1625-0027 Stat/Authority

Page 227
HISTORICAL AND REVISION NOTES
Revised
Section

Source (U.S. Code)

31113 ..........

46 App.:790.

Source (Statutes at Large)
Mar. 3, 1925, ch. 428, § 10, 43
Stat. 1113; Aug. 30, 1954,
ch. 1076, § 1(26), 68 Stat.
968.

CHAPTER 313—COMMERCIAL INSTRUMENTS
AND MARITIME LIENS
SUBCHAPTER I—GENERAL
Sec.

31301.
31302.

Definitions.
Availability of instruments, copies, and information.
31303.
Certain civil actions not authorized.
31304.
Liability for noncompliance.
31305.
Waiver of lien rights.
31306.
Declaration of citizenship.
31307.
State statutes superseded.
31308.
Secretary of Commerce or Transportation as
mortgagee.
31309.
General civil penalty.
SUBCHAPTER II—COMMERCIAL INSTRUMENTS
31321.
31322.
31323.
31324.
31325.
31326.
31327.
[31328.
31329.
31330.
31341.
31342.
31343.

§ 31301

TITLE 46—SHIPPING

Filing, recording, and discharge.
Preferred mortgages.
Disclosing and incurring obligations before
executing preferred mortgages.
Retention and examination of mortgages of
vessels covered by preferred mortgages.
Preferred mortgage liens and enforcement.
Court sales to enforce preferred mortgage
liens and maritime liens and priority of
claims.
Forfeiture of mortgagee interest.
Repealed.]
Court sales of documented vessels.
Penalties.
SUBCHAPTER III—MARITIME LIENS
Persons presumed to have authority to procure necessaries.
Establishing maritime liens.
Recording and discharging notices of claim of
maritime lien.
HISTORICAL AND REVISION NOTES

Section 101 [102] of H.R. 3105 [became Pub. L. 100–710]
revises, consolidates, and enacts certain general and
permanent laws of the United States related to commercial instruments and liens and public vessels and
goods. It amends subtitle III of title 46, United States
Code by striking at the end ‘‘Chapters 313, 315—Reserved’’ and substituting ‘‘Chapter 313—Commercial Instruments and Maritime Liens’’. Chapter 313 is essentially a codification of the Ship Mortgage Act, 1920 (46
App. U.S.C. 911–984). H.R. 3105 is the second step in the
process of enacting laws compiled in title 46 of the Code
into positive law. The first step in the codification
process began in 1983 when certain general and permanent laws related to vessels and seamen were enacted
as subtitle II of the title 46, United States Code.
HOUSE FLOOR STATEMENT

Section 102 of this bill adds a new subtitle III to title
46, which contains a codification of the Ship Mortgage
Act, 1920 and other related provisions. A previous version of this codification and the remaining sections of
the bill were recently reported by the Merchant Marine
and Fisheries Committee in H.R. 3105 (H. Rept. 100–918).
The significant additions or changes by this provision
to the version of H.R. 3105 reported by the Merchant
Marine and Fisheries Committee are explained as follows: [see sections 31305, 31321, 31322, 31325, 31329, 31330,
31343 of this title].
AMENDMENTS
2002—Pub. L. 107–295, title II, § 205(a)(2), Nov. 25, 2002,
116 Stat. 2096, substituted ‘‘notices of claim of mari-

time lien’’ for ‘‘liens on preferred mortgage vessels’’ in
item 31343.
1996—Pub. L. 104–324, title XI, § 1113(b)(3), Oct. 19, 1996,
110 Stat. 3970, struck out item 31328 ‘‘Limitations on
parties serving as trustees of mortgaged vessel interests’’.

SUBCHAPTER I—GENERAL
§ 31301. Definitions
In this chapter—
(1) ‘‘acknowledge’’ means making—
(A) an acknowledgment or notarization before a notary public or other official authorized by a law of the United States or a State
to take acknowledgments of deeds; or
(B) a certificate issued under the Hague
Convention Abolishing the Requirement of
Legalisation for Foreign Public Documents,
1961;
(2) ‘‘district court’’ means—
(A) a district court of the United States
(as defined in section 451 of title 28);
(B) the District Court of Guam;
(C) the District Court of the Virgin Islands;
(D) the District Court for the Northern
Mariana Islands;
(E) the High Court of American Samoa;
and
(F) any other court of original jurisdiction
of a territory or possession of the United
States;
(3) ‘‘mortgagee’’ means—
(A) a person to whom property is mortgaged; or
(B) when a mortgage on a vessel involves a
trust, the trustee that is designated in the
trust agreement;
(4) ‘‘necessaries’’ includes repairs, supplies,
towage, and the use of a dry dock or marine
railway;
(5) ‘‘preferred maritime lien’’ means a maritime lien on a vessel—
(A) arising before a preferred mortgage
was filed under section 31321 of this title;
(B) for damage arising out of maritime
tort;
(C) for wages of a stevedore when employed directly by a person listed in section
31341 of this title;
(D) for wages of the crew of the vessel;
(E) for general average; or
(F) for salvage, including contract salvage;
(6) ‘‘preferred mortgage’’—
(A) means a mortgage that is a preferred
mortgage under section 31322 of this title;
and
(B) also means in sections 31325 and 31326
of this title, a mortgage, hypothecation, or
similar charge that is established as a security on a foreign vessel if the mortgage,
hypothecation, or similar charge was executed under the laws of the foreign country
under whose laws the ownership of the vessel
is documented and has been registered under
those laws in a public register at the port of
registry of the vessel or at a central office;
and
(7) ‘‘Secretary’’ means the Secretary of the
Department of Homeland Security, unless
otherwise noted.

§ 31302

TITLE 46—SHIPPING

(Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988, 102
Stat. 4739; Pub. L. 111–281, title IX, § 913(a)(2)–(4),
Oct. 15, 2010, 124 Stat. 3017.)
HISTORICAL AND REVISION NOTES
Revised section
31301(1), (2) ..................................
31301(3) ........................................
31301(4) ........................................
31301(5) ........................................
31301(6)(A) ...................................
31301(6)(B) ...................................

Source section (U.S. Code)
New
46:911(5)
Derived from 46:971–974
46:953(a)
46:922(b)
46:951 (2d par. less proviso)

Section 31301(1) defines the term ‘‘acknowledge’’.
This paragraph makes a substantive change to law to
expand the current law by allowing a notarization
under State law, a form prescribed by the Secretary, as
well as a certificate issued under the Hague Convention
Abolishing the Requirement of Legalisation for Foreign Public Documents, 1961.
Section 31301(2) defines ‘‘district court’’. This paragraph makes a substantive change to law by including
the District Court of Guam, the District Court of the
Virgin Islands, the District Court of the Northern Mariana Islands, the High Court of American Samoa, and
other Federal territorial courts as they are established.
Under current law, only the district courts of the
United States have jurisdiction under the Ship Mortgage Act, 1920.
Section 31301(3) defines ‘‘mortgagee’’ as a person to
whom property is mortgaged and the trustee authorized under section 31328 that is designated in the trust
agreement.
Section 31301(4) defines ‘‘necessaries’’ to include repairs, supplies, towage, and the use of a drydock and
marine railway for a vessel. As in all codifications, the
term ‘‘includes’’ means ‘‘includes but is not limited to’’
and, therefore, is not intended to be an exclusive listing
of those items that a court has determined or may determine as falling within the meaning of the term
‘‘other necessaries’’ as contained in current law. The
definition is new, is based on 46 App. U.S.C. 971–974, and
makes no substantive change to law.
Section 31301(5) defines ‘‘preferred maritime lien’’ to
mean a lien on a vessel that arises before a preferred
mortgage was filed under section 31321 of this title for
damages arising out of maritime tort, stevedore wages,
crew wages, general average, and salvage. The definition is new and is based on 46 App. U.S.C. 953(a). The
only substantive change to law made by this paragraph
is to change the effective date from the day the preferred mortgage is recorded and endorsed to when it is
filed. This change is in keeping with other changes
with regard to filing. The term ‘‘duly and validly’’ that
is in existing law is not used because it is unnecessary.
An instrument that is not ‘‘duly and validly’’ executed
is not executed under the laws of the foreign country.
This makes no substantive change to law.
Section 31301(6)(A) defines ‘‘preferred mortgage’’ to
mean a mortgage that meets the requirements of section 31322. This clause makes no substantive change to
law.
Section 31301(6)(B) defines ‘‘preferred mortgage’’ to
also mean a mortgage on a documented foreign vessel
that is preferred under sections 31325 and 31326 for purposes of enforcement of the outstanding mortgage indebtedness. Preference is only granted if the mortgage
is executed under the laws of a foreign country, registered under those laws in a public register at the port
of registry or at a central office. The use of the word
‘‘established’’ in place of ‘‘created’’ in the current law
or ‘‘effective’’ as used in the treaties is not intended to
make any substantive change to law. The only substantive changes to law made by this clause are the
elimination of the exemption of foreign vessels of less
than 200 gross tons, and clarification of the rule of interpretation that if a vessel is registered in one country, but is permitted to fly temporarily the flag of another country (such as through a demise charter), it is
the law of the country in which the ownership of the

Page 228

vessel is documented that is used to determine when a
mortgage attains preferred status.
AMENDMENTS
2010—Par. (7). Pub. L. 111–281 added par. (7).
EFFECTIVE DATE
Pub. L. 100–710, title I, § 107, Nov. 23, 1988, 102 Stat.
4752, provided that:
‘‘(a) This title [see Tables for classification] and
amendments made by this title take effect on January
1, 1989. However, sections 31321 and 31322 of title 46 (as
enacted by section 102 of this Act), United States Code
(as sections 31321 and 32322 [probably should be 31322]
apply to vessels for which an application for documentation has been filed), take effect on January 1,
1990.
‘‘(b) An instrument filed before January 1, 1989, but
not recorded before that date, is deemed to comply
with section 31321 of title 46, United States Code, if it
is in substantial compliance with the provisions in that
section that had corresponding requirements under the
law on December 31, 1988. However, the mortgage may
not become a preferred mortgage until the vessel is
documented.
‘‘(c) This title and the amendments made by this title
do not affect the validity of any instrument filed or recorded before January 1, 1989, if there was a corresponding requirement under the law on December 31, 1988.
‘‘(d) An instrument filed or recorded before January
1, 1989, is deemed to comply with any new requirement
under chapter 313 of title 46, United States Code (as enacted by section 102 of this Act), affecting the validity
of that instrument.
‘‘(e) Section 102 of this Act and amendments made by
that section [enacting former section 30101 and sections
31301 to 31309, 31321 to 31330, and 31341 to 31343 of this
title and provisions set out as a note preceding section
2101 of this title] do not affect any civil action filed before January 1, 1989.
‘‘(f) Section 104(b) of this Act and the amendments
made by section 104(b) of this Act [amending section 808
of the former Appendix to this title] do not apply to
any change in control resulting from, or which may at
any time result from, any proposed plan of reorganization filed under the United States bankruptcy laws
prior to the date of enactment of this Act [Nov. 23,
1988], except that transactions undertaken as a result
of such a plan shall continue to be governed by section
9 of the Shipping Act, 1916 ([former] 46 App. U.S.C. 808)
[see 46 U.S.C. 56101, 57109], as it existed prior to the date
of enactment of this Act, to the extent that such section 9 would have governed such transactions.’’

