Shipping Lawyer Ship Finance and Maritime Mortgages

Question 1

Under U.S. law, what statute governs the creation and enforcement of preferred ship mortgages?

Accepted Answer

Ship Mortgage Act of 1920 (now codified in 46 U.S.C. Chapter 313)

Answer

Jones Act

Answer

Maritime Lien Act

Answer

Merchant Marine Act of 1936

Question 2

What is a 'preferred ship mortgage' and what priority does it hold over other liens?

Accepted Answer

A ship mortgage that is duly recorded and preferred over all maritime liens except seamen's wages, salvage, and tort liens

Answer

Any ship mortgage regardless of recording

Answer

A government-guaranteed vessel loan

Answer

A mortgage on a U.S.-flagged vessel with Coast Guard priority

Question 3

What is a 'flag state' and why does it matter for ship financing?

Accepted Answer

The country of registration that determines the vessel's legal identity and which laws govern its mortgage

Answer

The country where the vessel is operated commercially

Answer

The country of the mortgagee bank

Answer

The country of the vessel's owner

Question 4

What is a 'bareboat charter registry' (BIR) and how does it affect ship mortgages?

Accepted Answer

A registry allowing a vessel registered in one country to operate under another flag for charter purposes

Answer

A secondary registry for time-chartered vessels

Answer

A crew registry for bare boat operators

Answer

A tax classification registry

Question 5

What is 'assignment of earnings' in ship finance?

Accepted Answer

A lender's security interest in the vessel's freight earnings and charter hire payments

Answer

Transfer of crew wages to the ship manager

Answer

Distribution of profits to vessel shareholders

Answer

Assignment of insurance proceeds before a loss

Question 6

What is a 'Loan to Value' (LTV) ratio in ship financing and what does it determine?

Accepted Answer

The percentage of vessel value financed by debt, determining leverage and covenants in the loan agreement

Answer

The ratio of cargo value to freight costs

Answer

The exchange rate applied to freight payments

Answer

The ratio of insurance value to market value