SC 2025-watercraft-tod-lien 2025-06-16

If I'm a transfer-on-death beneficiary on a South Carolina boat title, can the DNR refuse to issue me a new title because there's still a lien on it?

Short answer: No. Once the owner dies, DNR's job is ministerial: it must issue the new title to the named TOD beneficiary even if a lien is still recorded. The lien stays valid against the boat, but the agency cannot make the beneficiary clear it before retitling.

Disclaimer: This is an official South Carolina Attorney General opinion. AG opinions are persuasive authority but not binding precedent. This summary is for informational purposes only and is not legal advice. Consult a licensed South Carolina attorney for advice on your specific situation.

Plain-English summary

Starting July 1, 2025, South Carolina boat owners can name a "transfer on death" (TOD) beneficiary on the title of a watercraft or outboard motor, the same way many states already allow on car titles. The South Carolina Department of Natural Resources (DNR) asked the Attorney General what to do when the owner dies but a lien is still recorded on the title: can DNR sit on the new title until the beneficiary clears the lien?

The Attorney General's answer is no. DNR's job in titling boats is ministerial. If the application is in proper form, the right fee is paid, and the beneficiary shows proof of death, DNR has to retitle the boat in the beneficiary's name. The lien does not vanish, it stays recorded and stays enforceable against the property, but DNR cannot use it as a reason to delay or deny the new title. The only thing the lender loses at the owner's death is the option to chase the deceased borrower personally; everything else in the loan agreement and the security interest survives.

In practical terms, this opinion gives DNR a clear green light to retitle and tells lenders that a TOD designation does not let the beneficiary walk away clean. The boat still secures the loan.

What this means for you

If you're naming a TOD beneficiary on your boat title

You can use this designation to keep the boat out of probate. After July 1, 2025, the TOD beneficiary you list takes ownership the moment you die, automatically, and your personal representative does not need to administer the boat as part of your estate. You'll pay a $10 fee to set up, change, or cancel the designation. The beneficiary has no rights in the boat while you are alive, so you can sell, refinance, or change the designation at any time.

Two things to keep in mind:

The designation does not erase any loan or lien. If you owe money on the boat when you die, the boat still secures that loan when it transfers to your beneficiary.
If you co-own the boat with someone else, TOD only works if title is held with right of survivorship, and all co-owners have to agree on (and act together to change) the designation.

If you're a TOD beneficiary on someone else's boat title

When the owner dies, you become the new owner immediately by operation of law. To get the title in your name, you'll apply to DNR with the items the Department's procedure calls for: a death certificate, the application, personal property tax receipts, payment of the transfer fees, and any other documentation the agency requires.

Per this opinion, DNR cannot refuse to retitle the boat just because there's still a lien on it. But the lien is still a real lien. The lender can still repossess the boat if the loan goes unpaid, and the lender's rights against the property are unchanged. You step into the same position the deceased owner had: ownership, but subject to the existing security interest. Plan to either keep paying the loan, refinance it into your own name, or sell the boat and pay off the loan.

If you're a lender or lienholder on a SC boat loan

This opinion confirms the AG's view that a TOD designation does not impair your security interest. The lien survives the owner's death and remains valid against the boat regardless of who holds title. What you do lose is the ability to pursue the deceased borrower personally for any deficiency: the borrower is dead, and the property has transferred outside the probate estate. Your remedies under the loan agreement and your in-rem rights against the boat are intact.

The AG suggests that lienholders should be notified both when a TOD beneficiary is designated and when retitling occurs. If your loan documents do not already require notice of TOD designations, consider whether you want to address that in future loan paperwork.

If you're DNR titling staff

The AG describes your titling function under § 50-23-80 as ministerial. When a TOD beneficiary's application is in proper form, the fee is paid, ownership is established (death certificate plus the TOD designation on the existing certificate), and there are no undisclosed security interests, you are required to issue the new title. A disclosed, recorded lien is not a basis to withhold the title; the new statute (§ 62-6-401(H)) reinforces that you "shall retitle" upon a proper request.