§ 31302. Availability of instruments, copies, and
information
The Secretary shall—
(1) make any instrument filed or recorded
with the Secretary under this chapter available for public inspection;
(2) on request, provide a copy, including a
certified copy, of any instrument made available for public inspection under this chapter;
and
(3) on request, provide a certificate containing information included in an instrument
filed or recorded under this chapter.
(Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988, 102
Stat. 4740; Pub. L. 111–281, title IX, § 913(a)(1),
Oct. 15, 2010, 124 Stat. 3017.)
HISTORICAL AND REVISION NOTES
Revised section
31302(1) ........................................
31302(2) ........................................

Source section (U.S. Code)
46:927 (1st sentence)
46:927 (2d sentence)

Page 229

§ 31306

TITLE 46—SHIPPING

HISTORICAL AND REVISION NOTES—CONTINUED
Revised section

Source section (U.S. Code)

31302(3) ........................................

New

Section 31302(1) makes all instruments filed for recording or recorded with the Secretary of Transportation available for public inspection. The only substantive change to law made by this subsection is the
inclusion of instruments filed for recording, which is in
keeping with the new requirements on filing of instruments made in section 31321.
Section 31302(2) requires the Secretary to provide the
public with a certified copy of the material made available to the public under subsection (a). This subsection
makes no substantive change to law.
Section 31302(3) requires the Secretary, on request, to
issue a certificate containing the information included
in instruments on file, such as certificates of ownership.
AMENDMENTS
2010—Pub. L. 111–281 struck out ‘‘of Transportation’’
after ‘‘Secretary’’ in introductory provisions.

§ 31303. Certain civil actions not authorized
If a mortgage covers a vessel and additional
property that is not a vessel, this chapter does
not authorize a civil action in rem to enforce
the rights of the mortgagee under the mortgage
against the additional property.
(Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988, 102
Stat. 4740.)
HISTORICAL AND REVISION NOTES
Revised section
31303 ............................................

Source section (U.S. Code)
46:954(b)

prevails, the court shall award costs and attorneys fees
to the plaintiff. This section makes two substantive
changes to law. First, is the broadening of its coverage
from documented vessels covered by a preferred mortgage to any vessel covered by a mortgage that is filed
or recorded under the chapter. The second substantive
change repeals the liability on the United States Government for losses caused because the Secretary did
not comply with statutory requirements. This is covered by the Federal Tort Claims Act due to the nondiscretionary responsibility of the Secretary.

§ 31305. Waiver of lien rights
This chapter does not prevent a mortgagee or
other lien holder from waiving or subordinating
at any time by agreement or otherwise the lien
holder’s right to a lien, the priority or, if a preferred mortgage lien, the preferred status of the
lien.
(Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988, 102
Stat. 4741.)
HISTORICAL AND REVISION NOTES
Revised section
31305 ............................................

Source section (U.S. Code)
46:974

Section 31305 provides for the waiver of lien rights by
the mortgagee or a person performing or supplying necessaries. This section makes no substantive change to
law and is included only because of a like provision in
current law. Without this provision the Committee believes these waivers would be permissible as a matter
of law as they do not violate any public policy and on
their face reflect an arms length transaction between
the parties. The inclusion of this provision should not
raise the implication that a similar provision is required for other matters that may be waivable as a
matter of law.

Section 31303 makes it clear that, if a mortgage covers a vessel and additional property that is not a vessel,
this chapter does not authorize a civil action in rem in
admiralty to enforce rights against the additional property. This section makes no substantive change to law.

Section 31305 has been changed to clarify that the
chapter does not prevent a mortgagee or other lien
holder from waiving by contract the right to a lien, or
the priority of that lien.

§ 31304. Liability for noncompliance

§ 31306. Declaration of citizenship

(a) If a person makes a contract secured by, or
on the credit of, a vessel covered by a mortgage
filed or recorded under this chapter and sustains
a monetary loss because the mortgagor or the
master or other individual in charge of the vessel does not comply with a requirement imposed
on the mortgagor, master, or individual under
this chapter, the mortgagor is liable for the loss.
(b) A civil action may be brought to recover
for losses referred to in subsection (a) of this
section. The district courts have original jurisdiction of the action, regardless of the amount
in controversy or the citizenship of the parties.
If the plaintiff prevails, the court shall award
costs and attorney fees to the plaintiff.

(a) Except as provided by the Secretary, when
an instrument transferring an interest in a vessel is presented to the Secretary for filing or recording, the transferee shall file with the instrument a declaration, in the form the Secretary
may prescribe by regulation, stating information about citizenship and other information the
Secretary may require to show the transaction
involved does not violate section 56102 or 56103 of
this title.
(b) A declaration under this section filed by a
corporation must be signed by its president, secretary, treasurer, or other official authorized by
the corporation to execute the declaration.
(c) Except as provided by the Secretary, an instrument transferring an interest in a vessel is
not valid against any person until the declaration required by this section has been filed.
(d) A person knowingly making a false statement of a material fact in a declaration filed
under this section shall be fined under title 18,
imprisoned for not more than 5 years, or both.

(Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988, 102
Stat. 4740.)
HISTORICAL AND REVISION NOTES
Revised section
31304 ............................................

Source section (U.S. Code)
46:941(c)

Section 31304 imposes liability on the mortgagor if
the mortgagor, master, or other individual in charge of
the vessel does not comply with the statutory requirements. A civil action may be brought in a district court
of the United States for losses incurred. If the plaintiff

HOUSE FLOOR STATEMENT

(Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988, 102
Stat. 4741; Pub. L. 101–225, title III, § 303(1), Dec.
12, 1989, 103 Stat. 1923; Pub. L. 109–304, § 15(27),
Oct. 6, 2006, 120 Stat. 1704; Pub. L. 111–281, title
IX, § 913(a)(1), Oct. 15, 2010, 124 Stat. 3017.)

§ 31307

TITLE 46—SHIPPING
HISTORICAL AND REVISION NOTES
Revised section

Source section (U.S. Code)

31306 ............................................

46:838

Section 31306(a) requires that a person submitting an
instrument transferring interest in a vessel to the Secretary for recording is also to file a declaration stating
information about citizenship and other information to
show that the transfer is not in violation of section 9
of the Shipping Act, or section 37 of that Act in a national emergency. This section makes no substantive
change to law.
Section 31306(b) requires that a declaration filed by a
corporation must be signed by the president, secretary,
treasurer, or other official authorized by the corporation to execute the declaration. This section makes no
substantive change to law.
Section 31306(c) invalidates any instrument transferring an interest until the declaration is filed. This section makes no substantive change to law.
Section 31306(d) provides for a criminal penalty for a
violation of this section. The amount of the fine is prescribed under title 18, United States Code, and may include imprisonment for not more than 5 years, or both.
This section makes no substantive change to law.
AMENDMENTS
2010—Subsec. (a). Pub. L. 111–281 struck out ‘‘of
Transportation’’ after ‘‘provided by the Secretary’’.
2006—Subsec. (a). Pub. L. 109–304 substituted ‘‘section
56102 or 56103 of this title’’ for ‘‘section 9 or 37 of the
Shipping Act, 1916 (46 App. U.S.C. 808, 835)’’.
1989—Subsec. (a). Pub. L. 101–225, § 303(1)(A), substituted ‘‘Except as provided by the Secretary of Transportation, when’’ for ‘‘When’’ and ‘‘Secretary for filing’’ for ‘‘Secretary of Transportation for filing’’.
Subsec. (c). Pub. L. 101–225, § 303(1)(B), substituted
‘‘Except as provided by the Secretary, an’’ for ‘‘An’’.

§ 31307. State statutes superseded
This chapter supersedes any State statute conferring a lien on a vessel to the extent the statute establishes a claim to be enforced by a civil
action in rem against the vessel for necessaries.
(Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988, 102
Stat. 4741.)
HISTORICAL AND REVISION NOTES
Revised section
31307 ............................................

Source section (U.S. Code)
46:975

Section 31307 provides for preemption of State laws to
the extent a claim for necessaries is enforced by a civil
action in rem in admiralty against the vessel.

§ 31308. Secretary of Commerce or Transportation as mortgagee
The Secretary of Commerce or Transportation, as a mortgagee under this chapter, may
foreclose on a lien arising from a right established under a mortgage under chapter 537 of
this title, subject to section 362(b) of title 11.
(Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988, 102
Stat. 4741; Pub. L. 101–595, title VI, § 603(13), Nov.
16, 1990, 104 Stat. 2993; Pub. L. 109–304, § 15(28),
Oct. 6, 2006, 120 Stat. 1704; Pub. L. 111–281, title
IX, § 913(b), Oct. 15, 2010, 124 Stat. 3017.)
HISTORICAL AND REVISION NOTES
Revised section
31308 ............................................

Source section (U.S. Code)
46:952 (last sentence)

Page 230

Section 31308 allows the Secretary of Commerce or
Transportation to foreclose on a lien arising from a
right established under a mortgage under title XI of
the Merchant Marine Act, 1936. This section makes no
substantive change to law.
AMENDMENTS
2010—Pub. L. 111–281 substituted ‘‘The Secretary of
Commerce or Transportation, as a mortgagee under
this chapter,’’ for ‘‘When the Secretary of Commerce or
Transportation is a mortgagee under this chapter, the
Secretary’’.
2006—Pub. L. 109–304 substituted ‘‘chapter 537 of this
title’’ for ‘‘title XI of the Merchant Marine Act, 1936 (46
App. U.S.C. 1271 et seq.)’’.
1990—Pub. L. 101–595 substituted ‘‘(46 App. U.S.C. 1271
et seq.)’’ for ‘‘(46 App. U.S.C. 1241 et seq.)’’.

§ 31309. General civil penalty
Except as otherwise provided in this chapter, a
person violating this chapter or a regulation
prescribed under this chapter is liable to the
United States Government for a civil penalty of
not more than $10,000.
(Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988, 102
Stat. 4741.)
HISTORICAL AND REVISION NOTES
Revised section
31309 ............................................

Source section (U.S. Code)
New

Section 31309 provides for a civil penalty of not more
than $10,000 for a violation of this chapter or a regulation prescribed under this chapter.

