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Guest
Guest
What are the practical advantages of Part 1 Registration against the much cheaper SSR ?
Geoff
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Geoff
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jhr
Well-known member
Do a search and you will find lengthy discussion around this subject, both here and on S/'butt.
Basically, Part 1 gives proof of ownership (hence security for marine mortgages etc) and exclusivity of name; also the opportunity to carve your registered tonnage onto a convenient beam (OK, so there aren't many convenient beams on a GRP hull). Survey is needed for official tonnage, etc.; total cost up in the hundreds, but pretty permanent.
SSR doesn't do any of this and has to be renewed after 5 years, but will mollify impertinent French officials with their interminable nosy questions. Plus it's only a tenner.
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Basically, Part 1 gives proof of ownership (hence security for marine mortgages etc) and exclusivity of name; also the opportunity to carve your registered tonnage onto a convenient beam (OK, so there aren't many convenient beams on a GRP hull). Survey is needed for official tonnage, etc.; total cost up in the hundreds, but pretty permanent.
SSR doesn't do any of this and has to be renewed after 5 years, but will mollify impertinent French officials with their interminable nosy questions. Plus it's only a tenner.
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Observer
Active member
Part I registration provides proof of ownership of a registered ship, subject to any mortgage which, if a ship is registered under Part I, must also be registered. If a mortgage or other charge on a Part I registered ship is not registered with the shipping registry, the mortgagee (lender) will not be able to enforce the security against a subsequent owner who purchases from the registered owner in good faith without knowledge of the mortgage/security interest.
If a ship is registered on Part III (SSR), there is no proof of ownership so the person in whose name it is registered may not be the lawful owner and/or another person may have a mortgage/security interest in the ship which is enforceable against a subsequent purchaser.
So the practical benefit of buying a Part I registered is that you can easily check: (a) whether the seller is the owner; and (ii) whether there is an outstanding mortgage or secuity interest. The practical benefits of owning a Part I registered ship are: (i) if the boat is stolen it will be easier to trace; and (ii) when you come to sell it it will be easier to sell.
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If a ship is registered on Part III (SSR), there is no proof of ownership so the person in whose name it is registered may not be the lawful owner and/or another person may have a mortgage/security interest in the ship which is enforceable against a subsequent purchaser.
So the practical benefit of buying a Part I registered is that you can easily check: (a) whether the seller is the owner; and (ii) whether there is an outstanding mortgage or secuity interest. The practical benefits of owning a Part I registered ship are: (i) if the boat is stolen it will be easier to trace; and (ii) when you come to sell it it will be easier to sell.
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jfm
Well-known member
Agree these advantages but two modifications:
1. Pt 1 gives proof of legal title, not beneficial ownership. That's perhaps 95% of the way there, and I'm not knocking it, but you just need to be aware it doesn't give absolute proof of outright ownership, and therefore always do the usual checks and keep your wits about you if you are buying 2nd hand
3. It gives exclusivity of name only among pt 1 registered boats. This doesn't stop an unregistered boat using the same name, not a boat registered on a different register. No big deal of course...
1. Pt 1 gives proof of legal title, not beneficial ownership. That's perhaps 95% of the way there, and I'm not knocking it, but you just need to be aware it doesn't give absolute proof of outright ownership, and therefore always do the usual checks and keep your wits about you if you are buying 2nd hand
3. It gives exclusivity of name only among pt 1 registered boats. This doesn't stop an unregistered boat using the same name, not a boat registered on a different register. No big deal of course...
ari
Well-known member
"Part I registration provides proof of ownership of a registered ship, subject to any mortgage which, if a ship is registered under Part I, must also be registered. If a mortgage or other charge on a Part I registered ship is not registered with the shipping registry, the mortgagee (lender) will not be able to enforce the security against a subsequent owner who purchases from the registered owner in good faith without knowledge of the mortgage/security interest."
Not the case, sorry. Whilst a finance company may register their lien against a vessel via Part One registry, they are not obliged to and still have rights to the vessel even if they have not done this.
Totally mad situation, but there it is.
Also, even if the finance commpany have registered their interest under the Full Part One scheme there is sadly nothing stopping someone with a registered boat from removing the tonnage marking (usually a plate or similar) and fraudulantly stating it is not registered to a potential purchaser. Fact is that it is, and finance company again have rights to the boat so don't regard the fact that a potential purchase of an unregistered boat is safe from the clutches of a finance company because it could be registered and the owner may simply be telling you it isn't.