If you're an estate planning attorney advising South Carolina clients

TOD on boat and outboard-motor titles is a new nonprobate transfer tool you can use alongside TOD designations on vehicles, payable-on-death bank accounts, and beneficiary designations on retirement accounts. Two practice points from this opinion:

It does not solve the lien problem. If your client owes money on the boat, you should plan for the beneficiary's path to either refinance, pay off, or sell the boat post-death.
The TOD beneficiary takes "precisely the interest the titled owner held before death, no more or less." Build that into your client conversations so beneficiaries are not surprised by the loan balance.

Common questions

Q: When does TOD on South Carolina boat titles take effect?
A: July 1, 2025. After that date, you can designate one or more TOD beneficiaries on the certificate of title for a watercraft or outboard motor by providing the beneficiary information on the title application and paying a $10 fee.

Q: What happens to the boat loan when the owner dies?
A: The lien stays. The TOD beneficiary takes the boat subject to whatever security interest was recorded on the title. The lender's right to repossess the boat, foreclose, or otherwise enforce its security interest survives the owner's death and the TOD transfer.

Q: Can DNR make me pay off the loan before issuing me a new title?
A: No. The AG concluded DNR's titling duty is ministerial. As long as the application is proper, the fee is paid, and proof of death is provided, DNR must issue the new title. A recorded lien is not a basis to withhold the title.

Q: Does a TOD beneficiary inherit through probate?
A: No. The new SC statute (§ 62-6-401(B)) treats the transfer as nonprobate and not subject to estate administration. The boat passes directly to the beneficiary at the moment of death, outside the will and outside the probate process.

Q: What documents will I need as a TOD beneficiary?
A: Per the procedure DNR proposed and the AG accepted: an application for certificate of title, a death certificate, personal property tax receipts, a notification of lien release from the lienholder if you are clearing the lien yourself, and payment of any transfer fees. If a lien is still in place and unsatisfied, you can still get the new title; you just take it subject to the lien.

Q: Can co-owners use TOD?
A: Only if the boat is titled with right of survivorship, and only if all co-owners act together to designate, change, or revoke the beneficiary. The TOD beneficiary takes only after the last surviving owner dies.

Q: Can the legislature change this?
A: Yes. The AG specifically noted that the General Assembly could, if it wishes, restrict TOD designations to clear titles or require lienholder consent. As of this opinion, the statute does not require either, and DNR cannot impose those requirements on its own.

Background and statutory framework

Act No. 200 of 2024 (S.C. Acts 1602) added a new TOD designation regime for personal property titled with the Department of Motor Vehicles or the Department of Natural Resources. The act amended four Title 50 statutes (governing watercraft and outboard motors) and added a new section to Title 62 (the Probate Code). Effective July 1, 2025, owners can list a TOD beneficiary on the title application (§ 50-23-60(A)(6)), pay a $10 fee to set up, modify, or revoke the designation (§ 50-23-70(F)), and have the designation reflected on the certificate of title itself (§ 50-23-90(a)(7)). Transfer on death is added to the list of operation-of-law transfers in § 50-23-130(a). The substantive rules sit in § 62-6-401 in the Probate Code.

Two features of § 62-6-401 are doing the work in this opinion. First, the beneficiary has no interest while the owner is alive (§ 62-6-401(C)), but the property "belongs to" the beneficiary at the moment of the last owner's death (§ 62-6-401(D)(1), (E)(3)). Second, the agency's role is described as a "shall retitle" duty (§ 62-6-401(H)) when proof of death is presented. Act 200 did not amend any of the lienholder-protection provisions in Chapter 23 of Title 50, so liens noted on a certificate of title remain valid against subsequent owners under § 50-23-140(a).

