Preferred Mortgage Defined
A preferred mortgage is a mortgage which is given status as a maritime lien. As such it enjoys a certain priority in the event of default.
Additional Mortgage Information
In addition, the Coast Guard is prohibited from making certain changes in documentation including, but not limited to, change of vessel ownership, name, and hailing port without consent of the mortgagee. For this reason many financial institutions require vessels which are eligible for documentation to be documented and to have preferred mortgages recorded against them.
To apply, click the link for a Preferred Mortgage.
Vessel Documentation Laws Referencing Preferred Mortgages
Subpart B—Forms of Documentation; Endorsements; Eligibility of Vessel
- 67.15 Form of document—all endorsements.
(a) The form of document is a Certificate of Documentation, form CG–1270.
(b) Upon application in accordance with subpart K of this part and determination of qualification by the Director, National Vessel Documentation Center, a Certificate of Documentation may be issued with a registry, coastwise, fishery, or recreational endorsement.
(c) A Certificate of Documentation may bear simultaneous endorsements for recreation and more than one trade, including operation under 46 CFR part 68.
Note:
Where a vessel possesses a Certificate of Documentation bearing more than one endorsement, the actual use of the vessel determines the endorsement under which it is operating.
- 67.17 Registry endorsement.
(a) A registry endorsement entitles a vessel to employment in the foreign trade; trade with Guam, American Samoa, Wake, Midway, or Kingman Reef; and any other employment for which a coastwise, or fishery endorsement is not required.
(b) Any vessel eligible for documentation under § 67.5 is eligible for a registry endorsement.
- 67.19 Coastwise endorsement.
(a) A coastwise endorsement entitles a vessel to employment in unrestricted coastwise trade, dredging, towing, and any other employment for which a registry or fishery endorsement is not required.
(b) If eligible for documentation and not restricted from coastwise trade by paragraph (c) or (d) of this section, the following vessels are eligible for a coastwise endorsement:
(1) Vessels built in the United States (§ 67.97);
(2) Forfeited vessels (§ 67.131);
(3) Vessels granted coastwise trading privileges by special legislation (§ 67.132);
(4) Wrecked vessels (§ 67.133);
(5) Captured vessels (§ 67.134); and
(6) Vessels purchased, chartered, or leased from the Secretary of Transportation by persons who are citizens of the United States (46 U.S.C. 57109).
(c) A vessel otherwise eligible for a coastwise endorsement under paragraph (b) of this section permanently loses that eligibility if:
(1) It is thereafter sold in whole or in part to an owner:
(i) Not a citizen as defined in subpart C of this part, or
(ii) Not a person permitted to document vessels pursuant to 46 CFR part 68;
(2) It is thereafter registered under the laws of a foreign country;
(3) It undergoes rebuilding as defined in § 67.177 outside of the United States; or
(4) It is a crude oil tanker of 20,000 deadweight tons or above, and after October 17, 1978, has segregated ballast tanks, a crude oil washing system, or an inert gas system installed outside of the United States as defined in § 67.3.
(d) A vessel otherwise eligible for a coastwise endorsement under paragraph (b) of this section loses that eligibility during any period in which it is:
(1) Owned by a corporation which does not meet the citizenship requirements of § 67.39(c);
(2) Owned by a partnership which does not meet the citizenship requirements of § 67.35(c); or
(3) Mortgaged to a person not identified in § 67.233(b).
- 67.21 Fishery endorsement.
(a) A fishery endorsement entitles a vessel to employment in the fisheries as defined in § 67.3, subject to Federal and State laws regulating the fisheries, and in any other employment for which a registry or coastwise endorsement is not required. A fishery endorsement entitles a vessel to land its catch, wherever caught, in the United States.
(b) If eligible for documentation and not restricted from the fisheries by paragraph (c) of this section, the following vessels are eligible for a fishery endorsement:
(1) Vessels built in the United States (§ 67.97);
(2) Forfeited vessels (§ 67.131);
(3) Vessels granted fisheries privileges by special legislation(§ 67.132);
(4) Wrecked vessels (§ 67.133); and
(5) Captured vessels (§ 67.134).
