Negotiation, drafting and registration of financing and mortgage documentation — and the registration, transfer and discharge of statutory mortgages over the Malta-registered yacht.
Most yachts of any size are financed, and the security a lender takes over the vessel decides how comfortably it lends. The Maltese registered ship mortgage is one reason the flag sits well with international ship finance: it reaches beyond the hull, it holds up against the owner's insolvency, and it carries remedies the mortgagee can exercise without going to court. zeta. supports owners and their lenders through the documentation and registry work behind it.
A ship mortgage makes the vessel itself security for a debt. Under Maltese law it takes a prescribed form, and in practice it sits alongside a deed carrying the commercial terms.
Discuss a FinancingThe mortgagor — the debtor — grants the instrument in favour of the mortgagee, and by it the ship becomes security for a debt. Maltese law prescribes the form it must take, and it has to be signed before a witness.
In practice the Instrument of Mortgage travels with a Deed of Covenants, which carries the commercial bargain: when and how the debt is to be repaid, at what rate of interest, what insurance the owner must keep in place, what limits apply to the operation of the ship, and what the mortgagee may do if the owner defaults. For a fuller technical treatment, see Mortgage in Maltese Maritime by our Managing Director, David Zammit.
Maltese law treats the ship mortgage as an exceptionally secure form of security. Four features do most of that work.
The mortgage catches far more than the hull, and keeps hold until it is discharged or extinguished.
The instrument can bar any further mortgage from going on the register without the mortgagee's prior written consent.
Claims against the ship rank ahead of the owner's other creditors, undisturbed by the owner's insolvency.
On default and due written notice, the mortgagee may take possession and — subject to prior-ranking mortgagees — sell the ship.
What the mortgage actually captures — and the only three circumstances in which it comes to an end.
For security purposes Maltese law defines the ship broadly: the hull, plus all equipment, machinery and other accessories belonging to it. Items in those categories that have been taken off the vessel temporarily still count as part of it — so the mortgage catches them too. Its reach runs further still, to indemnities payable after collisions and other mishaps, and to insurance proceeds.
That security stays fastened to the vessel and its accessories until it is discharged or extinguished, and only three sets of circumstances will extinguish it:
Future obligations can also be secured, on one condition: the Instrument of Mortgage must expressly state a maximum sum. Nor is the rule open to every lender — it applies only where the mortgage is granted in favour of a credit institution in an approved jurisdiction.
What the mortgagee can insist on, where its claims rank, and what it may do on default without first going to court.
The Instrument of Mortgage can be drafted so that no further mortgage goes on the register over the ship without the mortgagee's prior written consent. There is one carve-out: the restriction falls away where the new mortgage is being granted to a mortgagee who already holds one.
Maltese law ring-fences the vessel. It is a separate and distinct asset from the estate of its owner, held for the security of the actions to which it is subject — with the result that claims against the ship rank ahead of the owner's other creditors. Neither the bankruptcy nor the insolvency of the owner disturbs that position, and liquidators cannot interrupt a mortgagee's claims.
Where the owner defaults and due written notice has been given to the mortgagor, the mortgagee may:
A Maltese mortgage also carries executive title, which means the mortgagee can enforce against the mortgagor directly, without first grinding through lengthy and expensive litigation.
The protections above are not automatic. Most of them belong to registered mortgages, which is why the registry step decides how good the security actually is.
Registration decides ranking: the day and the hour each mortgage goes on the register fixes its place in the queue. And a great many of the rights set out above — every one of the self-help remedies among them — attach only to a registered mortgage. Timing at the registry is not administrative housekeeping; it is priority.
A mortgage sits over a vessel held by a company and, sometimes, operated under a charter on another flag.
A financed yacht is usually held by a Maltese company, and a lender will want to understand the ownership chain before drawdown. We incorporate and administer the owning entity.
The mortgage is registered against a Malta-registered vessel, so the flag work and the finance work run in step. See Malta flag registration.
Malta permits bareboat charter registration into and out of the register. The charterer's flag governs operation, while ownership and registered mortgages remain protected on the underlying register — see bareboat charter registration.
Our financing support assists owners and their lenders with the negotiation, drafting and registration of financing and mortgage documentation, including the registration, transfer and discharge of statutory mortgages over the Malta-registered yacht.
Support on the negotiation and drafting of the financing and mortgage documentation, including the Instrument of Mortgage and the Deed of Covenants.
Execution in the prescribed form and registration against the Malta-registered yacht, so its place in the ranking is fixed at the point it goes on the register.
Registration of transfers where a mortgage moves between lenders — on a refinancing, or where the facility changes hands.
Discharge once the debt is repaid, so the register reflects that the vessel is no longer encumbered — the first thing a future buyer checks.
Liaison with the lender, its counsel and the registry, so the security is in place when drawdown requires it.
Tell us about the vessel, the lender and the timetable — we'll set out the documentation and the registry steps.
Contact us to discuss financing documentation and the registration, transfer or discharge of a mortgage over a Malta-registered yacht.