The AG's analysis turns on the well-settled distinction between ministerial and discretionary agency duties. Citing Wilson v. Preston, 378 S.C. 348, 662 S.E.2d 580 (2008), the opinion notes that a duty "defined by law with such precision as to leave nothing to the exercise of discretion" is ministerial. Title 50's titling provisions (§§ 50-23-80(A), 50-23-80(D)) tell DNR what it "shall" do once the standard prerequisites are met; they do not give DNR discretion to deny an otherwise proper application based on a disclosed lien. The new TOD statute uses the same mandatory language ("shall retitle") and reinforces that conclusion.

Citations and references

Statutes:

S.C. Code Ann. § 50-23-20 (titling requirement; thirty-day notice of transfer)
S.C. Code Ann. § 50-23-30 (exemptions from titling)
S.C. Code Ann. § 50-23-55 (titling, prima facie ownership)
S.C. Code Ann. § 50-23-60(A)(6) (TOD beneficiary designation, effective July 1, 2025)
S.C. Code Ann. § 50-23-70(F) ($10 fee for TOD setup/modification/revocation)
S.C. Code Ann. § 50-23-80 (DNR's title-issuance duties; withholding for undisclosed security interests)
S.C. Code Ann. § 50-23-90(a)(7) (TOD designation appears on certificate of title)
S.C. Code Ann. § 50-23-125 (clear title issued when last lien discharged)
S.C. Code Ann. § 50-23-130 (transfer by operation of law)
S.C. Code Ann. § 50-23-140 (liens valid against subsequent purchasers)
S.C. Code Ann. § 50-23-295 (no transfer when taxes are owed)
S.C. Code Ann. § 62-6-401 (TOD rules in Probate Code, effective July 1, 2025)

Cases:

Wilson v. Preston, 378 S.C. 348, 662 S.E.2d 580 (2008), distinguishing ministerial from discretionary duties
Mungo v. Smith, 289 S.C. 560, 347 S.E.2d 514 (Ct. App. 1986), administrative agencies derive authority from statute

Source

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

ALAN WILSON
ATTORNEY GENERAL

June 16, 2025

Thomas S. Mullikin, PhD, JD
Director
South Carolina Department of Natural Resources
PO Box 167
Columbia, SC 29202

Dear Director Mullikin:

Attorney General Alan Wilson forwarded your letter to the Opinions section. You seek an opinion interpreting the 2024 amendment to South Carolina Code Section 50-23-60(A)(6) which permits a Transfer on Death (TOD) beneficiary to be designated on the title of a watercraft or outboard motor. Because the amendment is set to take effect on July 1, 2025, you requested an expedited opinion. Your letter explains:

Prior to this amendment and in accordance with SC Code Ann. § 50-23-80, the South Carolina Department of Natural Resources (the department) required proof that any existing security interest in the watercraft or outboard motor was released or satisfied before issuing a new certificate of title. However, with the new provision allowing for TOD beneficiaries, the department is uncertain about the proper procedure when a security interest is still recorded on the title at the time of the owner's death. Specifically, may the department withhold issuing the certificate of title to the TOD beneficiary until the beneficiary provides reasonable proof that the security interest has been released or satisfied?

The department proposes implementing the following procedure: the TOD beneficiary would be required to complete an application for a certificate of title for the watercraft or outboard motor. Along with the completed application, the TOD beneficiary would need to submit the following documents: a Death Certificate, Personal Property tax receipts, a notification of lien release from the lienholder, and payment of any applicable transfer fees. Would this proposed process conflict with the recent amendment to S.C. Code Ann. § 50-23-60(A)(6)?

It is the opinion of this office that upon a TOD transfer, the new owner receives the same interest in the property that the prior owner had and may only receive clear title if the title is already clear or when any existing liens are satisfied. However, the new owner is required to promptly apply for a certificate of title and the department cannot withhold issuing a new certificate of title until the new owner establishes that any liens have been satisfied.

