the dock, is it secured by a deed of trust recorded with the county, a UCC-1 financing statement filed with the Secretary of State, or a ship’s mortgage filed with the Coast Guard?

Most docks in the San Diego area are a combination of pylons – permanently anchored to the sea floor and clearly real estate – with floating docks loosely attached. Until the U. S. Supreme Court issued an opinion earlier this year in Lozman v. City of Riviera Beach it wasn’t clear whether California law or admiralty law applied to floating docks. The case involved a floating home against which the City of Riviera Beach filed a federal admiralty action to recover moorage fees. The U. S. District Court and the Eleventh Circuit Court of Appeals found admiralty jurisdiction applied – the home was a “vessel” under federal admiralty law because it was capable of movement over water.

Note that the “vessel” at issue in the Lozman case was not a typical vessel – it had no ability to propel itself, had no rudder or other steering mechanism, was rectangular in shape, and was dependent on land-based electricity. Kind of like a floating dock with a house on it.

The Supreme Court reversed the Eleventh Circuit. The federal law defines “vessel” as “every description of watercraft or other artificial contrivance used, or capable of being used, as a means of transportation on water.” The Eleventh Circuit read this definition to include just about any floating structure. The Supreme Court rejected the “anything that floats” approach, finding that just because a structure floats does not mean it is “capable” of being used as a means of transportation. The Court held that a structure does not qualify as a “vessel” unless “a reasonable observer, looking to the home’s physical characteristics and activities, would consider it designed to a practical degree for carrying people or things over water.”

So, floating docks, like floating homes, are governed by California law, not federal admiralty law.

Now the question is, is a floating dock real property or personal property? Is title transferred by grant deed or bill of sale? Is a lien secured by a deed of trust or a UCC-1 financing statement? The safest approach is all of the above – in particular because the pylons to which the docks are attached are real estate. Use a grant deed and bill of sale to transfer title, use a deed of trust and a financing statement to secure indebtedness.

But at least you don’t have to worry about federal law.

September 2014