As you might be aware, there are some regulations you need to comply with if you are lucky enough to have a boat in the US. Generally, you will need to be registered at a state or federal level. That will depend on the size and primary use you give to your vessel. Boats that exceed a net tonnage of five, for example, can choose to get documented with the United States Coast Guard. In fact, if they are used for commercial purposes, it is mandatory for them to do so. Why would someone want to get his ship registered with the Coast Guard voluntarily, then? There are a few different answers to that question. This article, in particular, will cover one of them: To have access to a Preferred Ship Mortgage, and how to properly apply for your USCG Satisfaction of Mortgage before selling your vessel.
Explaining the Preferred Ship Mortgage
As usual, we will begin with the definition. You might be wondering why is the ship mortgage “preferred” or what USCG’s Satisfaction with Mortgage is and there is a simple explanation to all of those questions. A preferred ship mortgage is a mortgage recorded against a vessel. So why preferred? Because the mortgagee of this particular mortgage will be “preferred” over all of the other maritime liens that the vessel might have. This means he will have to pay the mortgage before any other expenses.
If you are thinking that that still doesn’t explain why someone would get USCG documentation if it doesn’t give you any advantages you are right. The thing is that banks or lenders comply to have your boat documented with the USCG before lending you the money to pay for your vessel. This way, they make sure you will be repaying them. Other reasons that might guide you to register with the governmental agency are that you will be able to display your vessel name instead of your state registration numbers and that it will be easier for you to enter and leave foreign ports given that USCG documentation is recognized internationally.
Explaining the USCG Satisfaction of Mortgage
Let us now explain the USCG Satisfaction of Mortgage. It is a legal requirement for you to submit documentation showing that your mortgage has been completed or, in other words, satisfied. If you can not provide this proof of satisfaction, you can have legal troubles and risk fines of up to $10,000.
In addition to that, you would be creating the future owner a headache as well, as he or she will not be able to register his or her boat with the USCG. This is not a big deal for recreational vessels, but it can turn into a major problem for boats used for commercial activities.
Get the Forms You Need With Our Help!
Whether you want to get help with the USCG Satisfaction of Mortgage or any other type of vessel documentation, the Maritime Documentation Center is the place to go. We are a third-party agency that processes all types of boating paperwork. Contact us today and clear all of your doubts!