SUBCHAPTER II—COMMERCIAL
INSTRUMENTS
§ 31321. Filing, recording, and discharge
(a)(1) A bill of sale, conveyance, mortgage, assignment, or related instrument, whenever
made, that includes any part of a documented
vessel or a vessel for which an application for
documentation is filed, must be filed with the
Secretary to be valid, to the extent the vessel is
involved, against any person except—
(A) the grantor, mortgagor, or assignor;
(B) the heir or devisee of the grantor, mortgagor, or assignor; and
(C) a person having actual notice of the sale,
conveyance, mortgage, assignment, or related
instrument.
(2) Each bill of sale, conveyance, mortgage, assignment, or related instrument that is filed in
substantial compliance with this section is valid
against any person from the time it is filed with
the Secretary.
(3) The parties to an instrument or an application for documentation shall use diligence to ensure that the parts of the instrument or application for which they are responsible are in substantial compliance with the filing and documentation requirements.
(4) A bill of sale, conveyance, mortgage, assignment, or related instrument may be filed
electronically under regulations prescribed by
the Secretary.
(b) To be filed, a bill of sale, conveyance,
mortgage, assignment, or related instrument
must—
(1) identify the vessel;

Page 231

§ 31321

TITLE 46—SHIPPING

(2) state the name and address of each party
to the instrument;
(3) state, if a mortgage, the amount of the
direct or contingent obligations (in one or
more units of account as agreed to by the parties) that is or may become secured by the
mortgage, excluding interest, expenses, and
fees;
(4) state the interest of the grantor, mortgagor, or assignor in the vessel;
(5) state the interest sold, conveyed, mortgaged, or assigned; and
(6) be signed and acknowledged.
(c) If a bill of sale, conveyance, mortgage, assignment, or related document is filed that involves a vessel for which an application for documentation is filed, and the Secretary decides
that the vessel cannot be documented by an applicant—
(1) the Secretary shall send notice of the
Secretary’s decision, including reasons for the
decision, to each interested party to the instrument filed for recording; and
(2) 90 days after sending the notice as provided under clause (1) of this subsection, the
Secretary—
(A) may terminate the filing; and
(B) may return the instrument filed without recording it under subsection (e) of this
section.
(d) A person may withdraw an application for
documentation of a vessel for which a mortgage
has been filed under this section only if the
mortgagee consents.
(e) The Secretary shall—
(1) record the bills of sale, conveyances,
mortgages, assignments, and related instruments of a documented vessel complying with
subsection (b) of this section in the order they
are filed; and
(2) maintain appropriate indexes, for use by
the public, of instruments filed or recorded, or
both.
(f) On full and final discharge of the indebtedness under a mortgage recorded under subsection (e)(1) of this section, a mortgagee, on request of the Secretary or mortgagor, shall provide the Secretary with an acknowledged certificate of discharge of the indebtedness in a form
prescribed by the Secretary. The Secretary shall
record the certificate.
(g) The mortgage or related instrument of a
vessel covered by a preferred mortgage under
section 31322(d) of this title, that is later filed
under this section at the time an application for
documentation is filed, is valid under this section from the time the mortgage or instrument
representing financing became a preferred mortgage under section 31322(d).
(h) On full and final discharge of the indebtedness under a mortgage deemed to be a preferred
mortgage under section 31322(d) of this title, a
mortgagee, on request of the Secretary, a State,
or mortgagor, shall provide the Secretary or the
State, as appropriate, with an acknowledged
certificate of discharge of the indebtedness in a
form prescribed by the Secretary or the State,
as applicable. If filed with the Secretary, the
Secretary shall enter that information in the
vessel identification system under chapter 125 of
this title.

(Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988, 102
Stat. 4741; Pub. L. 101–225, title III, § 303(2), Dec.
12, 1989, 103 Stat. 1923; Pub. L. 104–324, title III,
§ 305, Oct. 19, 1996, 110 Stat. 3918; Pub. L. 107–295,
title IV, § 420, Nov. 25, 2002, 116 Stat. 2124; Pub. L.
111–281, title IX, § 913(a)(1), Oct. 15, 2010, 124 Stat.
3017.)
HISTORICAL AND REVISION NOTES
Revised section
31321(a)(1) ....................................
31321(a)(2) ....................................
31321(a)(3) ....................................
31321(b) ........................................
31321(c), (d) ..................................
31321(e) ........................................
31321(f) ........................................
31321(g) ........................................
31321(h) ........................................

Source section (U.S. Code)
46:921(a)
46:1012
New
46:926(a), (b)
New
46:921(b)
46:925(b)
New
46:925(b)

Section 31321(a)(1) provides for the filing of a bill of
sale, conveyance, mortgage, assignment, or related instrument of a vessel. This subsection makes substantive changes to law. The bill would allow a bill of
sale, conveyance, mortgage, assignment, or related instrument to be filed at the same time an application
for documentation under chapter 121 is filed. The Committee intends that the types of related instruments
required to be filed be defined by regulations prescribed
by the Secretary of Transportation. A major change
the bill makes is that the instrument needs only be
filed with the Secretary of Transportation to be valid.
It is not necessary that it be recorded. This change is
being made to eliminate a problem under existing law
that prevents a person from recording an instrument
when the vessel has not been yet documented. When
filed with the Secretary, it is valid (to the extent the
vessel is involved) against any person except the grantor, mortgagor, or assignor, their heirs or devisees, and
a person having actual notice of that instrument.
Clauses (A)–(C) make no substantive change to law.
Paragraph (2) provides that each bill of sale, conveyance, mortgage, assignment, or related instrument that
is filed in substantial compliance with the requirements of this section is valid against any person from
the time it is filed with the Secretary.
Paragraph (3) provides that it is the responsibility of
the parties to an instrument to use diligence to ensure
that the particulars of a filed instrument for which
they are responsible are in substantial compliance. It is
not the responsibility of the Secretary to validate the
information in the instrument. If an instrument is
later found to be invalid because it is not in substantial
compliance, and the parties lose the benefits of a preferred mortgage, it is their fault, not the Secretary’s.
Section 31321(b) sets out the requirements that an instrument must meet to be properly filed. To be filed
the instruments must: (1) identify the vessel; (2) state
the name and address of each party to the instrument;
(3) state, if a mortgage, the amount of the direct or
contingent obligations (in one or more units of account
as agreed to by the parties) that is or may become secured by the mortgage, excluding interest, expenses,
and fees; (4) state the interest of the grantor, mortgagor, or assignor; (5) state the interest sold, conveyed,
mortgaged, or assigned; and (6) be signed and acknowledged. While most of these items are required under
current law to be included in the index, and therefore
required to be submitted to the Secretary to be recorded, this subsection makes a number of substantive
changes to law. First, while vessel names are currently
required to be submitted, this requirement has been
broadened so that hull identification numbers and official numbers can be used to more specifically identify
a vessel (since many vessels have the same name). Second, it requires the mortgage to state the maximum
amount of the obligation, including principal, interest,
fees, etc., that are secured by the mortgage. It also
clarifies that the mortgage obligation may be payable
in more than one unit of account, such as yen, franc, or

§ 31322

TITLE 46—SHIPPING

special drawing right. Third, it recognizes that under
some modern financing practices an instrument may
not have a date of maturity. The requirement for supplying the date of maturity has been eliminated.
Section 31321(c) provides that if an instrument filed
involves a vessel that has not yet been documented,
and the Secretary decides that the vessel cannot be
documented by the applicant, then the Secretary shall
send notice of that denial to the parties, including the
reasons for the Secretary’s decision. If the parties have
not corrected the deficiencies within 90 days, the Secretary may terminate the filing and return the instruments. This invalidates the instruments.
Section 31321(d) prohibits a person from withdrawing
an application for documentation of a vessel for which
a mortgage has been filed unless the mortgagee consents. Since the withdrawal will invalidate the mortgage, the mortgagee should be allowed to prohibit the
withdrawal.
Section 31321(e) makes a substantive change to law.
It requires the Secretary to record instruments in the
order they are received for filing, not in the order in
which they were received for recording. It also makes
a substantive change by eliminating the specific indexes required under the law and substituting a general
requirement for the Secretary to maintain indexes of
instruments filed or recorded, or both, for use by the
public. These indexes, prescribed by regulations, must
be in keeping with U.S. obligations under treaties to
which the United States is a party. Since section 104
[105] of this Act makes the existing rules and regulations applicable under this subsection, the current indexing system will be maintained that includes the
names of the vessels; names of the parties to the instruments; time and date each instrument was received; the interest in the vessel that was sold, conveyed, mortgaged, or assigned; and the date of the maturity of the mortgage, if any. However, it allows the
Secretary by regulation to automate the system with
computers, as long as the new system provides the public with an adequate method of finding and examining
these public records.
Section 31321(f) makes a substantive change to law by
eliminating the requirement that a partial discharge of
indebtedness be filed with the Secretary. The bill requires that on the full and final discharge of indebtedness the mortgagee, on request of the Secretary or
mortgagor, shall provide the Secretary with a written,
acknowledged certificate of discharge of the indebtedness. This subsection also makes a substantive change
by requiring that the mortgagee, not the mortgagor,
provide the certificate of discharge. The Secretary
shall then record the certificate. However, this does not
prohibit a person from submitting a certificate of discharge under subsection (a) since it is a related instrument. This subsection also makes a substantive change
to law by eliminating the requirement that the discharge be endorsed on the vessel’s certificate of documentation, and that the Customs Service only may
clear a vessel after an endorsement has been made.
This change is made because of the elimination of endorsements under section 31322.
HOUSE FLOOR STATEMENT

Section 31321 has been changed to clarify that a mortgage, whenever made, must be filed to be valid against
third parties. This clarification allows mortgage closings to occur previous to filing of an instrument, and
to eliminate the need for a fictional simultaneous closing and filing.
Subsection (g) clarifies that if an application for documentation is filed for a vessel covered by a preferred
mortgage under section 31322(d) (as enacted by this
Act), the preferred mortgage must be filed with the
Secretary at the same time the application for documentation is filed to be valid against third parties. If
the preferred mortgage is filed with the Secretary at
the time the documentation application is filed, it is
valid from the time it became a preferred mortgage
under section 31322(d).

Page 232

When a State preferred mortgage under section
31322(d) is finally discharged, subsection (h) of this section requires the mortgagee to provide upon request to
the Secretary or a State, whichever is more appropriate, an acknowledged certificate of discharge of indebtedness. This is necessary when a vessel in the system moves from a participating titling State and is not
retitled in another participating State. In this case,
there is no way to update the status of the indebtedness
through the original titling State. The Secretary is required to accept this information to be maintained in
the vessel identification system under section 12503(c)
of title 46 (as enacted by this Act).
AMENDMENTS
2010—Subsec. (a)(1). Pub. L. 111–281 struck out ‘‘of
Transportation’’ after ‘‘Secretary’’ in introductory provisions.
2002—Subsec. (a)(4) Pub. L. 107–295 struck out subpar.
(A) designation before ‘‘A bill of sale’’ and subpar. (B)
which read as follows: ‘‘A filing made electronically
under subparagraph (A) shall not be effective after the
10-day period beginning on the date of the filing unless
the original instrument is provided to the Secretary
within that 10-day period.’’
1996—Subsec. (a). Pub. L. 104–324 added par. (4).
1989—Subsec. (c). Pub. L. 101–225 substituted ‘‘for
which an application for documentation is filed’’ for
‘‘that has not yet been documented’’ in introductory
provisions and ‘‘interested party to’’ for ‘‘party whose
name and address is stated on’’ in par. (1).
EFFECTIVE DATE
Section effective Jan. 1, 1989, not to affect any civil
action filed before that date, and, insofar as applicable
to vessels for which an application for documentation
has been filed, effective Jan. 1, 1990, with further provision for an instrument filed before Jan. 1, 1989, but not
recorded before that date, and with other qualifications, see section 107 of Pub. L. 100–710, set out as a
note under section 31301 of this title.