Law/Analysis

South Carolina requires any watercraft, outboard motor, or both held or principally used in the State to be titled by the department. S.C. Code Ann. § 50-23-20 (Supp. 2024); see also S.C. Code Ann. § 50-23-55(A) (Supp. 2024) ("All watercraft and outboard motors subject to the titling requirements of this chapter must be titled."). Exemptions to the titling requirement include watercraft documented by the United States Coast Guard, "water skis, aquaplanes, surfboards, windsurfers, and similar devices," and watercraft that are "propelled exclusively by human power." S.C. Code Ann. § 50-23-30 (Supp. 2024). "A certificate of title to a watercraft or outboard motor is prima facie evidence of ownership" of the same. S.C. Code Ann. § 50-23-55(A).

The application for a certificate of title requires the applicant to provide information about any pending liens and lienholders. S.C. Code Ann. § 50-23-60(A)(3). Before issuing a certificate of title, the department must be satisfied that the applicant is the owner, the application is in proper form, and there is no undisclosed security interest in the item being titled. S.C. Code Ann. § 50-23-80(A) (Rev. 2008). If the department is not satisfied, it "shall withhold the issuance of a certificate of title until the applicant reasonably satisfies the department that the applicant is the owner of the watercraft or outboard motor and that there are no undisclosed security interests in it." S.C. Code Ann. § 50-23-80(D). When the applicant's ownership is subject to a security interest created at the time of transfer, the certificate of title will be retained by or provided to the lienholder. S.C. Code Ann. § 50-23-140(a) (Supp. 2024). When a lien is discharged, the lienholder must note that fact on the face of the certificate of title and either discharge the lien through the department's electronic lien system or surrender the paper certificate of title to the department. S.C. Code Ann. § 50-23-140(B). When the last lien is discharged, the department must print a clear title and convey it to the owner. S.C. Code Ann. § 50-23-125(A) (Supp. 2024).

A person who disposes of a watercraft or outboard motor subject to the state's titling requirements has a statutory obligation to transfer the certificate of title to the person obtaining property. S.C. Code Ann. § 50-23-55(C). When no certificate of title is available because the watercraft is new or the watercraft or outboard motor was last owned in a jurisdiction that did not title such property, other documentation may be substituted. Id. The disposing owner must also notify the department of the transfer in ownership, transfer out of state, or other disposal within thirty days. S.C. Code Ann. § 50-23-20. The owner of a titled watercraft or outboard motor is prohibited from transferring title when there are taxes owed on the same. S.C. Code Ann. § 50-23-295 (Rev. 2008). However, there is no such prohibition against an owner transferring the same property when there is an outstanding security interest. In fact, all liens noted on the certificate of title are valid against a subsequent purchaser. S.C. Code Ann. § 50-23-140(a). A person who acquires the watercraft or outboard motor is required to obtain the certificate of title or other appropriate documentation. S.C. Code Ann. § 50-23-55(B). The new owner then has thirty days from acquisition to apply for a new certificate of title. S.C. Code Ann. § 50-23-60(A) (Supp. 2024). When ownership is transferred by operation of law, the transferee must promptly submit an application for a new certificate of title along with the existing certificate of title or other appropriate documentation. S.C. Code Ann. § 50-23-130(a) (Supp. 2024); S.C. Code Ann. § 50-23-130(b) (Rev. 2024). A transfer by inheritance is one of the listed ways ownership can be transferred by operation of law. S.C. Code Ann. § 50-23-130(a).