(c) A vessel otherwise eligible for a fishery endorsement under paragraph (b) of this section permanently loses that eligibility if it undergoes rebuilding as defined in § 67.177 outside of the United States.
(d) A vessel otherwise eligible for a fishery endorsement under paragraph (b) of this section loses that eligibility during any period in which it is:
(1) Owned by a partnership which does not meet the requisite citizenship requirements of § 67.35(b);
(2) Owned by a corporation which does not meet the citizenship requirements of § 67.39(b); or
(3) Chartered or leased to an individual who is not a citizen of the United States or to an entity that is not eligible to own a vessel with a fishery endorsement, except that time charters, voyage charters and other charters that are not a demise of the vessel may be entered into with Non-Citizens for the charter of dedicated Fish Tender Vessels and Fish Processing Vessels that are not engaged in the harvesting of fish or fishery resources without the vessel losing its eligibility for a fishery endorsement.
(e) A vessel operating with a fishery endorsement on October 1, 1998, under the authority of the Western Pacific Fishery Management Council, or a purse seine vessel engaged in tuna fishing outside of the EEZ of the United States or pursuant to the South Pacific Regional Fisheries Treaty may continue to operate as set out in 46 U.S.C. 12113(c)(3), provided that the owner of the vessel continues to comply with the fishery endorsement requirements that were in effect on October 1, 1998.
(f) An individual or entity that is otherwise eligible to own a vessel with a fishery endorsement shall be ineligible if an instrument or evidence of indebtedness, secured by a mortgage of the vessel, to a trustee eligible to own a vessel with a fishery endorsement is issued, assigned, transferred, or held in trust for a person not eligible to own a vessel with a fishery endorsement, unless the Commandant determines that the issuance, assignment, transfer, or trust arrangement does not result in an impermissible transfer of control of the vessel and that the trustee:
(1) Is organized as a corporation that meets § 67.39(b) of this part, and is doing business under the laws of the United States or of a State;
(2) Is authorized under those laws to exercise corporate trust powers which meet § 67.36(b) of this part;
(3) Is subject to supervision or examination by an official of the United States Government or a State;
(4) Has a combined capital and surplus (as stated in its most recent published report of condition) of at least $3,000,000; and
(5) Meets any other requirements prescribed by the Commandant.
For vessels greater than or equal to 100 feet in length, approval of such an arrangement from the Maritime Administration will be accepted as evidence that the above conditions are met and will be approved by the Commandant. For vessels less than 100 feet, a standard loan and mortgage agreement that has received general approval under 46 CFR 356.21 will be accepted as evidence that the above conditions are met and will be approved by the Commandant.
- 67.23 Recreational endorsement.
(a) A recreational endorsement entitles a vessel to pleasure use only.
(b) Any vessel eligible for documentation under § 67.5 is eligible for a recreational endorsement.
Note:
A vessel having a Certificate of Documentation endorsed only for recreation may be bareboat chartered only for recreational use. Guidance on the elements of a valid bareboat charter should be obtained through private legal counsel.
- 67.111 Assignment of official number.
(a) The owner of a vessel must submit an Application for Initial Issue, Exchange, or Replacement of Certificate of Documentation; or Redocumentation (form CG–1258) to the Director, National Vessel Documentation Center, to apply for an official number for the vessel when:
(1) Application is made for initial documentation of the vessel; or
(2) An existing vessel has been severed, with two or more vessels resulting. In this case, the official number of the original vessel is retired and the owner of each resulting vessel must apply for designation of a new official number.
(b) Upon receipt of form CG–1258, the Director, National Vessel Documentation Center will have an official number assigned to the vessel and furnish it to the vessel owner.
- 67.163 Renewal of endorsement.