§ 31322. Preferred mortgages
(a) A preferred mortgage is a mortgage, whenever made, that—
(1) includes the whole of the vessel;
(2) is filed in substantial compliance with
section 31321 of this title;
(3)(A) covers a documented vessel; or
(B) covers a vessel for which an application
for documentation is filed that is in substantial compliance with the requirements of
chapter 121 of this title and the regulations
prescribed under that chapter; and
(4) with respect to a vessel with a fishery endorsement that is 100 feet or greater in registered length, has as the mortgagee—
(A) a person eligible to own a vessel with
a fishery endorsement under section 12113(c)
of this title;
(B) a state 1 or federally chartered financial institution that is insured by the Federal Deposit Insurance Corporation;
(C) a farm credit lender established under
title 12, chapter 23 of the United States
Code;
(D) a commercial fishing and agriculture
bank established pursuant to State law;
(E) a commercial lender organized under
the laws of the United States or of a State
and eligible to own a vessel for purposes of
documentation under section 12103 of this
title; or
1 So

in original. Probably should be capitalized.

Page 233

TITLE 46—SHIPPING

(F) a mortgage trustee under subsection (f)
of this section.
(b) Any indebtedness secured by a preferred
mortgage that is filed or recorded under this
chapter, or that is subject to a mortgage, security agreement, or instruments granting a security interest that is deemed to be a preferred
mortgage under subsection (d) of this section,
may have any rate of interest to which the parties agree.
(c)(1) If a preferred mortgage includes more
than one vessel or property that is not a vessel,
the mortgage may provide for the separate discharge of each vessel and all property not a vessel by the payment of a part of the mortgage indebtedness.
(2) If a vessel covered by a preferred mortgage
that includes more than one vessel or property
that is not a vessel is to be sold on the order of
a district court in a civil action in rem, and the
mortgage does not provide for separate discharge as provided under paragraph (1) of this
subsection—
(A) the mortgage constitutes a lien on that
vessel in the full amount of the outstanding
mortgage indebtedness; and
(B) an allocation of mortgage indebtedness
for purposes of separate discharge may not be
made among the vessel and other property
covered by the mortgage.
(d)(1) A mortgage, security agreement, or instrument granting a security interest perfected
under State law covering the whole of a vessel
titled in a State is deemed to be a preferred
mortgage if—
(A) the Secretary certifies that the State titling system complies with the Secretary’s
guidelines for a titling system under section
13107(b)(8) of this title; and
(B) information on the vessel covered by the
mortgage, security agreement, or instrument
is made available to the Secretary under chapter 125 of this title.
(2) This subsection applies to mortgages, security agreements, or instruments covering vessels titled in a State after—
(A) the Secretary’s certification under paragraph (1)(A) of this subsection; and
(B) the State begins making information
available to the Secretary under chapter 125 of
this title.
(3) A preferred mortgage under this subsection
continues to be a preferred mortgage even if the
vessel is no longer titled in the State where the
mortgage, security agreement, or instrument
granting a security interest became a preferred
mortgage under this subsection.
(e) If a vessel is already covered by a preferred
mortgage when an application for titling or documentation is filed—
(1) the status of the preferred mortgage covering the vessel to be titled in the State is determined by the law of the jurisdiction where
the vessel is currently titled or documented;
and
(2) the status of the preferred mortgage covering the vessel to be documented under chapter 121 is determined by subsection (a) of this
section.

§ 31322

(f)(1) A mortgage trustee may hold in trust,
for an individual or entity, an instrument or
evidence of indebtedness, secured by a mortgage
of the vessel to the mortgage trustee, provided
that the mortgage trustee—
(A) is eligible to be a preferred mortgagee
under subsection (a)(4), subparagraphs (A)–(E)
of this section;
(B) is organized as a corporation, and is
doing business, under the laws of the United
States or of a State;
(C) is authorized under those laws to exercise corporate trust powers;
(D) is subject to supervision or examination
by an official of the United States Government or a State;
(E) has a combined capital and surplus (as
stated in its most recent published report of
condition) of at least $3,000,000; and
(F) meets any other requirements prescribed
by the Secretary.
(2) If the beneficiary under the trust arrangement is not a commercial lender, a lender syndicate or eligible to be a preferred mortgagee
under subsection (a)(4), subparagraphs (A)–(E) of
this section, the Secretary must determine that
the issuance, assignment, transfer, or trust arrangement does not result in an impermissible
transfer of control of the vessel to a person not
eligible to own a vessel with a fishery endorsement under section 12113(c) of this title.
(3) A vessel with a fishery endorsement may be
operated by a mortgage trustee only with the
approval of the Secretary.
(4) A right under a mortgage of a vessel with
a fishery endorsement may be issued, assigned,
or transferred to a person not eligible to be a
mortgagee of that vessel under this section only
with the approval of the Secretary.
(5) The issuance, assignment, or transfer of an
instrument or evidence of indebtedness contrary
to this subsection is voidable by the Secretary.
(g) For purposes of this section a ‘‘commercial
lender’’ means an entity primarily engaged in
the business of lending and other financing
transactions with a loan portfolio in excess of
$100,000,000, of which not more than 50 per centum in dollar amount consists of loans to borrowers in the commercial fishing industry, as
certified to the Secretary by such lender.
(h) For purposes of this section a ‘‘lender syndicate’’ means an arrangement established for
the combined extension of credit of not less than
$20,000,000 made up of four or more entities that
each have a beneficial interest, held through an
agent, under a trust arrangement established
pursuant to subsection (f), no one of which may
exercise powers thereunder without the concurrence of at least one other unaffiliated beneficiary.
(Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988, 102
Stat. 4743; Pub. L. 101–225, title III, § 303(3), Dec.
12, 1989, 103 Stat. 1923; Pub. L. 104–324, title XI,
§ 1113(a), Oct. 19, 1996, 110 Stat. 3970; Pub. L.
105–277, div. C, title II, § 202(b), Oct. 21, 1998, 112
Stat. 2681–618; Pub. L. 105–383, title IV,
§ 401(c)(1)–(4), Nov. 13, 1998, 112 Stat. 3425; Pub. L.
106–31, title III, § 3027(a)(1), May 21, 1999, 113 Stat.
101; Pub. L. 107–20, title II, § 2202(b), (c), July 24,
2001, 115 Stat. 168, 169; Pub. L. 109–304, §§ 15(29),
16(c)(7), Oct. 6, 2006, 120 Stat. 1704, 1706.)

§ 31322

TITLE 46—SHIPPING
HISTORICAL AND REVISION NOTES
Revised section

31322(a)(1) ....................................
31322(a)(2) ....................................
31322(b) ........................................
31322(c)(1) ....................................
31322(c)(2) ....................................
31322(d), (e) ..................................

Source section (U.S. Code)
46:922(a), (b)
New
46:926(d)
46:922(e)
46:922(f)
New

Section 31322 sets out the conditions that must be
met for a mortgage to be considered a preferred mortgage, and the types of endorsements that the Secretary
must make on any certificate of documentation of a
vessel that is to be covered by a preferred mortgage.
Subsection (a)(1) makes many substantive changes to
law. While a preferred mortgage must still include the
whole of a vessel, this subsection eliminates the exception of certain vessels under 25 gross tons. It allows a
vessel for which an application for documentation has
been filed to have a preferred mortgage. It allows a
mortgage to be a preferred mortgage from the time all
four conditions are met, rather than from when the
vessel is finally documented. Therefore, a mortgage
will usually attain its preferred status when the application for documentation and the instrument have
been filed. This subsection changes the requirement
that all documented vessels have as a mortgagee a person that is a citizen of the United States, as defined in
section 2 of the Shipping Act, 1916, and allows a State,
the United States Government, a federally insured depository institution, or any other person approved by
the Secretary to be a mortgagee.
Subsection (a)(2) makes a substantive change to law
exempting fishing, fish processing, and fish tender vessels, and vessels operated only for pleasure from the
mortgagee restrictions, since these vessels do not have
significant national defense use.
Subsection (b) permits a preferred mortgage to have
any rate of interest that is agreeable to the parties to
the mortgage. This subsection makes no substantive
change to law.
Subsection (c)(1) applies to a mortgage that covers
more than one vessel or additional property that is not
a vessel. This subsection allows a preferred mortgage to
include a separate discharge of the additional vessels
and property.
Subsection (c)(2) applies when a preferred mortgage
covers more than one vessel, does not provide for the
separate discharge of a vessel, and is to be sold by court
order. The amount of the mortgage indebtedness attributable to a vessel is that part of the indebtedness, increased by 20 percent, that the court determines approximates the value that the particular vessel bears to
the value of all the vessels and property covered by the
mortgage. In other words, the amount to be set by the
court is the estimated value of the one vessel plus 20
percent of that value to assure sufficiency of collateral.
This section also makes a substantive change by
eliminating the requirement that a vessel’s certificate
of documentation be endorsed with information from
the mortgage. This change is made since most of the
information is out of date when examined, and since a
mortgage must be carried on self-propelled vessels
under section 31324(b). This section also eliminates the
requirement for the inclusion of an affidavit of good
faith. However, both criminal and civil penalties have
been added [in section 31330] to help ensure that there
is not fraud. This section also eliminates the requirement that a preferred mortgage include a separate discharge for additional property that is not a vessel, the
requirement that the mortgage does not stipulate that
the mortgagee waives the mortgage’s preferred status;
and the requirement for clearing vessels with endorsed
documents through Customs.
HOUSE FLOOR STATEMENT

Under section 31322(a)(2) a ‘‘vessel operated only for
pleasure’’ is exempt from any restrictions on who can
be a mortgagee. This standard is the same as used for
the documentation of a recreational vessel under sec-

Page 234

tion 12109 of title 46. The Committee intends that vessels that have a recreational vessel license, or combined fisheries and recreational license, fall under this
exemption. However, if the vessel has a Coastwise License, Great Lakes License, or Registry combined with
a Recreational License, the vessel would not fall under
this exemption.
Under subsection (c)(2), if a vessel covered by a preferred mortgage that includes more than one vessel or
property that is not a vessel is to be sold on the order
of a district court in rem, and there is not a separate
discharge, then the mortgage constitutes a lien on that
vessel in the full amount of the outstanding mortgage
indebtedness, and an allocation of mortgage indebtedness for purposes of a separate discharge may not be
made. This change is made to eliminate the formula
that did not work and to allow the vessel to be sold free
and clear, regardless of the amount of the sale.
Under subsection (d) of section 31322, a mortgage or
other instrument representing financing of a vessel
under State law that is made under applicable State
law and covers the whole of a vessel titled in a State
is deemed to be a preferred mortgage if two conditions
are fulfilled. The first condition is that the Secretary
must certify that the State in which the vessel is titled
has a titling system that complies with the Secretary’s
vessel titling guidelines established under section
13106(b)(8) of title 46. Congress mandated the promulgation of these guidelines in the Recreational Boating
Safety Act of 1986, Public Law 99–626. The second condition is that the State in which the vessel is titled must
make information available to the Secretary for the
vessel identification system established under chapter
125 of title 46 (as enacted by this Act) on the vessel covered by the mortgage or other instrument. This status
only applies to vessels titled in the State after those
two conditions are met. The phrase ‘‘instrument representing financing of a vessel under State law’’ is used
in addition to ‘‘mortgage’’ because State laws do not
always use the term mortgage when referring to financing. It is intended, however, that the financing covered
by this phrase would be the same as that covered by the
concept of a mortgage under other Federal law.
Paragraph (2) of subsection (d) clarifies that mortgages or other financing instruments may obtain preferred status under subsection (d) if they cover vessels
titled in a State after the Secretary certifies the compliance of the State’s titling system, and the State begins making vessel identification information available
to the Secretary. Preferred mortgage status can only
be attained when these two conditions are in effect.
Mortgages or financing instruments made prior to that
are not preferred and, if these two conditions cease to
exist, new mortgages or forecasting instruments made
after that time cannot attain preferred status.
The law of the titling State controls the making of
the preferred mortgage or financing instrument under
this subsection. No additional Federal recording requirements may be imposed for the mortgage or instrument to obtain preferred status under this subsection.
Paragraph (3) of this subsection ensures that a preferred mortgage under this subsection retains that
status if the vessel covered by the mortgage later relinquishes its title. If the vessel is subsequently documented, the continuing validity of the mortgage is determined by section 31321(g) (as enacted by this Act).
Subsection (e) of section 31322 clarifies the validity of
preferred mortgages made under subsection (d). In the
case of a State titled vessel covered by a preferred
mortgage for which a new titling application is filed,
the validity of the mortgage is governed by the law of
the titling State in which the mortgage became preferred. In the case of a documented vessel covered by a
preferred mortgage for which an application for a State
title is filed, or a State titled vessel covered by a preferred mortgage for which an application for documentation is filed, the validity of the preferred mortgage is governed by section 31322(a) of title 46 (as enacted by this Act).
Information on vessels with preferred mortgages
made under State law will be available to creditors

