BoatWiki - Definitions
A mortgagee can be defined in boating terms as the lending party in a boat loan transaction that involves a preferred vessel mortgage. The party granting the mortgage, who must be the vessel's owner, is known as a mortgagor.
A vessel mortgage is an instrument that pledges a vessel as collateral for a marine loan. The vessel can accordingly become liquidated for payment in the event of a default on the mortgage terms. The mortgage must be properly executed by the mortgagor. A preferred mortgage is the highest means of perfecting a vessel loan. Upon recordation, it gains priority over subsequent mortgages.
Although preferred vessel mortgage recordings are currently available for documented vessels only, there are efforts underway to have these also made available for state titled boats. However, it may be some time before this comes to fruition.
Marine lenders should be aware that failure to obtain a preferred mortgage on a documentable vessel may leave them in a vulnerable position with regard to prioritization against other loans.
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5/10/2022 - Page initiated by Team BoatWiki.