"She's screaming, just frantically, 'He was going to propose! He was going to propose!'" he said. "They're leading me off the pier and I yell back at her, 'Just mark the spot where it fell in the ocean. Find a landmark.'"
"In a matter of minutes, he's being put in handcuffs, machine guns are pointed at him and I find out he's proposing to me," Yearout told ABCNews.com. "It was very emotional."
Houston said he was put in the back of the police vehicle and had a machine gun pointed at him.
Soon after, additional police arrived and Houston was eventually let go after they determined there was no damage to the yacht.
Paty Gomez, a wedding planner who works with the hotel, told ABCNews.com that the boat belonged to one of the hotel's owners, which is "why it was a big deal."
The hotel apologized and soon Houston and Yearout were in one of the resort's penthouse suites complete with its own lap pool.
"One minute I'm handcuffed in the back of a truck and the next minute we're in one of the nicest rooms in the resort," Houston said. "It was just baffling. It was like the twilight zone."
But Houston didn't spend any time enjoying the room since he was panicked about the ring. The experienced diver threw on his scuba gear, grabbed a flashlight and headed back to the pier.
"After about two hours, I spotted a sparkle and dove down for it. This time it was actually the ring," he said.
Houston slipped the ring on his pinky and swam over to the pier to get out of the water.
"I walked over to her dripping wet in my wetsuit, kneeled down -- she didn't know I'd found i t-- and I kneeled down and proposed to her on the pier, in the middle of the night, in my scuba gear," Houston laughed. "She said yes."
The hotel has since offered to host their wedding for free and give them a complimentary two-week stay. Houston said they are considering it.
Houston is the founder and owner of Lawn-n-Order landscaping and Yearout is a medical assistant. They dated for eight months in high school, but then broke up and did not see each other for 11 years.
Houston said they eventually ran into each other and found that both of them had been constantly thinking of the other for more than a decade. They got back together six months ago.
The wedding date has been set for July 5 and the couple is hoping it is relatively uneventful.
"More according to plan would be nice," Houston said laughing. "I'd just like to have no surprises this time. No machine guns, no dropped ring."
"At the time, it was a nightmare. Now, it's a really good story," Yearout said. "The best couples in life have the best stories."