Mortgage Registration

Regulations Preferred Mortgages & Maritime Liens


Recording & Contents :


In relation to Section 901 of the Act, a hypothecation, mortgage or assignment of mortgage of any vessel registered under these Regulations shall not be valid in respect of such vessel until the instrument evidencing such transaction is recorded in the Register under these Regulations.

The Act provides that a registered ship, or a share in it, may be used as security for the repayment of a loan or the discharge of any other obligation. The vessel must be registered under Palau in order to record the mortgage in our records. Mortgages shall be registered in the order in which they are produced to the Registrar for the purposes of registration and the Registrar shall notify each mortgagee that the mortgage has been registered stating the day and hour of the registration.

Legal Opinion – Enforceability of Mortgage recorded with Palau International Ship Registry



Bill Of Sale: Recording


In relation to Section 905 of the Act, the Ship Registry Administrator or its duly authorized Special Agent elsewhere may accept for recording any bill of sale or other conveyance of a vessel or a facsimile thereof, the original of which has been received by the Ship Registry Administrator or any Special Agent, which recites the interest of the seller in the vessel and the interests sold or conveyed, provided it has previously been acknowledged or is submitted with such other proof of due execution as may be required by these Regulation, and provided further that any bill of sale of a vessel already documented under the laws of Republic of Palau must have attached thereto a true copy of its latest Certificate of Registry.


Registration Of Mortgages On Ships:


Documents to be submitted:

1 original of Mortgage application


1 original sets of mortgage deed duly notarized

1 original of the Loan agreement duly notarized

A POA with a notary certification that person who signs on behalf of mortgagee or mortgagor is duly authorized to perform this act.

Shipbuilder’s Letter (If newbuilding – confirming existence of contract between proposed owner and yard/shipbuilder, date of such contract, vessel’s hull number, expected date of delivery, estimated GRT)

A letter, issued by the Mortgagee, should list all authorized signatories or a POA in favor of the person who signs on behalf of the mortgagee and must be submitted to the administration

If a third party is involved in mortgage, then we will need a copy of any contracts involved.


Lien Of Preferred Mortgage


In relation to Section 910 of the Act, a Preferred Mortgage shall constitute a maritime lien upon the mortgaged vessel in the amount of the outstanding mortgage indebtedness secured by such vessel. The lien of a Preferred Mortgage shall not be in any way impaired or affected because the vessel’s document following recording of the mortgage has expired, or has been restrictively endorsed, suspended, revoked or canceled.


Discharge Of Mortgage:


An original notarized discharge letter from the mortgagee is required to be submitted to Registrar. Person who signed this letter must be a fully authorized person to act on behalf of the mortgagee. A letter, issued by the Mortgagee, should list all authorized signatories or a POA in favor of the person who signs on behalf of the mortgagee and must be submitted to the Registrar.


Priority Of Mortgages:


Where two or more mortgages are registered in respect to the same ship or share, the priority of mortgages between themselves shall be determined by the order in which the mortgages were registered.


Enforcement Of The Mortgage:


Every registered mortgagee shall have absolute power to dispose of the ship or share in respect which he is registered to give effectual receipts for the purchase money, but where there are more persons than one registered as mortgagees of the same ship or share, a subsequent mortgagee shall not, except under the order of the Supreme Court, sell the ship or share without the concurrence of every prior mortgagee.


Transfer Of Mortgage:


A registered mortgage of a ship, or share in it, may be transferred to any person. The instrument effecting the transfer shall be in the prescribed form. Where the interest of a mortgagee in a ship or share in it is transmitted on his death or bankruptcy, or by any lawful means, other than by a transfer under this Act the transmission shall be authenticated by declaration of the person to whom the interest is transmitted, containing a statement of the manner in which, and the person to whom the property has been transmitted. Also, to be accompanied by the like evidence, as is by this part required in the case of a transmission of the ownership of a ship or share in it.


Maritime Liens:


Maritime liens may be placed against an owner, demise charterer, manager or operator of a vessel for the following claims that shall be secured by maritime lien on the vessel:

Claims for wages and other sums due to the master, officers and other

members of the vessel’s complement in respect of their employment on the vessel, including costs of repatriation and social insurance contributions payable on their behalf;

Claims in respect of loss of life or personal injury occurring whether on land or water in direct connection with the operation of the vessel.

Claims for reward for the salvage of the vessel.

Claims for port, canal and other waterway dues and pilotage dues

Claims based on tort arising out of physical loss or damage caused by the operations of the vessel other than loss of/or damage to cargo, containers and passengers effects carried on the vessel.


Priority Of Maritime Liens:


The Maritime Liens listed above shall rank in the order listed, except the maritime liens securing claims for reward of salvage of the vessel shall take priority over all other maritime liens which have attached to the vessel prior to the time when the operation given rise to the said liens were performed.

Foreclosure, Priority of Preferred Mortgage Lien, and Exemption

In relation to Section 917 of the Act, upon the sale of any vessel in a suit in rem in the Supreme Court of the Republic of Palau, sitting in Admiralty for the enforcement of a Preferred Mortgage lien, all preexisting claims in the vessel, including any possessory common law lien, shall terminate and shall thereafter attach in like amount and in accordance with their respective priorities to the proceeds of sale; except that the Preferred Mortgage lien shall have priority over all claims against the vessel, except maritime liens for damages arising out of tort, maritime liens arising under sub-chapter 2.20 of these Regulations, maritime liens for crew’s wages, for general average, and for salvage (including contract salvage) and expenses and fees allowed and costs awarded by the Court.

You may wish to read further on the general provisions of mortgage registrations and its legal ramifications by making reference to the Act which is only a click away. Similarly, we have provided a link to our legal opinion on the enforceability of ships mortgage registered in the International Ships Registry of Palau.

We make ourselves available to address any concerns you may have on this subject and more.

Ship Registration Palau

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