§31323 — Title 46 Shipping | U.S. Code

Summary

Before a preferred mortgage is signed, if the lender asks, the borrower must tell the lender in writing about any known obligations on the vessel. After signing and until the lender has a reasonable time to file the mortgage, the borrower may not take on new contracts that create liens on the vessel without the lender’s permission, except for four kinds of claims: certain stevedore wages, crew wages, general average, and salvage (including contract salvage). If the borrower is convicted of breaking these rules, the lender may demand immediate repayment of the mortgage debt.

Title 46, §31323

Shipping — Source: USLM XML via OLRC

(a)On request of the mortgagee and before executing a preferred mortgage, the mortgagor shall disclose in writing to the mortgagee the existence of any obligation known to the mortgagor on the vessel to be mortgaged.

(b)After executing a preferred mortgage and before the mortgagee has had a reasonable time to file the mortgage, the mortgagor may not incur, without the consent of the mortgagee, any contractual obligation establishing a lien on the vessel except a lien for—

(1)wages of a stevedore when employed directly by a person listed in section 31341 of this title;

(2)wages for the crew of the vessel;

(3)general average; or

(4)salvage, including contract salvage.

(c)On conviction of a mortgagor under section 31330(a)(1)(A) or (B) of this title for violating this section, the mortgage indebtedness, at the option of the mortgagee, is payable immediately.

Notes & Related Subsidiaries

Historical and Revision Notes

Revised sectionSource section (U.S. Code) 31323(a)46:924(1) 31323(b)46:924(2) 31323(c)46:941(b) (last sentence) section 31323(a) requires the mortgagor to disclose any obligations on the vessel before executing a preferred mortgage. This subsection makes no substantive change to law. section 31323(b) provides that, after executing a preferred mortgage, the mortgagor may not incur, without consent of the mortgagee, any contractual obligations establishing a lien on the vessel—except a lien for stevedore wages, crew wages, general average, and salvage. The only substantive change to law made by this subsection is that the reasonable time to record a mortgage is changed to a reasonable time to file the mortgage, and the elimination of the reference to endorsements. These changes are in keeping with the changes made in section 31322. section 31323(c) provides that if a mortgagor is convicted of a violation of this section, then the mortgage indebtedness, at the option of the mortgagee, is payable immediately. This subsection makes no substantive change to law.

Statutory Notes and Related Subsidiaries

Effective Date

Section effective Jan. 1, 1989, with certain exceptions and qualifications, see section 107 of Pub. L. 100–710, set out as a note under section 31301 of this title.

§31323 Disclosing and incurring obligations before executing preferred mortgages