(a) Requirement for renewal of endorsement. Endorsements on Certificates of Documentation are valid for 1 year, except for Recreational Endorsements on Certificates of Documentation, which are valid for 5 years. However, a Certificate of Documentation with a Recreational Endorsement and a Commercial Endorsement will only be valid for 1 year. Prior to the expiration of an endorsement, the owner of a vessel, which is not exempt from the requirement for documentation under paragraph (c) of § 67.9, must apply for renewal of the endorsement(s) by complying with paragraph (b) of this section. The owner of a vessel exempt from the requirement for documentation under paragraph (c) of § 67.9 must either:
(1) Apply for renewal of the endorsement by complying with paragraph (b) of this section; or
(2) Place the Certificate of Documentation on deposit in accordance with § 67.165.
(b) Renewal application. The owner of a vessel must apply for renewal of each endorsement by executing an original Vessel Renewal Notification, Application for Renewal (CG–1280) certifying that the information contained in the Certificate of Documentation and any endorsement(s) thereon remains accurate, and that the Certificate has not been lost, mutilated, or wrongfully withheld. The completed CG–1280 must be sent to the Director, National Vessel Documentation Center.
(c) Requirement for renewal of recreational endorsements. A certificate of documentation for a recreational vessel and the renewal of such a certificate shall be effective for a 5-year period. During the period beginning January 1, 2019, and ending December 31, 2021, the owner of a recreational vessel may choose a period of effectiveness of 1, 2, 3, 4, or 5 years for such a certificate of documentation for such vessel or the renewal thereof.
Note:
Renewal of endorsements on a Certificate of Documentation may be denied if the vessel owner is the subject of an outstanding civil penalty assessed by the Coast Guard.
- 67.169 Requirement for replacement of Certificate of Documentation.
(a) The owner of a documented vessel must make application in accordance with subpart K of this part for replacement of a Certificate of Documentation which is:
(1) Lost;
(2) Mutilated; or
(3) Wrongfully withheld from the vessel owner.
(b) When application for replacement of a Certificate of Documentation is required because the Certificate has been mutilated, the existing Certificate must be physically given up to the National Vessel Documentation Center.
- 67.165 Deposit of Certificate of Documentation.
(a) Option for deposit in lieu of renewal of endorsement. In lieu of renewing the endorsement(s) in accordance with § 67.163, the owner of a vessel which is exempt from the requirement for documentation under paragraph (c) of § 67.9 may deposit the vessel’s outstanding Certificate of Documentation with the National Vessel Documentation Center.
(b) Reporting requirement. The owner of a vessel whose Certificate is on deposit in accordance with paragraph (a) of this section must make a written report to the National Vessel Documentation Center when:
(1) Exchange of the Certificate is required upon the occurrence of one or more of the events described in § 67.167 (b), (c), or (d); or
(2) The vessel is subject to deletion from the roll of actively documented vessels upon the occurrence of one or more of the events described in § 67.171(a)(1) through (8).
(c) Validity of document on deposit. A Certificate of Documentation placed on deposit in accordance with paragraph (a) of this section is valid for the purposes of:
(1) 46 U.S.C. chapter 125;
(2) 46 U.S.C. chapter 313;
(3) 46 U.S.C. 56101, 56102 and 57109; and
(4) 46 U.S.C. 56301.
- 67.167 Requirement for exchange of Certificate of Documentation.
(a) When application for exchange of the Certificate of Documentation is required upon the occurrence of one or more of the events described in paragraphs (b), (c), or (d) of this section, or the owner of the vessel chooses to apply for exchange of the Certificate pursuant to paragraph (e) of this section, the owner must send or deliver the Certificate to the National Vessel Documentation Center, and apply for an exchange of the Certificate in accordance with subpart K of this part.
(b) A Certificate of Documentation together with any endorsement(s) thereon becomes invalid immediately, except as provided in § 67.161, when:
(1) The ownership of the vessel changes in whole or in part;
(2) The general partners of a partnership change by addition, deletion, or substitution;
(3) The State of incorporation of any corporate owner of the vessel changes;
(4) The name of the vessel changes;
(5) The hailing port of the vessel changes; or
(6) The vessel is placed under the command of a person who is not a citizen of the United States.
