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5. MORTGAGES

A mortgage is a legal document that creates a security for a loan or other financial consideration using the registered vessel or a share of it as security. The person using the vessel as security and receiving the loan is called the mortgagor. The person taking the vessel as security and usually giving the loan is called the mortgagee. Note that a vessel must be registered before a mortgage can be registered.

Mortgage Process ^

A mortgage may be on a vessel or on shares
A person, a group of several persons, or a corporation may complete a Mortgage Form for any number of shares in a vessel, as long as they are registered owners. Where there are different owners of different vessel's shares, a separate mortgage would be required for each share being mortgaged.

Mortgage Form ^

In order for a mortgage on a vessel or share to be registered, you must complete the Mortgage Form and send it to a registrar, complete with the required fee. This alone becomes the registered mortgage document. Note that this form does not allow the inclusion of details that go beyond describing the nature of the mortgage transaction. Thus other issues relating to conditions which attach to a mortgage are covered in a separate agreement or deed between the parties concerned. You may refer to such a separate deed in the mortgage, but a registrar will not accept it for registration. For example you can add a phrase such as either of these to the Mortgage Form: 

In Accordance with an agreement dated .........between the parties hereto 
or
as is more fully detailed in the Deed of Covenants dated......... 

Once the Mortgage Form is completed it must be sent to the registrar at the Port of Registry along with the required fee. The Mortgage Form will then be registered and returned to the person who presented it, with the following endorsement added by the Registrar:

0 Mortgage A, (or B, or etc.) entered this.....day of.............19...
1 at.......a.m..(or p.m., to the nearest minute).
2 
3 .........................,
4 Registrar of Ships
5 Port of......................

Inspection of registered mortgages ^

If you are proposing to advance money or to purchase a vessel, you have the right to inspect the Register or to obtain a copy of the transcript by paying a fee. Thus you would be informed fully in advance as to how far the ownership of a vessel would be burdened by mortgages.

Several mortgages for any one vessel may appear on the Register at the same time. Mortgages rank in priority according to the date and time that they are accepted by the Registrar as complete and not according to the dates of the mortgage deeds themselves. 

No restrictions on mortgagees ^

There are no restrictions as to the kinds of persons who may be entered in the Register as mortgagees. Thus a person who is not qualified to own a Canadian registered vessel could be a mortgagee.

While the number of persons who may be registered as joint owners of a share(s) is limited to five, there is no legal limitation to the number of persons who may be registered as joint mortgagees.

Transfer of a mortgage ^
A mortgagee may transfer the mortgage by completing the transfer section on the Mortgage Form and must be sent to the registrar at the port of registry along with the required fee. For a transfer by joint mortgagees, all parties must sign the transfer section. A transfer by a corporation must be executed under its corporate seal or by an officer authorized to do so by a company resolution or by power of attorney. The Mortgage Form will then be registered and returned to the person who presented it, with the following endorsement added by the Registrar:

0 Transfer of Mortgage A, (or B, or etc.) entered this.....day of.............19...
1 at.......a.m..(or p.m., to the nearest minute).
2 
3 .........................,
4 Registrar of Ships
5 Port of......................

If you can't find the original Mortgage Form, you will have to complete a Statutory Declaration. Talk to the registrar's office about this. There is a fee for processing.

Powers of mortgagees ^

If you are a registered first mortgagee, then the Canada Shipping Act gives you absolute power, subject to the Bankruptcy and Insolvency Act, and to the extent set out in the mortgage agreement, to sell the vessel or shares which form the security. However, if there is more than one mortgage on the same vessel or share, no second or additional mortgagee can sell without the agreement of every prior mortgagee, except by an order by a court. Under power of sale, a sale of the vessel by a first mortgagee means that there is no longer a mortgage on the vessel.

Discharging a mortgage ^

Until the registrar receives the original mortgage deed together with a letter of discharge signed by the mortgagee, the mortgage will remain registered. It is not necessary that the amount for which the receipt is given should be the full amount of the mortgage, only that the receipt contains a statement that it is given in discharge of the mortgage. There is no additional fee for you to discharge a mortgage.

If the mortgagee is a corporation, a discharge must be given either under its corporate seal, under the signature of an officer authorized to do so by a company resolution, or by power of attorney.

Once the registry of discharge of a mortgage is completed, the registrar will register the discharge with the following endorsement and return the documents to the person who presented it:

0 Discharge of mortgage A, (or B, or etc.) entered this.....day of.............19...
1 at.......a.m..(or p.m., to the nearest minute).
2 
3 .........................,
4 Registrar of Ships
5 Port of......................

If the original mortgage deed has been lost, you must complete a statutory declaration confirming that the obligation was discharged. There is a fee for processing the declaration.

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