Page 235

§ 31323

TITLE 46—SHIPPING

from the vessel identification system under chapter 125
of title 46 (as enacted by this Act).
AMENDMENTS
2006—Subsec. (a)(4)(A). Pub. L. 109–304, § 15(29)(A), substituted ‘‘section 12113(c)’’ for ‘‘section 12102(c)’’.
Subsec. (a)(4)(E). Pub. L. 109–304, § 15(29)(B), substituted ‘‘for purposes of documentation under section
12103’’ for ‘‘under section 12102(a)’’.
Subsec. (d)(1)(A). Pub. L. 109–304, § 16(c)(7), substituted
‘‘section 13107(b)(8)’’ for ‘‘section 13106(b)(8)’’.
Subsec. (f)(2). Pub. L. 109–304, § 15(29)(C), substituted
‘‘section 12113(c)’’ for ‘‘section 12102(c)’’.
2001—Subsec. (a)(4)(B) to (F). Pub. L. 107–20, § 2202(b),
added subpars. (B) to (F) and struck out former subpars. (B) and (C) which read as follows:
‘‘(B) a state or federally chartered financial institution that satisfies the controlling interest criteria of
section 2(b) of the Shipping Act, 1916 (46 U.S.C. 802(b));
‘‘(C) a person that complies with the provisions of
section 12102(c)(4) of this title.’’
Subsecs. (f) to (h). Pub. L. 107–20, § 2202(c), added subsecs. (f) to (h).
1999—Subsec. (a)(4). Pub. L. 106–31 made technical
amendment to directory language of Pub. L. 105–277,
§ 202(b). See 1998 Amendment note below.
1998—Subsec. (a)(4). Pub. L. 105–277, § 202(b), as amended by Pub. L. 106–31, added par. (4).
Subsec. (b). Pub. L. 105–383, § 401(c)(1), added subsec.
(b) and struck out former subsec. (b) which read as follows: ‘‘A preferred mortgage filed or recorded under
this chapter may have any rate of interest that the
parties to the mortgage agree to.’’
Subsec. (d)(1). Pub. L. 105–383, § 401(c)(2), substituted
‘‘mortgage, security agreement, or instrument’’ for
‘‘mortgage or instrument’’ in introductory provisions
and subpar. (B).
Subsec. (d)(2). Pub. L. 105–383, § 401(c)(4), substituted
‘‘mortgages, security agreements, or instruments’’ for
‘‘mortgages or instruments’’ in introductory provisions.
Subsec. (d)(3). Pub. L. 105–383, § 401(c)(3), added par. (3)
and struck out former par. (3) which read as follows: ‘‘A
preferred mortgage under this subsection continues to
be a preferred mortgage if the vessel is no longer titled
in the State where the mortgage was made.’’
1996—Subsec. (a). Pub. L. 104–324 amended subsec. (a)
generally. Prior to amendment, subsec. (a) consisted of
2 pars. with substantially similar provisions defining a
preferred mortgage except that it included a mortgage
with a State, the United States Government, a federally insured depository institution, or specified individual as mortgagee.
1989—Subsec. (a)(2). Pub. L. 101–225, § 303(3)(A), amended par. (2) generally. Prior to amendment, par. (2) read
as follows: ‘‘Paragraph (1)(D) of this subsection does
not apply to a vessel operated only as a fishing vessel,
fish processing vessel, or a fish tender vessel (as defined
in section 2101 of this title) or to a vessel operated only
for pleasure.’’
Subsec. (d)(1). Pub. L. 101–225, § 303(3)(B), substituted
‘‘granting a security interest perfected under State
law’’ for ‘‘representing financing of a vessel under
State law that is made under applicable State law’’.
Subsec. (e). Pub. L. 101–225, § 303(3)(C), substituted
‘‘the status of the preferred mortgage’’ for ‘‘the validity of the preferred mortgage’’ in pars. (1) and (2).
EFFECTIVE DATE OF 2001 AMENDMENT
Pub. L. 107–20, title II, § 2202(d), July 24, 2001, 115 Stat.
170, provided that: ‘‘Section 31322 of title 46, United
States Code as amended in this section, and as amended
by section 202(b) of the American Fisheries Act (Public
Law 105–277, division C, title II) shall not take effect
until April 1, 2003, nor shall the Secretary of Transportation, in determining whether a vessel owner complies
with the requirements of section 12102(c) of title 46,
United States Code [now 46 U.S.C. 12113(b)(2) to (d)],
consider the citizenship status of a lender, in its capac-

ity as a lender with respect to that vessel owner, until
after April 1, 2003.’’
EFFECTIVE DATE OF 1998 AMENDMENT
Pub. L. 105–277, div. C, title II, § 203(a), Oct. 21, 1998,
112 Stat. 2681–619, provided that: ‘‘The amendments
made by section 202 [amending this section and former
section 12102 of this title] shall take effect on October
1, 2001.’’
EFFECTIVE DATE
Section effective Jan. 1, 1989, not to affect any civil
action filed before that date, and, insofar as applicable
to vessels for which an application for documentation
has been filed, effective Jan. 1, 1990, with other exceptions and qualifications, see section 107 of Pub. L.
100–710, set out as a note under section 31301 of this
title.

§ 31323. Disclosing and incurring obligations before executing preferred mortgages
(a) On request of the mortgagee and before
executing a preferred mortgage, the mortgagor
shall disclose in writing to the mortgagee the
existence of any obligation known to the mortgagor on the vessel to be mortgaged.
(b) After executing a preferred mortgage and
before the mortgagee has had a reasonable time
to file the mortgage, the mortgagor may not
incur, without the consent of the mortgagee,
any contractual obligation establishing a lien
on the vessel except a lien for—
(1) wages of a stevedore when employed directly by a person listed in section 31341 of
this title;
(2) wages for the crew of the vessel;
(3) general average; or
(4) salvage, including contract salvage.
(c) On conviction of a mortgagor under section
31330(a)(1)(A) or (B) of this title for violating
this section, the mortgage indebtedness, at the
option of the mortgagee, is payable immediately.
(Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988, 102
Stat. 4744.)
HISTORICAL AND REVISION NOTES
Revised section
31323(a) ........................................
31323(b) ........................................
31323(c) ........................................

Source section (U.S. Code)
46:924(1)
46:924(2)
46:941(b) (last sentence)

Section 31323(a) requires the mortgagor to disclose
any obligations on the vessel before executing a preferred mortgage. This subsection makes no substantive
change to law.
Section 31323(b) provides that, after executing a preferred mortgage, the mortgagor may not incur, without
consent of the mortgagee, any contractual obligations
establishing a lien on the vessel—except a lien for stevedore wages, crew wages, general average, and salvage. The only substantive change to law made by this
subsection is that the reasonable time to record a
mortgage is changed to a reasonable time to file the
mortgage, and the elimination of the reference to endorsements. These changes are in keeping with the
changes made in section 31322.
Section 31323(c) provides that if a mortgagor is convicted of a violation of this section, then the mortgage
indebtedness, at the option of the mortgagee, is payable immediately. This subsection makes no substantive change to law.

§ 31324

TITLE 46—SHIPPING

§ 31324. Retention and examination of mortgages
of vessels covered by preferred mortgages
(a) On request, the owner, master, or individual in charge of a vessel covered by a preferred
mortgage shall permit a person to examine the
mortgage if the person has business with the
vessel that may give rise to a maritime lien or
the sale, conveyance, mortgage, or assignment
of a mortgage of the vessel.
(b) A mortgagor of a preferred mortgage covering a self-propelled vessel shall use diligence in
keeping a certified copy of the mortgage on the
vessel.
(Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988, 102
Stat. 4744.)
HISTORICAL AND REVISION NOTES
Revised section
31324 ............................................

Source section (U.S. Code)
46:923

Section 31324(a) provides for examination of mortgages of a vessel that is covered by a preferred mortgage by persons that have business with the vessel that
may give rise to a maritime lien or the sale, conveyance, mortgage, or assignment of the mortgage. This
subsection makes no substantive change to law.
Section 31324(b) requires that a certified copy of the
mortgage must be on board a self-propelled vessel. This
subsection makes no substantive change to law.

