Are you a vessel owner looking to purchase or refinance your boat? You may be interested in exploring the benefits of a Preferred Ship Mortgage provided by the Maritime Documentation Center. Applying for financing can seem intimidating, but we’re here to let you know that at the Maritime Documentation Center, it doesn’t have to be that way!
Our team will work with you to quickly and efficiently get your Preferred Ship Mortgage application underway and approved. Keep reading if this sounds interesting, and learn more about what makes our Preferred Ship Mortgage so preferred! In this blog post, we’ll discuss all that should be considered before committing to a preferred ship mortgage—so keep reading and learn how to protect your vessels better!
Vessel Name and Official Number (Or Other Unique Identifier)
The vessel being mortgaged must be specified in the mortgage agreement. This will be useful in preventing any legal complications. If the mortgage is being registered in a jurisdiction that requires the official number to identify the vessel, including it is essential. Sometimes referred to as an “IMO number,” the formal designation is unique.
If a mortgage is being registered in a jurisdiction with no standardized method of identifying ships, an alternative method of determining the vessel must be provided. However, in other instances, this information could be unnecessary on a mortgage.
It may not be necessary, for instance, to provide the borrower’s vessel name and number in each mortgage if the preferred ship mortgage form applies to all of the borrower’s boats (or is part of a broader arrangement that does). In this scenario, however, it may be essential to provide details to clarify which ships are within its scope.
A Preferred Ship Mortgage Should Have Addresses of BOTH the Mortgagor and Mortgagee
After that, it has to include the mortgagee’s and the mortgagor’s contact information. The closing documents must be submitted to you and your lender simultaneously, so the title firm must know where to send everything.
Your Preferred Ship Mortgage should also include a description of the collateral. An actual location for personal property pledged as collateral is optional but might be helpful if the legal description needs to be improved. In the event of a subsequent dispute about what was sponsored, this method will make it easier to determine exactly what was.
Be sure to specify how you wish to be paid following closure. For instance, some individuals would rather have their money deposited directly into their bank account than delivered to them through a check. Such detailed requirements should be included in the preferred ship mortgage to ensure they are met at every stage, even throughout the repayment process.
A Signature By, or On Behalf, Of the Vessel Owner(S) and Acknowledged By A Notary Public
Suppose you are applying for a loan to pay off your ship or dealing with a lender providing you with a loan to pay off your boat. In that case, you should make sure that the preferred mortgage for a vessel has specific details—a notary-authenticated signature from the vessel’s owner(s) or an authorized representative.
The boat must be pledged as security since it is an asset that may be sold to pay off the debt. Only the ship’s legal owners should be authorized to make decisions in its name to protect the ship’s value. The Note’s Terms, Amount, and Additional Payment Provisions (including, without limitation, any amortization schedule, interest rate, late payment fees and penalties, balloon payments, prepayment penalties, and any other such terms or conditions)
It is essential that the fees associated with borrowing money from the lender be spelled out in the loan agreement. Only work with lenders that are willing to be transparent about this.
A Valid Certificate of Documentation or an Application for Initial, Exchange, or Replacement, CG-1258,
The next item that a lender should check for is a Certificate of Documentation (CG-1258) that is still in good standing. It must be current. This will help determine whether or not the vessel is subject to liens. Even if it is not up to date, the lender may still complete their research, and they may provide you a commitment letter based on the facts they obtain in response to any questions you may have.
Additionally, when a buyer or seller makes an offer, they can include a copy of the CG-1258 in the offer package they submit. The mortgagee can seek an application for an original, exchange, or replacement Certificate if they have grounds to suspect that the vessel’s Certificate has expired.
A ship mortgage is an important instrument that allows you to document various features such as a preferred loan position, priority transfer areas, and a security package. Maritime Documentation makes writing your first preferred ship mortgage easy with our custom-written agreements. For more information, call 800-535-8570 today!