Marine Finance and Lending

An unopposed Federal Court foreclosure of a Preferred Ship Mortgage may easily cost $20,000 or more, and this number will grow substantially if the vessel owner or competing creditors step in to the process.

Today, most established lenders include a provision in the language of the mortgage which allows for a "non-judicial" foreclosure, thus saving time and money in the foreclosure process. Under certain circumstances, however, the best course of action may be to proceed under the watchful eye of a federal judge and the Federal Court custodial process. This analysis will of course vary on a case-by-case, but problems invariably arise in the case of an unauthorized liveaboard, or where multiple claims will be made against the vessel. The mortgage is not always the senior lien, and even where it has priority the competing claimants may substantially reduce the value of the vessel at a private sale or auction. Remember, only a Federal Court, exercising its Admiralty Jurisdiction, may sell a vessel free and clear of all liens.

Weil & Associates has worked with maritime lien and mortgage issues for many years, and the firm has been involved with countless vessel foreclosures. We have also represented lenders in connection with construction loans and other products that are subject to State law rather than to Federal maritime law. We understand the mechanics of vessel security interests and are frequently able to advise clients of their best course of action during our initial consultation. We look forward to working with you.