Ship Mortgage
The registered security a lender takes over a hull: how it is created and recorded, where it ranks against maritime liens, and how it is enforced.
A ship mortgage is a security interest granted by a shipowner over the vessel and recorded in the flag registry, giving the lender a right to enforce against the hull itself if the borrower defaults. It is the dominant security in ship finance because the collateral is mobile and internationally enforceable: the mortgage travels with the ship, and a registry entry makes it discoverable by anyone dealing with her.
Recordation is what creates priority, not execution. Under Liberian Maritime Law, Title 21 of the Liberian Code of Laws of 1956, section 101(1), a valid mortgage covering the whole of a vessel takes preferred status as of the date of its recordation, and section 101(2) preserves that status even where no advance has yet been made. Public inspection of the register is one of the three conditions in Article 1 of the International Convention on Maritime Liens and Mortgages, 1993 for a mortgage to be recognised abroad.
What the mortgage does not do is outrank a maritime lien. Article 5(1) of the 1993 Convention places the five Article 4 liens ahead of registered mortgages, and national law reaches the same result by its own route.
The full article will cover creation and recordation across the principal registries, the deed of covenants and the wider security package, priority against maritime liens and ship arrest , the loan-to-value and minimum value clause covenants, enforcement through arrest and judicial sale , and the place of the mortgage in ship finance and asset valuation .