The imminent amendments that prompted your opinion request were included in Act Number 200, 2024 S.C. Acts 1602, which in part permits owners of personal property titled with the Department of Motor Vehicles or the Department of Natural Resources to designate one or more "Transfer on Death" beneficiaries. Act No. 200, 2024 S.C. Acts 1602. Four Title 50 statutes were amended by the Act. Beginning on July 1, 2025, owners will be able to designate a TOD beneficiary on the certificate of title for an outboard motor or watercraft. Owners who wish to designate a TOD beneficiary will be required to provide details about the beneficiary on the application for certificate of title. S.C. Code Ann. § 50-23-60(A)(6) (Supp. 2024) (effective July 1, 2025). Owners will be charged a $10 fee to establish, modify, or revoke a TOD beneficiary. S.C. Code Ann. § 50-23-70(F) (Supp. 2024) (effective July 1, 2025). The certificate of title will reflect any designated TOD beneficiary. S.C. Code Ann. § 50-23-90(a)(7) (Supp. 2024) (effective July 1, 2025). Transfer on death will be added to the list of transfers of ownership by operation of law. S.C. Code Ann. § 50-23-130(a) (Supp. 2024) (effective July 1, 2025). And, when the property has transferred by operation of the law, the new owner will be required to provide proof of death of the titled owner or owners. S.C. Code Ann. § 50-23-60(a)(7) (Supp. 2024) (effective July 1, 2025).

Act Number 200, 2024 S.C. Acts 1602 also updates the Probate Code in relation to the TOD designation. Definitions for "Transfer on Death" or "TOD" and "Titled personal property" are added to a definition section of the Probate Code. S.C. Code Ann. § 62-6-101(16), (17) (Supp. 2024) (effective July 1, 2025). Section 62-6-401 is the sole statute created by Act No. 200. Entitled "Transfer on Death," the new statute contains the rules and mechanical details for the TOD designation and its application. S.C. Code Ann. § 62-6-401 (Supp. 2024) (effective July 1, 2025). For example, the statute provides that a sole owner who uses the TOD designation may revoke or modify the designation any time during the owner's lifetime. S.C. Code Ann. § 62-6-401(D)(3). When there are multiple owners, TOD designations are limited to property titled with right of survivorship and the owners must act together when making, revoking, or modifying a TOD designation. S.C. Code Ann. § 62-6-401(E)(1) and (4). Significantly, a TOD beneficiary has no interest in the property during the lifetime of the owner or owners, but the property immediately "belongs to" the TOD beneficiary or beneficiaries on the death of the sole owner or last of multiple owners. S.C. Code Ann. § 62-6-401(C) (TOD beneficiary has no interest in the property during the lifetime of the owner or owners); § 62-6-401(D)(1) (on death of sole owner, titled personal property "belongs to" the named TOD beneficiary or beneficiaries); § 62-6-401(E)(3) (on death of last of multiple owners, property "belongs to" the named TOD beneficiary or beneficiaries). The transfer is a result of the designation authorized by statute and is not testamentary or subject to estate administration. § 62-6-401(B). The statute provides the following instructions for retitling personal property titled with a TOD designation:

(H) The Department of Motor Vehicles or the Department of Natural Resources, as appropriate, upon request, shall retitle the appropriate titled personal property with a TOD designation, to:

(1) The beneficiary or beneficiaries named in the TOD designation, if proof of death is presented to the appropriate department showing that the beneficiary or beneficiaries survived all owners of the titled personal property.

(2) The personal representative of a deceased party, if proof of death is presented to the appropriate department showing that the deceased party was the last survivor of all other owners named on the title to the titled personal property and there shall be no surviving beneficiaries named in any TOD designation.

(3) To such party or parties in accordance with a court order directing the retitling of such titled personal property.

S.C. Code Ann. § 62-6-401(H). Act 200 does not add, remove, or amend any language regarding the interests of lienholders noted on the certificate of title. We therefore conclude it does not affect the interests of lienholders.

