Owning a boat can be a significant investment, especially when considering larger vessels. Securing financing for your purchase may lead you to explore loans, including preferred ship mortgages. Understanding the role of the US Coast Guard (USCG) Vessel Registry in this process is crucial. Let’s delve into the relationship between preferred ship mortgages and the vital documentation services provided by the Vessel Registrar Center.
What is Preferred Ship Mortgage and Its Relation to USCG Vessel Registry?
A preferred ship mortgage is a type of maritime lien that provides lenders with a high-priority security interest in a vessel. This mortgage allows you to secure financing for vessel purchases, repairs, or improvements by using the boat itself as collateral. In the event of default or non-payment, your lenders can foreclose the vessel to recover their investment.
Relation to Vessel Registry
The USCG boat registry plays a vital role in facilitating the documentation required for a preferred ship mortgage:
Documentation Eligibility
To qualify for a preferred ship mortgage, a boat must be eligible for USCG documentation. This typically applies to boats over five net tons engaged in commercial activities or operating in international waters.
Vessel Documentation
If you are seeking a preferred ship mortgage, you must first document your vessel with the USCG. This involves registering the boat’s ownership and details with the USCG National Vessel Documentation (NVDC).
Security for Lenders
Once a boat is documented with the USCG, lenders can register a preferred ship mortgage against the vessel. This mortgage serves as a legal instrument granting the lender a priority lien on the vessel. It enhances the security of the loan.
Enforcement of Mortgage
In the event of default on the loan, lenders can enforce the preferred ship mortgage by initiating foreclosure proceedings through the USCG documentation system. This process lets lenders reclaim the vessel and recover their investment.
How to Use the Registry for Preferred Ship Mortgage:
First, you need to document your vessel with the USCG. If the documentation is not available, you need to use the Initial link located on the left side of this page. If the documentation is in place but the certificate has expired, you might need to utilize the renewal link or reinstatement option. Ask our experts about it if you are not sure.
Obtain Certificate of Documentation
Upon approval, you will receive a COD from the USCG. It confirms the vessel’s registration and compliance with documentation requirements. It is important to know that we do not issue the COD. Rather, it comes from the USCG. We only process the documentation application. It means that our experts will check and review your application before submitting it to the proper authority.
Register Preferred Ship Mortgage
Work with your lender to register a preferred ship mortgage against the documented vessel. Provide necessary documentation and complete the mortgage restoration process.
Compliance and Maintenance
Documentation is not a one-time thing. Rather, you will have to renew it annually. But you can document your boat for five years at the end of the fifth year, you will have to renew its documentation.
Financing Your Boat
A preferred ship mortgage is necessary to finance your boat. But lenders will need your boat to be registered at the USCG vessel registry before issuing this mortgage. Contact the Vessel Registrar Center team of experts; ask us about anything related to boat documentation with the USCG to help you get started with your process.