§ 31325. Preferred mortgage liens and enforcement
(a) A preferred mortgage is a lien on the mortgaged vessel in the amount of the outstanding
mortgage indebtedness secured by the vessel.
(b) On default of any term of the preferred
mortgage, the mortgagee may—
(1) enforce the preferred mortgage lien in a
civil action in rem for a documented vessel, a
vessel to be documented under chapter 121 of
this title, a vessel titled in a State, or a foreign vessel;
(2) enforce a claim for the outstanding indebtedness secured by the mortgaged vessel
in—
(A) a civil action in personam in admiralty
against the mortgagor, maker, comaker, or
guarantor for the amount of the outstanding
indebtedness or any deficiency in full payment of that indebtedness; and
(B) a civil action against the mortgagor,
maker, comaker, or guarantor for the
amount of the outstanding indebtedness or
any deficiency in full payment of that indebtedness; and
(3) enforce the preferred mortgage lien or a
claim for the outstanding indebtedness secured by the mortgaged vessel, or both, by exercising any other remedy (including an extrajudicial remedy) against a documented vessel,
a vessel for which an application for documentation is filed under chapter 121 of this
title, a vessel titled in a State, a foreign vessel, or a mortgagor, maker, comaker, or guarantor for the amount of the outstanding indebtedness or any deficiency in full payment
of that indebtedness, if—
(A) the remedy is allowed under applicable
law; and

Page 236

(B) the exercise of the remedy will not result in a violation of section 56101 or 56102 of
this title.
(c) The district courts have original jurisdiction of a civil action brought under subsection
(b)(1) or (2) of this section. However, for a documented vessel, a vessel to be documented under
chapter 121 of this title, a vessel titled in a
State, or a foreign vessel, this jurisdiction is exclusive of the courts of the States for a civil action brought under subsection (b)(1) of this section.
(d)(1) Actual notice of a civil action brought
under subsection (b)(1) of this section, or to enforce a maritime lien, must be given in the manner directed by the court to—
(A) the master or individual in charge of the
vessel;
(B) any person that recorded under section
31343(a) or (d) of this title an unexpired notice
of a claim of an undischarged lien on the vessel; and
(C) a mortgagee of a mortgage filed or recorded under section 31321 of this title that is
an undischarged mortgage on the vessel.
(2) Notice under paragraph (1) of this subsection is not required if, after search satisfactory to the court, the person entitled to the notice has not been found in the United States.
(3) Failure to give notice required by this subsection does not affect the jurisdiction of the
court in which the civil action is brought. However, unless notice is not required under paragraph (2) of this subsection, the party required
to give notice is liable to the person not notified
for damages in the amount of that person’s interest in the vessel terminated by the action
brought under subsection (b)(1) of this section. A
civil action may be brought to recover the
amount of the terminated interest. The district
courts have original jurisdiction of the action,
regardless of the amount in controversy or the
citizenship of the parties. If the plaintiff prevails, the court may award costs and attorney
fees to the plaintiff.
(e) In a civil action brought under subsection
(b)(1) of this section—
(1) the court may appoint a receiver and authorize the receiver to operate the mortgaged
vessel and shall retain in rem jurisdiction over
the vessel even if the receiver operates the
vessel outside the district in which the court
is located; and
(2) when directed by the court, a United
States marshal may take possession of a mortgaged vessel even if the vessel is in the possession or under the control of a person claiming
a possessory common law lien.
(f)(1) Before title to the documented vessel or
vessel for which an application for documentation is filed under chapter 121 is transferred by
an extrajudicial remedy, the person exercising
the remedy shall give notice of the proposed
transfer to the Secretary, to the mortgagee of
any mortgage on the vessel filed in substantial
compliance with section 31321 of this title before
notice of the proposed transfer is given to the
Secretary, and to any person that recorded an
unexpired notice of a claim of an undischarged
lien on the vessel under section 31343(a) or (d) of

Page 237

§ 31325

TITLE 46—SHIPPING

this title before notice of the proposed transfer
is given to the Secretary.
(2) Failure to give notice as required by this
subsection shall not affect the transfer of title
to a vessel. However, the rights of any holder of
a maritime lien or a preferred mortgage on the
vessel shall not be affected by a transfer of title
by an extrajudicial remedy exercised under this
section, regardless of whether notice is required
by this subsection or given.
(3) The Secretary shall prescribe regulations
establishing the time and manner for providing
notice under this subsection.
(Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988, 102
Stat. 4745; Pub. L. 101–225, title III, § 303(4), Dec.
12, 1989, 103 Stat. 1923; Pub. L. 104–324, title XI,
§ 1124(a), (b), Oct. 19, 1996, 110 Stat. 3980; Pub. L.
105–383, title IV, § 401(c)(5)–(7), Nov. 13, 1998, 112
Stat. 3425; Pub. L. 107–295, title II, § 205(b), Nov.
25, 2002, 116 Stat. 2096; Pub. L. 109–304, § 15(30),
Oct. 6, 2006, 120 Stat. 1704; Pub. L. 110–181, div. C,
title XXXV, § 3529(b)(1)(B), Jan. 28, 2008, 122 Stat.
603.)
HISTORICAL AND REVISION NOTES
Revised section
31325(a) ........................................
31325(b)(1) ....................................
31325(b)(2) ....................................
31325(b)(3) ....................................
31325(c) ........................................
31325(d) ........................................
31325(e) ........................................

Source section (U.S. Code)
46:951 (1st sentence)
46:951 (2d sentence)
46:954(a)
New
46:951 (3d sentence)
46:951 (4th to 6th sentences)
46:952 (1st, 2d sentences)

Section 31325 provides for the enforcement of a preferred mortgage lien.
Section 31325(a) makes a ‘‘preferred mortgage’’ a lien
on the vessel in the amount of the mortgage indebtedness secured by the vessel outstanding at foreclosure.
This subsection makes no substantive change to law.
Section 31325(b) provides that, on default of any term,
the mortgagee may enforce the preferred mortgage lien
in a civil action in rem, or in personam in admiralty
against the mortgagor, comaker, or guarantor for the
amount of the outstanding indebtedness secured by the
vessel or any deficiency in paying off that indebtedness. This subsection makes a substantive change to
law by allowing a nonadmiralty civil action to be
brought against the mortgagor, comaker, or guarantor
for the amount of the outstanding indebtedness secured
by the vessel or any deficiency in paying off that indebtedness. This change allows an action to be brought
even when the vessel is outside U.S. jurisdiction. This
section will also allow the action to be brought against
the comaker or guarantor of the mortgage.
Section 31325(c) provides for original and exclusive jurisdiction by a district court, to the exclusion of the
courts of a State for civil actions brought in rem. It
also provides for original jurisdiction for civil actions
brought in personam in admiralty and civil actions
brought under subsection (b)(3). This subsection makes
a substantive change to law by broadening the jurisdiction to courts in the territories, as defined in section
31301, as well as giving original jurisdiction to the district courts in nonadmiralty civil actions brought to
enforce the preferred mortgage lien.
Subsection (d) provides that actual notice of a civil
action in rem to enforce a maritime lien must be given
in a manner directed by the court to the master, individual in charge of the vessel, to any person that recorded a notice of a claim of an undischarged lien, and,
for the first time, to the mortgagee of a mortgage filed
with the Secretary. This notice is not required if, after
a search is made that is satisfactory to the court, the
person entitled to notice is not found in the United
States. Failure to give notice does not affect the
court’s jurisdiction. However, the mortgagor is still lia-

ble to the person not notified for damages in the
amount of that person’s interest in the vessel that was
terminated by the civil action in rem, and a civil action
may still be brought to recover the amount of the terminated interest. The district courts have original jurisdiction of the action, regardless of the amount in
controversy or the citizenship of the parties. If plaintiff
prevails, the court shall award costs and attorneys fees
to the plaintiff.
Subsection (e) provides that, in a civil action in rem,
the court may appoint a receiver and authorize operation of the vessel. When directed by the court, a
United States marshal may take possession—even if
the vessel is in the possession of or under the control
of a person claiming a possessory common law lien.
This subsection makes a substantive change to law by
allowing the court to retain in rem jurisdiction over the
vessel even if the receiver operates the vessel outside
the district in which the court is located.
HOUSE FLOOR STATEMENT

Subsection (c) of this section clarifies that the district courts have original jurisdiction for a civil action
under subsection (b) of this section, and exclusive jurisdiction in the case of vessels documented or to be documented under chapter 121 of title 46.
AMENDMENTS
2008—Subsec. (b)(3)(B). Pub. L. 110–181 amended Pub.
L. 109–304, § 15(30). See 2006 Amendment note below.
2006—Subsec. (b)(3)(B). Pub. L. 109–304, § 15(30), as
amended by Pub. L. 110–181, substituted ‘‘section 56101
or 56102 of this title’’ for ‘‘section 9 or 37 of the Shipping Act, 1916 (46 App. U.S.C. 808, 835)’’.
2002—Subsec. (d)(1)(B). Pub. L. 107–295, § 205(b)(1), substituted ‘‘an unexpired notice of a claim’’ for ‘‘a notice
of a claim’’.
Subsec. (f)(1). Pub. L. 107–295, § 205(b)(2), substituted
‘‘an unexpired notice of a claim’’ for ‘‘a notice of a
claim’’.
1998—Subsecs. (b)(1), (3), (c). Pub. L. 105–383 inserted
‘‘a vessel titled in a State,’’ after ‘‘chapter 121 of this
title,’’.
1996—Subsec. (b). Pub. L. 104–324, § 1124(a)(1), substituted ‘‘mortgagee may’’ for ‘‘mortgage may’’ in introductory provisions.
Subsec. (b)(1). Pub. L. 104–324, § 1124(a)(2)(A), substituted ‘‘preferred’’ for ‘‘perferred’’.
Subsec. (b)(3). Pub. L. 104–324, § 1124(a)(2)(B), (3), added
par. (3).
Subsec. (f). Pub. L. 104–324, § 1124(b), added subsec. (f).
1989—Subsecs. (b), (c). Pub. L. 101–225 amended subsecs. (b) and (c) generally. Prior to amendment, subsecs. (b) and (c) read as follows:
‘‘(b) On default of any term of the preferred mortgage, the mortgagee may enforce the preferred mortgage lien in—
‘‘(1) a civil action in rem for a documented vessel or
a vessel to be documented under chapter 121 of this
title;
‘‘(2) a civil action in personam in admiralty against
the mortgagor, comaker, or guarantor for the
amount of the outstanding indebtedness secured by
the mortgaged vessel or any deficiency in full payment of that indebtedness; and
‘‘(3) a civil action against the mortgagor, comaker,
or guarantor for the amount of the outstanding indebtedness secured by the mortgaged vessel or any
deficiency in full payment of that indebtedness.
‘‘(c) The district courts have original jurisdiction of
a civil action brought under subsection (b) of this section. However, for documented vessels or vessels to be
documented under chapter 121 of this title, this jurisdiction is exclusive of the courts of the States for a
civil action under subsection (b)(1) of this section.’’
EFFECTIVE DATE OF 2008 AMENDMENT
Amendment by Pub. L. 110–181 effective as if included
in the enactment of Pub. L. 109–304, see section

§ 31326

TITLE 46—SHIPPING

3529(b)(2) of Pub. L. 110–181, set out as a note under section 3205 of this title.
EFFECTIVE DATE OF 2002 AMENDMENT
Pub. L. 107–295, title II, § 205(e), Nov. 25, 2002, 116 Stat.
2096, provided that: ‘‘This section [see Tables for classification] shall take effect January 1, 2003.’’
CONSTRUCTION OF 1996 AMENDMENTS
Section 1124(c) of Pub. L. 104–324 provided that: ‘‘The
amendments made by subsections (a) and (b) [amending
this section] may not be construed to imply that remedies other than judicial remedies were not available
before the date of enactment of this section [Oct. 19,
1996] to enforce claims for outstanding indebtedness secured by mortgaged vessels.’’

§ 31326. Court sales to enforce preferred mortgage liens and maritime liens and priority of
claims
(a) When a vessel is sold by order of a district
court in a civil action in rem brought to enforce
a preferred mortgage lien or a maritime lien,
any claim in the vessel existing on the date of
sale is terminated, including a possessory common law lien of which a person is deprived under
section 31325(e)(2) of this title, and the vessel is
sold free of all those claims.
(b) Each of the claims terminated under subsection (a) of this section attaches, in the same
amount and in accordance with their priorities
to the proceeds of the sale, except that—
(1) the preferred mortgage lien, including a
preferred mortgage lien on a foreign vessel
whose mortgage has been guaranteed under
chapter 537 of this title, has priority over all
claims against the vessel (except for expenses
and fees allowed by the court, costs imposed
by the court, and preferred maritime liens);
and
(2) for a foreign vessel whose mortgage has
not been guaranteed under chapter 537 of this
title, the preferred mortgage lien is subordinate to a maritime lien for necessaries provided in the United States.
(Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988, 102
Stat. 4746; Pub. L. 103–160, div. A, title XIII,
§ 1360, Nov. 30, 1993, 107 Stat. 1816; Pub. L. 109–304,
§ 15(31), Oct. 6, 2006, 120 Stat. 1704.)
HISTORICAL AND REVISION NOTES
Revised section
31326(a) ........................................
31326(b)(1) ....................................
31326(b)(2) ....................................

