Mortgagor

Merchant Shipping Act 1995 Schedule 1 makes provision relating to the title to and registration of mortgages over ships. The 1993 Regulations also contain provisions as to the title to and registration of mortgages over ships. The mortgage must be in a form approved by the Registrar at the Central Registry of Shipping and Seamen. As has been noted above, there is no obligation to register a mortgage. The advantages of so doing are that a registered mortgagee benefits in priority and gains the advantages available under legislation. Failure to register a mortgage does not render the mortgage invalid and an unregistered mortgage can be enforced against a buyer, even if he had no notice of it: The Shizelle (1992)Paragraphs 11 – 12 of Schedule 1 to the 1995 Act and Regulations 60 – 61 of the 1993 Regulations deal with the transfer and transmission of registered mortgages. A mortgagor is able to enter into contracts for the use of the vessel and these contracts are valid and can be enforced. If a mortgagee interferes with a charter party which the mortgagor has entered into he can be restrained by an injunction. A mortgagor must insure the vessel and there is usually an express clause in the deed stating that the mortgagor will keep the vessel fully insured. A mortgagor can also sell the vessel to another person. Where the ship is sold by order of the Court the new owner being an innocent purchaser for value takes the ship free of all encumbrances. In such case the mortgagee’s recourse will be restricted to the proceeds of sale.