(c) A Certificate of Documentation together with any endorsement(s) thereon becomes invalid immediately, except as provided in § 67.161 and in paragraph (f) of this section, if the vessel is not at sea, or upon the vessel’s next arrival in port anywhere in the world if the vessel is at sea, when:
(1) The gross or net tonnages or dimensions of the vessel change;
(2) Any beneficiary with an enforceable interest in a trust arrangement owning a vessel changes by addition or substitution;
(3) The trustee of a trust arrangement owning a vessel changes by addition, substitution, or deletion;
(4) A tenant by the entirety owning any part of the vessel dies;
(5) The restrictions imposed on the vessel change by addition or substitution;
(6) The legal name of any owner of the vessel changes;
(7) A self-propelled vessel becomes non-self-propelled or a non-self-propelled vessel becomes self-propelled;
(8) The endorsements for the vessel change by addition, deletion, or substitution;
(9) A substantive or clerical error made by the issuing documentation officer is discovered; and
(10) For a vessel with a coastwise endorsement under 46 U.S.C. 12119, one of the events in § 68.80 or § 68.111 of this chapter occurs.
(d) Although a Certificate of Documentation and any endorsement(s) thereon remain valid, the owner of a documented vessel must apply for exchange of the Certificate upon an election to designate a new managing owner of the vessel in accordance with § 67.113.
(e) Although a Certificate of Documentation and any endorsement(s) thereon remain valid, the owner may apply for exchange of the Certificate if:
(1) The restrictions imposed on the vessel change by deletion; or
(2) The vessel attains a special entitlement under subpart J of this part.
(f) A Certificate of Documentation which becomes invalid pursuant to paragraph (c) of this section remains valid for the purposes of filing a new mortgage or amendment, assignment, assumption, or subordination agreement for 30 days after the date it would otherwise have become invalid.
- 67.169 Requirement for replacement of Certificate of Documentation.
(a) The owner of a documented vessel must make application in accordance with subpart K of this part for replacement of a Certificate of Documentation which is:
(1) Lost;
(2) Mutilated; or
(3) Wrongfully withheld from the vessel owner.
(b) When application for replacement of a Certificate of Documentation is required because the Certificate has been mutilated, the existing Certificate must be physically given up to the National Vessel Documentation Center.
- 67.171 Deletion; requirement and procedure.
(a) A Certificate of Documentation together with any endorsement(s) thereon is invalid, except as provided in § 67.161, and the vessel is subject to deletion from the roll of actively documented vessels when:
(1) The vessel is placed under foreign flag;
(2) The vessel is sold or transferred in whole or in part to a person who is not a citizen of the United States within the meaning of subpart C of this part;
(3) Any owner of the vessel ceases to be a citizen of the United States within the meaning of subpart C of this part;
(4) The owner no longer elects to document the vessel;
(5) The vessel no longer measures at least five net tons;
(6) The vessel ceases to be capable of transportation by water;
(7) The owner fails to exchange the Certificate as required by § 67.167;
(8) The owner fails to maintain the markings required by subpart I of this part;
(9) The endorsements on the Certificate are revoked because the vessel owner is the subject of an outstanding civil penalty assessed by the Coast Guard; or
(10) The owner fails to:
(i) Renew the endorsement(s) as required by § 67.163; or
(ii) Comply with the provisions of § 67.165.
(b) Where a cause for deletion arises for any reason under paragraphs (a) (1) through (6) of this section, the owner must send or deliver the original Certificate of Documentation to the National Vessel Documentation Center together with a statement setting forth the reason(s) deletion is required.
(c) When a Certificate of Documentation is required to be deleted because the vessel has been placed under foreign flag or has been sold or transferred in whole or in part to a non-citizen of the United States, the owner of that vessel must comply with the requirements of paragraph (b) of this section, and file:
(1) Evidence of the sale or transfer, if any; and
(2) Evidence that the Maritime Administration has consented to the sale or transfer, except for vessels identified in § 67.11(b) and vessels for which the Maritime Administration has granted approval for unrestricted sale or transfer pursuant to regulations set forth in 46 CFR part 221.
(d) A certificate evidencing deletion from U.S. documentation will be issued upon request of the vessel owner to the National Vessel Documentation Center upon compliance with the applicable requirements of this subpart.