Source section (U.S. Code)
46:953(b), 961(c)
46:953(b)
46:951 (2d par. proviso)

Section 31326(a) provides for a court-ordered sale to
enforce a preferred mortgage lien or a maritime lien
and the priority of claims. When a mortgaged vessel is
sold by court order in a civil action in rem, any prior
claim in the vessel is terminated—including any possessory common law lien. This subsection makes a substantive change to law by making the process the same
for maritime liens as was provided for preferred mortgage liens. This eliminates the requirement for making
a new mortgagee for a court sale to enforce a maritime
lien. This section also broadens the jurisdiction to
courts in the territories, as defined in section 31301.
Section 31326(b)(1) provides that each of these terminated claims attaches, in the same amount and priority, to the proceeds of sale—except that the preferred
mortgage lien always has priority over these other
claims. However, the preferred mortgage lien is still
subordinated to expenses and fees allowed by the court,

Page 238

costs imposed by the court, and any preferred maritime
liens. This may include statutory fees such as the fee
of the United States Marshal under 28 U.S.C. 1921. Except for broadening its coverage under subsection (a),
this makes no substantive change to law.
Section 31326(b)(2) provides in the case of a foreign
vessel, the preferred mortgage lien is also subordinated
to a maritime lien for necessaries performed or supplied for the vessel in the United States. ‘‘Provided’’
has been substituted for ‘‘provided or supplied’’ for consistency in usage. Except for broadening its coverage
under subsection (a), this paragraph makes no substantive change to law.
AMENDMENTS
2006—Subsec. (b)(1). Pub. L. 109–304, § 15(31)(A), substituted ‘‘chapter 537 of this title,’’ for ‘‘title XI of the
Merchant Marine Act, 1936 (46 App. U.S.C. 1101 et seq.)’’.
Subsec. (b)(2). Pub. L. 109–304, § 15(31)(B), substituted
‘‘chapter 537 of this title’’ for ‘‘title XI of that Act’’.
1993—Subsec. (b)(1). Pub. L. 103–160, § 1260(1), inserted
‘‘, including a preferred mortgage lien on a foreign vessel whose mortgage has been guaranteed under title XI
of the Merchant Marine Act, 1936 (46 App. U.S.C. 1101 et
seq.)’’ after ‘‘preferred mortgage lien’’.
Subsec. (b)(2). Pub. L. 103–160, § 1360(2), inserted
‘‘whose mortgage has not been guaranteed under title
XI of that Act’’ after ‘‘foreign vessel’’.

§ 31327. Forfeiture of mortgagee interest
The interest of a mortgagee in a documented
vessel or a vessel covered by a preferred mortgage under section 31322(d) of this title may be
terminated by a forfeiture of the vessel for a
violation of a law of the United States only if
the mortgagee authorized, consented, or conspired to do the act, failure, or omission that is
the basis of the violation.
(Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988, 102
Stat. 4746.)
HISTORICAL AND REVISION NOTES
Revised section
31327 ............................................

Source section (U.S. Code)
46:961(b)

Section 31327 provides for forfeiture of the mortgagee’s interest if the mortgagee authorized, consented,
or conspired to do the act, failure, or omission that is
the basis of the violation that caused forfeiture of the
vessel. This section makes no substantive change to
law.

[§ 31328. Repealed. Pub. L. 104–324, title XI,
§ 1113(b)(1), Oct. 19, 1996, 110 Stat. 3970]
Section, Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988,
102 Stat. 4746, related to limitations on parties serving
as trustees of mortgaged vessel interests.

§ 31329. Court sales of documented vessels
(a) A documented vessel may be sold by order
of a district court only to—
(1) a person eligible to own a documented
vessel under section 12103 of this title; or
(2) a mortgagee of that vessel.
(b) When a vessel is sold to a mortgagee not eligible to own a documented vessel—
(1) the vessel must be held by the mortgagee
for resale;
(2) the vessel held by the mortgagee is subject to chapter 563 of this title; and
(3) the sale of the vessel to the mortgagee is
not a sale to a person not a citizen of the
United States under section 12132 of this title.

Page 239

§ 31330

TITLE 46—SHIPPING

(c) Unless waived by the Secretary of Transportation, a person purchasing a vessel by court
order under subsection (a)(1) of this section or
from a mortgagee under subsection (a)(2) of this
section must document the vessel under chapter
121 of this title.
(d) The vessel may be operated by the mortgagee not eligible to own a documented vessel only
with the approval of the Secretary of Transportation.
(e) A sale of a vessel contrary to this section
is void.
(f) This section does not apply to a documented vessel that has been operated only for
pleasure.
(Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988, 102
Stat. 4747; Pub. L. 104–324, title XI, § 1118, Oct. 19,
1996, 110 Stat. 3973; Pub. L. 109–304, § 15(32), Oct.
6, 2006, 120 Stat. 1704; Pub. L. 111–281, title IX,
§ 913(c), Oct. 15, 2010, 124 Stat. 3017.)
HISTORICAL AND REVISION NOTES
Revised section

Source section (U.S. Code)

31329 ............................................

46:961(f)

Section 31329 sets out certain restrictions on the
court sale of a documented vessel.
Section 31329(a) restricts the sale only to a person eligible to own a documented vessel under section 12102 of
title 46 or to the mortgagee, which may be a trustee
acting as a holder of a preferred mortgage on a documented vessel for the benefit of a person not eligible to
be the holder of a preferred mortgage on that vessel.
Section 31329(b) sets out conditions on the sale to a
trustee acting as a holder of a preferred mortgage on a
documented vessel for the benefit of a person not eligible to be the holder of a preferred mortgage on that
vessel. First, the vessel must be held by the trustee for
resale. Second, while being held for resale, the vessel is
subject to requisition or purchase during a national
emergency under section 902 of the Merchant Marine
Act, 1936 (46 App. U.S.C. 1242). And third, the sale of the
vessel to the trustee is not a sale foreign within the
terms of the First Proviso of section 27 of the Merchant
Marine Act, 1920 (46 App. U.S.C. 883).
Section 31329(c) requires a person that is eligible to
document the vessel that purchases a vessel from the
court to document the vessel. This subsection also requires the person purchasing the vessel from the trustee to document it, thereby restricting to whom the
trustee can sell the vessel. Many documented vessels
have no national defense utility, such as recreational
vessels and fishing vessels. Therefore, both of these restrictions can be waived by the Secretary. As previously discussed, these waivers can be on a case-bycase basis or with a blanket waiver.
Section 31329(d) prohibits a trustee from operating
the vessel without the approval of the Secretary.
Section 31329(e) voids any sale that is done contrary
to this section.
HOUSE FLOOR STATEMENT

Under section 31329(d) a vessel may be operated by
the trustee only with the approval of the Secretary.
Under current law a vessel may be documented by a
trust if all of the members of the trust are citizens of
the United States. If the trust buying the vessel at the
court sale includes foreign investors, the vessel cannot
be documented. The Committee intends in this section
that the vessel will only be ‘‘operated’’ in a maintenance manner, but not in a commercial service.
AMENDMENTS
2010—Subsec. (d). Pub. L. 111–281 substituted ‘‘Secretary of Transportation’’ for ‘‘Secretary’’.

2006—Subsec. (a)(1). Pub. L. 109–304, § 15(32)(A), substituted ‘‘section 12103’’ for ‘‘section 12102’’.
Subsec. (b)(2). Pub. L. 109–304, § 15(32)(B)(i), substituted ‘‘chapter 563 of this title’’ for ‘‘section 902 of
the Merchant Marine Act, 1936 (46 App. U.S.C. 1242)’’.
Subsec. (b)(3). Pub. L. 109–304, § 15(32)(B)(ii), substituted ‘‘sale to a person not a citizen of the United
States under section 12132 of this title’’ for ‘‘sale foreign within the terms of the first proviso of section 27
of the Merchant Marine Act, 1920 (46 App. U.S.C. 883)’’.
1996—Subsec. (f). Pub. L. 104–324 added subsec. (f).

§ 31330. Penalties
(a)(1) A mortgagor shall be fined under title 18,
imprisoned for not more than 2 years, or both, if
the mortgagor—
(A) with intent to defraud, does not disclose
an obligation on a vessel as required by section 31323(a) of this title;
(B) with intent to defraud, incurs a contractual obligation in violation of section 31323(b)
of this title; or
(C) with intent to hinder or defraud an existing or future creditor of the mortgagor or a
lienor of the vessel, files a mortgage with the
Secretary.
(2) A mortgagor is liable to the United States
Government for a civil penalty of not more than
$10,000 if the mortgagor—
(A) does not disclose an obligation on a vessel as required by section 31323(a) of this title;
(B) incurs a contractual obligation in violation of section 31323(b) of this title; or
(C) files with the Secretary a mortgage made
not in good faith.
(b)(1) A person that knowingly violates section
31329 of this title shall be fined under title 18,
imprisoned for not more than 3 years, or both.
(2) A person violating section 31329 of this title
is liable to the Government for a civil penalty of
not more than $25,000.
(3) A vessel involved in a violation under section 31329 of this title and its equipment may be
seized by, and forfeited to, the Government.
(c) If a person not an individual violates this
section, the president or chief executive of the
person also is subject to any penalty provided
under this section.
(Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988, 102
Stat. 4747; Pub. L. 104–324, title XI, § 1113(b)(2),
Oct. 19, 1996, 110 Stat. 3970; Pub. L. 111–281, title
IX, § 913(a)(1), (d), Oct. 15, 2010, 124 Stat. 3017.)
HISTORICAL AND REVISION NOTES
Revised section
31330(a) ........................................
31330(b) ........................................
31330(c) ........................................