You ask whether the department may withhold issuing title following a TOD transfer until the new owner resolves any lien on the property's certificate of title. To answer your question, we must determine whether the department's function in titling watercraft and outboard motors is ministerial or discretionary. "The duties of public officials are generally classified as ministerial and discretionary (or quasi-judicial)." Wilson v. Preston, 378 S.C. 348, 354, 662 S.E.2d 580, 583 (2008). Where the duty is "defined by law with such precision as to leave nothing to the exercise of discretion," it is ministerial. Id. By contrast, where the duty "requires the exercise of reason in adaptation of means to an end, and discretion in determining how or whether the act shall be done or the course pursued," it is discretionary or quasi-judicial. Id.

As the administrative agency charged with titling watercraft and outboard motors, the department derives its authority from statute. See Mungo v. Smith, 289 S.C. 560, 564, 347 S.E.2d 514, 517 (Ct. App. 1986) (administrative agencies are creatures of statute and find their authority within statute). The department's responsibility in processing applications for certificates of title is established by Section 50-23-80. The department is required to file each application it receives that conforms to the statutory requirements and is submitted with the appropriate fee. § 50-23-80(A). When the department is satisfied the application is in property form, the applicant is the owner, and there are no undisclosed security interests in the property, the statute provides the department "shall issue a certificate of title." Id. When questions regarding ownership or undisclosed security interests remain, the department is required to withhold issuing title "until the applicant reasonably satisfies the department that the applicant is the owner" of the property and "that there are no undisclosed security interests in it." § 50-23-80(D). Our review of this statute reveals the department's titling function is ministerial as it lacks discretion to deny an otherwise proper application. Additionally, the new TOD Probate Code statute reinforces the ministerial nature of the department's responsibility by requiring that on an appropriate request, the department "shall retitle" the property. § 62-6-401(H). In short, while the department must respect and honor documented liens, it is not required or allowed to prevent the title from reflecting current ownership following a TOD transfer simply because a lien remains on the property.

Upon a TOD transfer of a titled watercraft or outboard motor, the transferee will be required to promptly apply for a certificate of title. S.C. Code § 50-23-130(a). The department must file the application if it is proper and accompanied by the appropriate fee. § 50-23-80(A). If satisfied that the applicant is the owner and there are no undisclosed security interests in the property, the department must retitle the property. Id.; § 62-6-401(H). To withhold the issuance of title because of a disclosed security interest would be contrary to the department's ministerial titling duty and at odds with the change of ownership that occurred at the death of the prior owner.

Importantly, any lienholders noted on the certificate of title for a watercraft or outboard motor maintain their security interests in the property notwithstanding the change in the law or a transfer on death permitted by the law. Therefore, the only thing a lienholder loses as the result of a TOD transfer is the option to pursue the deceased borrower for payment. All other options permitted by law and available under the agreements formed at the creation of the security interest remain intact. We presume the lienholders will be notified both when a TOD beneficiary is designated and when an application for a certificate of title following a TOD transfer has been processed.

By permitting owners of titled watercraft and outboard motors to designate one or more TOD beneficiaries, our General Assembly gave owners the freedom to pass the property on death outside of our probate court system. For owners who exercise this option, it offers convenience and potential cost savings. If the legislature wishes, it can certainly restrict use of the TOD designation to clear titles or to situations where the lienholder consents to the designation. The legislature has restricted other transfers of titled watercraft and outboard motors where taxes are owed. S.C. Code Ann. § 50-23-295 (Rev. 2008). And, as mentioned above, the new TOD statute limits use of the TOD designation when the property is owned by multiple people. S.C. Code Ann. § 62-6-401(E)(1) and (4).

Conclusion

Beginning on July 1, 2025, when the owner of a titled watercraft or outboard motor dies while a living TOD beneficiary is named on the certificate of title, the beneficiary receives precisely the interest the titled owner held before death, no more or less. At death of the prior owner, the beneficiary becomes the new owner. It is the opinion of this office that the department may not refuse to accept an application for title or withhold issuing a new title until the new owner establishes any lien on the title has been satisfied.

Sincerely,

Sabrina C. Todd
Assistant Attorney General

REVIEWED AND APPROVED BY:

Robert D. Cook
Solicitor General