The “Preferred Ship Mortgage” is one of the ways that you can go about securing boat loans. Typically, this particular kind of mortgage is for vessels that are over 26 feet in length. For boats that are smaller than that, the title and a notation of the security interest recorded on the title should be enough to protect the lender. These mortgages, as you might imagine from the prior sentence, can get a bit complicated. In this blog, we’ll going to go over how our mortgage form works on our site and why you may be interested in filing one.
A Preferred Ship Mortgage
If you go to our site, you can find these forms on the left part of the site. If you look at the top of the page, you’ll see a very large paragraph. You might be a bit confused by the line “there is NO government form for a preferred mortgage,” as you are on a webpage that says “ship mortgage” right at the top. What that means is that this is an “Optional Application for Filing Form CG 5542.” However, you will see that there is a list below of all the information that a form for a mortgage must contain. Instead of making people have to design one themselves or even fill it out by hand, we built a form that has space for all of the information that you’ll need for this kind of mortgage.
What a Mortgage Form Contains
The important information on this form is a signature by the vessel’s owners (or made on their behalf) as well as the addresses of the mortgagee and mortgagor. It’s important to note that the mortgage has to cover the entire vessel. It can’t just cover part of it, only cover the vessel when it’s in a particular location or doing a certain job. The vessel has to be identified by name, hull number and/or official number. A key element that sometimes gets overlooked: the mortgage can’t be accepted unless the vessel has a valid certificate of documentation or it has an Application for Initial, Exchange or Replacement, CG-1258, on file . Of course, you can find all of those same files elsewhere on our site.
Certificate of Documentation First
When you want to get a boat loan, you don’t want to have to wait around for it. So, we offer our customers ways to expedite the process. For example, if you scroll down on the preferred mortgage page, you’ll see that there’s a link to “priority request/rush processing.” For a few extra bucks, we can speed along the process for you. That way, you can get your boat lien faster. Of course, as we mentioned, you do want to keep the Certificate of Documentation up to date with these mortgages. To make that easier, we have a renewal advanced payment option on this page as well. You’ll find that you can renew this documentation for up to five years in the future. You can get the peace of mind that comes from having one less thing to worry about.
Ship Mortgage History
This kind of mortgage is one that’s recorded against a vessel that’s been federally documented with the USCG. In fact, this particular kind of form goes back to the Ship’s Mortgage Act of 1920, which shows just how long these have been around. There’s a reason these mortgages are often referred to as “first preferred.” That’s because they are the first lien preferred, should the liens have to be claimed. They take precedence over any and all liens on the vessel. The only exceptions to this are mechanical liens that may have existed before the mortgage, the wages of the crew, or salvage. That’s part of what makes these vessels so important for lenders.
We’re always glad to answer any questions that you may have. We understand that vessel documentation isn’t the easiest to understand the thing, nor did you get a vessel so that you would have to deal with more documentation. That being said, we do have a sentence on our site that reads: “The U.S. Coast guard acts principally as a recording agency in regard to mortgages and related instruments; therefore, it is suggested you review the cited references and/or seek private legal counsel for additional information.” We’re here to answer any of your questions about vessel documentation. For some questions, you may want to reach out to an attorney.
That being said, we do aim to be your one stop shop for all of the vessel documentation services that you might need. This mortgage is just one of the many forms that you can find at our site. For more information about these forms or any of our others, just give us a call at (800) 535-8570 or send a message through our site.