Source section (U.S. Code)
46:941(b) (1st sentence)
New
46:941(b) (1st sentence)

Section 31330(a) provides for criminal penalties for
not disclosing obligations, incurring contractual obligations in violation of section 31323(b), and filing a
mortgage made not in good faith. This subsection
makes a substantive change to law by adding civil penalties and by making it a crime to record with the Secretary of Transportation a mortgage made not in good
faith with the intent to hinder an existing or future
creditor of the mortgagor or a lienor of the vessel. This
is done since the affidavit of good faith has been eliminated from the elements of a preferred mortgage.
Section 31330(b) adds criminal and civil penalties for
violating the sale and trust requirements under sec-

§ 31341

TITLE 46—SHIPPING

tions 31328 and 31329. It also makes a vessel and its
equipment involved in those violations subject to seizure by the Government.
Section 31330(c) makes the president or chief executive officer of a corporation or association liable as a
mortgagor for the penalties under this section.
HOUSE FLOOR STATEMENT

Subsection (a) of this section adds criminal and civil
penalties for a preferred mortgagor’s failure to carry
out certain requirements under chapter 313 of title 46
(as enacted by this Act).
AMENDMENTS
2010—Subsec. (a)(1)(B). Pub. L. 111–281, § 913(d)(1)(A),
inserted ‘‘or’’ after semicolon.
Subsec. (a)(1)(C). Pub. L. 111–281, § 913(d)(1)(B), substituted ‘‘Secretary.’’ for ‘‘Secretary; or’’.
Pub. L. 111–281, § 913(a)(1), struck out ‘‘of Transportation’’ after ‘‘Secretary’’.
Subsec. (a)(1)(D). Pub. L. 111–281, § 913(d)(1)(C), struck
out subpar. (D) which read as follows: ‘‘with intent to
defraud, does not comply with section 31321(h) of this
title.’’
Subsec. (a)(2)(B) to (D). Pub. L. 111–281, § 913(d)(2), inserted ‘‘or’’ at end of subpar. (B), substituted ‘‘faith.’’
for ‘‘faith; or’’ at end of subpar. (C), and struck out subpar. (D) which read as follows: ‘‘does not comply with
section 31321(h) of this title.’’
1996—Subsec. (b). Pub. L. 104–324 struck out ‘‘31328 or’’
before ‘‘31329’’ in pars. (1) to (3).

SUBCHAPTER III—MARITIME LIENS
§ 31341. Persons presumed to have authority to
procure necessaries
(a) The following persons are presumed to
have authority to procure necessaries for a vessel:
(1) the owner;
(2) the master;
(3) a person entrusted with the management
of the vessel at the port of supply; or
(4) an officer or agent appointed by—
(A) the owner;
(B) a charterer;
(C) an owner pro hac vice; or
(D) an agreed buyer in possession of the
vessel.
(b) A person tortiously or unlawfully in possession or charge of a vessel has no authority to
procure necessaries for the vessel.
(Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988, 102
Stat. 4748; Pub. L. 101–225, title III, § 303(5), Dec.
12, 1989, 103 Stat. 1924.)
HISTORICAL AND REVISION NOTES
Revised section

Source section (U.S. Code)

31341(a) ........................................
31341(b) ........................................

46:972 (1st sentence), 973
46:972 (2d sentence)

Section 31341(a) lists those persons who are presumed
to have authority to procure necessaries for a vessel.
These include the owner, master, or a manager at the
port of supply; and an officer or agent appointed by the
owner, charterer, owner pro hac vice, or buyer in possession of the vessel. This subsection makes no substantive change to law.
Section 31341(b) provides that any person that is tortiously or unlawfully in possession of or in charge of a
vessel has no authority to procure necessaries. This
subsection makes no substantive change to law.
AMENDMENTS
1989—Subsec. (a)(3). Pub. L. 101–225 substituted ‘‘management’’ for ‘‘mangement’’.

Page 240

§ 31342. Establishing maritime liens
(a) Except as provided in subsection (b) of this
section, a person providing necessaries to a vessel on the order of the owner or a person authorized by the owner—
(1) has a maritime lien on the vessel;
(2) may bring a civil action in rem to enforce
the lien; and
(3) is not required to allege or prove in the
action that credit was given to the vessel.
(b) This section does not apply to a public vessel.
(Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988, 102
Stat. 4748; Pub. L. 101–225, title III, § 303(6), Dec.
12, 1989, 103 Stat. 1924.)
HISTORICAL AND REVISION NOTES
Revised section

Source section (U.S. Code)

31342 ............................................

46:971

Section 31342 provides that any authorized person
providing necessaries for a vessel has a maritime lien
on the vessel, may bring a civil action in rem in admiralty to enforce the lien, and is not required to allege
or prove that credit was given to the vessel. ‘‘Providing’’ has been substituted for ‘‘furnishing’’ for consistency with other laws. This section makes no substantive change to law. This section does not supersede
the prohibition under the Public Vessels Act, the Foreign Sovereign Immunities Act, or the Suits in Admiralty Act, on bringing an in rem action against a public
vessel.
AMENDMENTS
1989—Pub. L. 101–225 designated existing provisions as
subsec. (a), substituted ‘‘Except as provided in subsection (b) of this section, a person providing necessaries to a vessel on the order of the owner’’ for ‘‘A
person providing necessaries to a vessel (except a public vessel) on the order of a person listed in section
31341 of this title’’, and added subsec. (b).

§ 31343. Recording and discharging notices of
claim of maritime lien
(a) Except as provided under subsection (d) of
this section, a person claiming a lien on a vessel
documented, or for which an application for documentation has been filed, under chapter 121
may record with the Secretary a notice of that
person’s lien claim on the vessel. To be recordable, the notice must—
(1) state the nature of the lien;
(2) state the date the lien was established;
(3) state the amount of the lien;
(4) state the name and address of the person;
and
(5) be signed and acknowledged.
(b)(1) The Secretary shall record a notice complying with subsection (a) of this section if,
when the notice is presented to the Secretary
for recording, the person having the claim files
with the notice a declaration stating the following:
(A) The information in the notice is true and
correct to the best of the knowledge, information, and belief of the individual who signed it.
(B) A copy of the notice, as presented for recordation, has been sent to each of the following:
(i) The owner of the vessel.
(ii) Each person that recorded under subsection (a) of this section an unexpired no-

Page 241

§ 31343

TITLE 46—SHIPPING

tice of a claim of an undischarged lien on
the vessel.
(iii) The mortgagee of each mortgage filed
or recorded under section 31321 of this title
that is an undischarged mortgage on the vessel.
(2) A declaration under this subsection filed by
a person that is not an individual must be signed
by the president, member, partner, trustee, or
other individual authorized to execute the declaration on behalf of the person.
(c)(1) On full and final discharge of the indebtedness that is the basis for a notice of claim of
lien recorded under subsection (b) of this section, the person having the claim shall provide
the Secretary with an acknowledged certificate
of discharge of the indebtedness. The Secretary
shall record the certificate.
(2) The district courts of the United States
shall have jurisdiction over a civil action in Admiralty to declare that a vessel is not subject to
a lien claimed under subsection (b) of this section, or that the vessel is not subject to the notice of claim of lien, or both, regardless of the
amount in controversy or the citizenship of the
parties. Venue in such an action shall be in the
district where the vessel is found or where the
claimant resides or where the notice of claim of
lien is recorded. The court may award costs and
attorneys fees to the prevailing party, unless
the court finds that the position of the other
party was substantially justified or other circumstances make an award of costs and attorneys fees unjust. The Secretary shall record any
such declaratory order.
(d) A person claiming a lien on a vessel covered by a preferred mortgage under section
31322(d) of this title must record and discharge
the lien as provided by the law of the State in
which the vessel is titled.
(e) A notice of claim of lien recorded under
subsection (b) of this section shall expire 3 years
after the date the lien was established, as such
date is stated in the notice under subsection (a)
of this section.
(f) This section does not alter in any respect
the law pertaining to the establishment of a
maritime lien, the remedy provided by such a
lien, or the defenses thereto, including any defense under the doctrine of laches.
(Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988, 102
Stat. 4748; Pub. L. 107–295, title II, § 205(a)(1),
Nov. 25, 2002, 116 Stat. 2095; Pub. L. 111–281, title
IX, § 913(a)(1), Oct. 15, 2010, 124 Stat. 3017.)
HISTORICAL AND REVISION NOTES
Revised section
31343 ............................................

Source section (U.S. Code)
46:925

Section 31343 provides that any person claiming a lien
on a vessel covered by a preferred mortgage may record
a notice of lien. This notice must state the nature of
the lien, date it was established; the amount; and the
name and address of the person claiming a lien, and it
must be acknowledged. The Secretary must record a
notice of lien if it complies with these requirements.
When any part of the indebtedness is discharged, the
claimant shall provide the Secretary with a written,
acknowledged certificate of discharge of the indebtedness, and the Secretary shall record the certificate.
This section makes no substantive change to law.

Section 31343(c) provides that, on the full and final
discharge of an indebtedness that is the basis for a
claim, the person having the claim shall provide the
Secretary with an acknowledged certificate of discharge on the request of the Secretary or owner of the
vessel. This subsection makes a substantive change to
law by not requiring partial discharges to be filed, as
well as making the filing of discharge certificates only
at the request of the Secretary or owner of the vessel.
HOUSE FLOOR STATEMENT

Subsection (d) of this section requires a person claiming a lien on a vessel covered by a preferred mortgage
under section 31322(d) to record and discharge the lien
as provided by the law of the State in which the vessel
is titled.
AMENDMENTS
2010—Subsec. (a). Pub. L. 111–281 struck out ‘‘of
Transportation’’ after ‘‘Secretary’’ in introductory provisions.
2002—Pub. L. 107–295, § 205(a)(1)(A), substituted ‘‘notices of claim of maritime lien’’ for ‘‘liens on preferred
mortgage vessels’’ in section catchline.
Subsec. (a). Pub. L. 107–295, § 205(a)(1)(B), substituted
‘‘documented, or for which an application for documentation has been filed, under chapter 121’’ for ‘‘covered by a preferred mortgage filed or recorded under
this chapter’’ in introductory provisions.
Subsec. (b). Pub. L. 107–295, § 205(a)(1)(C), amended
subsec. (b) generally. Prior to amendment, subsec. (b)
read as follows: ‘‘The Secretary shall record a notice
complying with subsection (a) of this section.’’
Subsec. (c). Pub. L. 107–295, § 205(a)(1)(D), amended
subsec. (c) generally. Prior to amendment, subsec. (c)
read as follows: ‘‘On full and final discharge of the indebtedness that is the basis for a claim recorded under
subsection (b) of this section, on request of the Secretary or owner, the person having the claim shall provide the Secretary with an acknowledged certificate of
discharge of the indebtedness. The Secretary shall
record the certificate.’’
Subsecs. (e), (f). Pub. L. 107–295, § 205(a)(1)(E), added
subsecs. (e) and (f).
EFFECTIVE DATE OF 2002 AMENDMENT
Amendment by Pub. L. 107–295 effective Jan. 1, 2003,
see section 205(e) of Pub. L. 107–295, set out as a note
under section 31325 of this title.

Subtitle IV—Regulation of Ocean
Shipping
PART A—OCEAN SHIPPING
Chapter

401.
403.
405.
407.
409.
411.
413.

Sec.

General ..................................................
Agreements ...........................................
Tariffs, Service Contracts, Refunds,
and Waivers ......................................
Controlled Carriers ............................
Ocean
Transportation
Intermediaries ...........................................
Prohibitions and Penalties ...............
Enforcement .........................................

40101
40301
40501
40701
40901
41101
41301

PART B—ACTIONS TO ADDRESS FOREIGN PRACTICES

421.
423.

Regulations Affecting Shipping in
Foreign Trade ................................... 42101
Foreign Shipping Practices .............. 42301
PART C—MISCELLANEOUS

441.

Evidence of Financial Responsibility for Passenger Transportation 44101
PART A—OCEAN SHIPPING
CHAPTER 401—GENERAL

Sec.

40101.

Purposes.