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A Preferred Mortgage is a mortgage recorded against a vessel registered in the RMI which meets the requirements of § 303 of the Act. In a vessel mortgage, a shipowner agrees to provide a lender/bank (the “mortgagee”) an interest in a vessel as security against a loan.
The mortgage is signed by the registered owner (the “mortgagor”) or a company representative.
Assignments of Mortgage
An assignment of mortgage is a document which indicates that a mortgage which is currently recorded in the RMI has been transferred from the original lender (assignor) to another party (assignee). All original rights, title, and interest are transferred, in addition the details of the assignment may determine some additional rights and liabilities. Assignments of mortgages are more commonly seen when an existing lender sells the mortgage to another lender.
This assignment is signed by the present mortgagee the assignor.
A mortgage assumption is the transfer of rights, terms, and balance of an existing mortgage held by one party, the present registered owner (existing mortgagor) to another party, the new registered owner (new mortgagor) with the consent of the mortgagee.
Amendments of Mortgage
A mortgage amendment is a process where the terms of a mortgage, which are currently recorded in the RMI, are modified outside the original terms of the contract agreed to by the mortgagee and mortgagor. Examples of these changes could be changing the total amount of mortgage or the maturity date. This could also be referenced as an “amended and restated mortgage.”
The amendment is signed by the mortgagor and mortgagee.
Addendum to Mortgages
A mortgage addendum is the process where additional information is added to the terms of a mortgage which is currently recorded in the RMI.
The addendum is signed by the mortgagor and mortgagee.
Release, Satisfaction, and Discharge of Mortgages
When the mortgage is satisfied it is necessary to clear the title of the vessel by discharging the mortgage. This is done by recording a document which shows the debt is released, discharged, or satisfied. This is usually called either a “Discharge of Mortgage,” “Satisfaction of Mortgage,” or “Release of Mortgage.”
The release of mortgage, satisfaction, or discharge is signed by the mortgagee.
Bill of Sale
A Bill of Sale is a document which records the transfer of title from one party to another. When the ownership of a vessel presently registered in the RMI is transferred and the vessel is re-registered in the RMI, the Bill of Sale or another instrument transferring the vessel must be recorded. For recordation under RMI laws a copy of the vessel’s currently valid RMI Certificate of Registry must be attached.
The Bill of Sale is signed by the grantor.
- MI-246E, Requirements for Bill of Sale Recordation
Continuation of Foreign Mortgage
Under RMI law, a vessel subject to a foreign mortgage or a financing charter lien in its present country of registry is permitted to register into the RMI flag and have its foreign mortgage or financing charter lien accompany it into the RMI Registry. This “tacking” legislation provides for the continuation of the preferred status of the mortgage or financing charter without interruption. Under the statute, the mortgage or financing charter deletion or release of record by the prior State of registry as a condition of the vessel’s deletion from that registry does not affect the priority of the mortgage or financing charter lien in the RMI for a 30-day period following the vessel’s registration in the RMI. If not recorded when the vessel is registered in the RMI, an RMI mortgage or financing charter given in continuation of the foreign mortgage or financing charter may be recorded within such 30-day period. If properly recorded in either of these two cases, the RMI mortgage or financing charter given in continuation of the foreign mortgage or financing charter will have the status of a preferred mortgage lien on the vessel with priority dating from the original recording date of the foreign mortgage or financing charter.
This mortgage is signed by the mortgagor.
A fleet mortgage is one mortgage recorded against multiple vessels owned by the same registered owner and registered in the RMI at one time. In a fleet mortgage, a shipowner gives the mortgagee an interest in several vessels as security for a loan. The fleet mortgage needs to mention all the vessels involved and the official numbers.
The fleet mortgage is signed by the mortgagor.
Conveyance of Title
A conveyance is the act of transferring an ownership interest. A Conveyance of Title shows the transfer of legal title from one party to another.
The Conveyance of Title is signed by the grantor.
- MI-246E, Requirements for Bill of Sale Recordation
Notice of Foreign Mortgage
A Notice of Foreign Mortgage is a notice that an instrument has been recorded over the vessel in the underlying flag of registry. This notice is not mandatory. When a vessel is bareboat charter registered in the RMI the Administrator will accept for recordation a Notice of Foreign Mortgage, or of a similar recorded instrument, that has been recorded or registered in the State of underlying registration of the vessel. The foreign mortgage, financing charter, or similar instrument will be subject only to the laws of the foreign State of registration of the vessel. If there is more than one such instrument, then notices of all such instruments must be filed, in the same order as they are registered in the foreign State of registration. Notice of any mortgage, financing charter, or similar instrument that is subsequently recorded in accordance with the laws of the foreign State of registration of the vessel must also be promptly submitted for filing in accordance with this section.
A Financing Charter is a contract in the form of a demise or bareboat charter agreement (or other document which supplement the charter agreement), regardless of duration, between the registered owner and the finance charterer of the entire vessel, which contract is agreed by the parties to be or is determined in judicial or arbitral proceedings to create in favor of the registered owner a security interest in the vessel granted by the finance charterer. A Financing Charter may, among other rights, secure: debts owed to a party; contingent obligations; charter hire future advances; and future debts and much more. This document is treated like a mortgage.
The Financing Charter must be signed by the registered owner and charterer.
A mortgage subordination agreement is a document frequently used when there are two mortgages on a vessel, and the mortgagor is looking to refinance the first mortgage. The mortgage subordination agreement specifies which mortgage takes precedence over the other. This means one mortgagee is placed in a lower priority for the collection of its debt from the mortgagor’s assets, in comparison to the other mortgagee.
The subordination is signed by mortgagor the current priority mortgagee and the new priority mortgagee.
A coordination agreement does not alter priorities over multiple existing mortgages recorded in the RMI, in a coordination agreement the subordinate mortgagee is merely agreeing with the prior mortgagee that they will not exercise certain rights that they would of otherwise have the power to exercise and delegates to the prior mortgagee the power to discharge the subordinate mortgage in certain situations.
The coordination agreement is signed by the mortgagor, the priority mortgagee and the subordinate mortgagee.