Record a Preferred Vessel Mortgage
How to record a preferred vessel mortgage with step-by-step instructions.
A preferred vessel mortgage is required for perfecting a marine lender's collateral interest on any boat that qualifies for U.S. Coast Guard documentation. These guidelines will provide step by step instructions on how to prepare, file and record a preferred vessel ship mortgage.
Determining the Documentation Status
Preferred vessel mortgages can only be recorded against a vessel that already has a valid certificate of documentation or is in the process of becoming documented. If unsure of the current status, you can order a copy of the certificate of documentation from the National Vessel Documentation Center. A records order form can be found in the references for this page. If an application is in progress, it can be checked by visiting the documentation center's overview in the referrals for this page. There you will find a link for what is called "Work Packet Inquiry". Although a mortgage can be filed in conjunction with an application for documentation, it will not become effective until a certificate of documentation has been issued.
Checking for Prior Recordings
Multiple mortgages can be filed and remain outstanding, with the earliest chronological filings having priority. If unsure about this status, you should order an abstract of title and inspect it carefully. If necessary, a subordination of mortgage form can be filed should a prior mortgagee agree to step aside.
Completing the Mortgage Form
A preferred mortgage must include the required citations regarding the mortgagor, the mortgagee, the vessel, and the mortgage amount. It must also be properly executed, notarized, and be accompanied by the any ancillary items such ad promissory notes or security agreements. If unsure of whether the completed mortgage meets the necessary recording requirements, you can attach a Optional Application for Filing as listed in the references for this page. In such case, the mortgage will be processed with further inspection of the context.
Submitting the Filings
Once the mortgage has been properly executed and notarized, it is time to bundle everything up for submission to the National Vessel Documentation Center. All items should be prefaced with a transmittal cover letter as shown in the referrals for this page. It will provide the documentation center with your contact information, list of items submitted, and your payment option. In making submissions, the documentation center will now accept copies of all items including the executed mortgage, related forms, and attachments. This means that in addition to regular mail or courier, you have the option of sending these items by email with no need to follow up by mailing the originals. Information about electronic filings can be found in the documentation center's website.
Monitoring the progress.
Processing time can be a matter of weeks and even months depending on the documentation center's pending backlog. You can get a sense of this by following the Paperwork Status Inquiry link at the bottom of their website home page. Although recordings may be delayed, you can take comfort in the fact that a time and date stamp is placed on all of your recordable instruments immediately upon receipt. This ensures their rank and priority on the abstract of title, even though not actually recorded until a later date. In monitoring the progress of your transmittal you should first confirm that your items were actually received. If submitted by email you should get a response confirming either their acceptance or rejection. You can also monitor the progress by visiting the documentation center's work packet inquiry link. In any event, you can always contact the NVDC by telephone or email at any time if you have any concerns about the status of your application. Keep in mind that if you receive a filing deficiency notification, everything goes back to the bottom of the queue until resolved. The filings will also be cancelled with a forfeiture of fees if no response it given within a certain period of time.
Conclusion.
Getting a preferred mortgage recorded is not all that difficult and this will afford rights of priority. However, this does not ensure the enforceability of its terms should they come under dispute. You should contact a maritime attorney with any such concerns.
References and Referrals
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