Malta Flag Mortgages
A ship registered in Malta, including all its equipment, machinery and other accessories may be put up as security for a loan by way of mortgage. Such a mortgage over a Maltese ship may be recorded in the Maltese register as soon as the vessel is registered. Transfer and discharge of mortgages may be effected immediately on presentation of the relative documents.
Maltese mortgages provide good security for banks and other financial institutions because, inter alia:
- they enjoy a high ranking position;
- a shipowner may not delete a vessel from the Maltese register without the mortgagee‘s prior written consent;
- a vessel may not be struck off the register before 1 month‘s notice being given to the mortgagee and shipowner by the Registrar of Shipping;
- a mortgagee may take over and complete registration formalities himself (including applying for extensions, paying fees etc.) in order to protect the status of the ship and the validity of its registration;
- the Registrar of Shipping is bound, upon transfer of a vessel to new Maltese owners, to inform the mortgagee of such transfer;
- the vessel may not be sold to foreign nationals without the mortgagee‘s consent;
- mortgages may be enforced without the need of lengthy Court proceedings;
- the mortgage attaches to any insurance proceeds; and a mortgagee may prohibit the registration, without his prior written consent, of second or subsequent mortgages by including a relevant clause in the registered Mortgage Deed.
In case of default on behalf of the mortgagor, the mortgagee is entitled:
- to take possession of the ship;
- absolutely to sell the vessel;
- generally to do any such things in the name of the owner as may be required in order to maintain the status and validity of the registration of the vessel.
Foreign mortgages are recognised and granted the same status as mortgages under the Maltese Shipping Act provided such foreign mortgages are validly recorded in terms of the relevant foreign law and certain other conditions are fulfilled.