Preferred Vessel Mortgage Form
Preferred vessel mortgage form requirements, examples and guidelines.
The Preferred Vessel Mortgage form is used to perfect, secure and prioritize a lender's interest in a Coast Guard documented vessel. Also referred to as a Ships Mortgage, this is a recordable instrument that applies for both recreational and commercial purposes. The information and examples provided here will help demonstrate the necessary citations required by the National Vessel Documentation Center for mortgage recording purposes.
Form Specifics
The National Vessel Documentation Center (NVDC) does not require or recommend a specific preferred vessel mortgage form. Any version will suffice providing it contains the necessary citations for recording purposes or is otherwise accompanied by an Optional Application for Filing form. The contractual viability of a mortgage is not of concern to the NVDC and should accordingly be reviewed by a qualified maritime attorney.
Required Citations
The necessary citations to record a preferred vessel mortgage
are determined by the Code of Federal regulations, 46 CFR Part 67. These
must be strictly adhered to unless the mortgage is accompanied by an Optional Application for Filing
form which satisfies the
required information.
Mortgagor Name and Address: The mortgagor's
name must match that as shown on the Coast Guard abstract of title or any
ownership instruments if an application is in process. The address does not
particularly need to match that already on record and should reflect the most
current location where the mortgagor resides.
Mortgagee Name and
Address: The mortgagee’s name whether individual or entity, must follow the same naming conventions required for vessel ownership. The address should indicate where the mortgagee can be contacted.
Percentage of Equity Granted:
The mortgage must clearly state the percentage of vessel interest being granted to the mortgagee. This should represent the entire vessel (100%). When multiple mortgagees are involved, their respective percentages must collectively total 100%.
Vessel Identification: A vessel
name and hailing port should be stated on the mortgage as a matter
clarification. A mortgage must also include a unique identifier such as an official USCG
documentation number if one has been assigned, a manufacturer's hull
identification number or both if available. State registration numbers are
not accepted as these are not viewed as permanent identifiers.
Mortgage Amount: The mortgage must indicate the principal amount covered, excluding interest or ancillary fees. Amounts are presumed to be in U.S. dollars unless otherwise specified.
Signatures: A mortgage must be signed
by the mortgagor and contain the date on which executed, although his is not
relative to that upon which the mortgagor acquired or will acquire
documentation. However, the date must coincide with or supersede the dates
of any attachments referenced in the mortgage. Mortgagee signatures
are not required.
Acknowledgement: All signatures must be
acknowledged by a qualified notary public. The acknowledgement date can not precede the respective
mortgagor signature date.
Attachments: If there is a promissory note, security agreement, loan contract,
or any ancillary items referred to in the mortgage, these be submitted with the mortgage as attachments.
The dates on all attachments must precede or coincide with the date on which the mortgage is executed.
Alterations:
A mortgage may not be changed or altered after it has been executed unless
the notary specifically notates such changes in the
Acknowledgement.
Preferred Mortgage Examples
Examples of what a preferred vessel mortgage may entail are provided in the Referrals for these guidelines. Other examples may also be available through online searches or obtained from a maritime law firm. Keep in mind that preferred mortgages are very complex legal arrangements and should always be reviewed by a qualified maritime attorney.
Optional Application for Filing
A link to an Optional Application for Filing form can be found in the Referrals for these guidelines. If properly executed, any preferred mortgage version will qualify for recording without further review by the NVDC. Such acceptance does not, however, affirm it's enforceability or legal viability.
Conclusion
Recording a preferred vessel mortgage is a straightforward process that provides important rights of priority to lenders and lienholders. However, recording does not guarantee that the terms of the mortgage will be enforceable if later challenged. Any such concerns should be discussed with a qualified maritime attorney. The guidelines and examples presented here are subject to change without notice and may contain errors or omissions. You should contact the National Vessel Documentation Center directly for the most accurate and and current information.
References and Referrals
Comments - Suggestions - Corrections