Yes you would of course have redress against the chappy selling you the boat, but lets face it if he's up to tricks like this then he's obviously not got a bean and isn't going to be worth pursuing even if you can find him!
Ridiculous state of affairs, but thats the law apparently...
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Not the case, sorry. Whilst a finance company may register their lien against a vessel via Part One registry, they are not obliged to and still have rights to the vessel even if they have not done this.
Totally mad situation, but there it is.
Also, even if the finance commpany have registered their interest under the Full Part One scheme there is sadly nothing stopping someone with a registered boat from removing the tonnage marking (usually a plate or similar) and fraudulantly stating it is not registered to a potential purchaser. Fact is that it is, and finance company again have rights to the boat so don't regard the fact that a potential purchase of an unregistered boat is safe from the clutches of a finance company because it could be registered and the owner may simply be telling you it isn't.
Yes you would of course have redress against the chappy selling you the boat, but lets face it if he's up to tricks like this then he's obviously not got a bean and isn't going to be worth pursuing even if you can find him!
Ridiculous state of affairs, but thats the law apparently...
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jfm
Well-known member
Ari:
I dont think you're right on the first point, I'm with Observer. Yes, the finance co is not obliged to register the mortgage. But if someone buys the boat in good faith without knowledge of the mortgage, the chances any court would enforce an unregistered mortgage are slim. There are shades of grey in this, but for a lender to enforce a mortgage against an unknowing buyer the lender has to have taken reasonable steps to make third parties aware of the mortgage, otherwise courts will not uphold it. For houses, it's the land registry. For boats reg under pt 1, it's the registry. In other words a court would have no sympathy for lender who failed to register mortgage when the boat was already p1 registered. By way of another example, for ordinary machines in factories, it is common to see metal plates attached saying "This lathe is owned/under mortgage to XYZ finance co" and so on - this is domne to make buyers aware
I agree your second point, a fraudulent seller can disguise the fact that the boat is registered, then the buyer is in a pickle. On big boats, the carving is often done by chain drilling a hull stringer, so hard to cover up, but on small boats (including ours) the carving is on a plate screwed to a bit of furniture, so easy to remove. However, if decals are removed from transom, it often shows as a shadow due to discolouration of GRP, so look there. Also check the name of boat with VHF licence people, then see register for that name. Finally, the UK boat morgage market is 90% served by only a few banks, so you could write to them with details including hull number and ask if they have an interest in it. Dunno if they reply, but you can put them on notice that you are a good faith 3rd party buyer. If they reply "no" or dont reply they will struggle to enforce the mortgage.
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I dont think you're right on the first point, I'm with Observer. Yes, the finance co is not obliged to register the mortgage. But if someone buys the boat in good faith without knowledge of the mortgage, the chances any court would enforce an unregistered mortgage are slim. There are shades of grey in this, but for a lender to enforce a mortgage against an unknowing buyer the lender has to have taken reasonable steps to make third parties aware of the mortgage, otherwise courts will not uphold it. For houses, it's the land registry. For boats reg under pt 1, it's the registry. In other words a court would have no sympathy for lender who failed to register mortgage when the boat was already p1 registered. By way of another example, for ordinary machines in factories, it is common to see metal plates attached saying "This lathe is owned/under mortgage to XYZ finance co" and so on - this is domne to make buyers aware
I agree your second point, a fraudulent seller can disguise the fact that the boat is registered, then the buyer is in a pickle. On big boats, the carving is often done by chain drilling a hull stringer, so hard to cover up, but on small boats (including ours) the carving is on a plate screwed to a bit of furniture, so easy to remove. However, if decals are removed from transom, it often shows as a shadow due to discolouration of GRP, so look there. Also check the name of boat with VHF licence people, then see register for that name. Finally, the UK boat morgage market is 90% served by only a few banks, so you could write to them with details including hull number and ask if they have an interest in it. Dunno if they reply, but you can put them on notice that you are a good faith 3rd party buyer. If they reply "no" or dont reply they will struggle to enforce the mortgage.
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Observer
Active member
With respect, please re-read and consider what I actually wrote.
I agree that a lender will take good security from a mortgage of an unregistered or Part III registered ship (which will necessarily be unregistered). However, if: (i) a ship is Part I registered; (ii) the registered owner grants a mortgage; and (iii) the mortgagee fails to register the mortgage, it seems to me that the security must be unenforceable against a subsequent purchaser in good faith buying without actual or constructive knowledge of the mortgage.
It is certainly the case that the mortgagee under a second mortage, which is registered, will have priority over the unregistered or subsequently registered first mortgage. This is expressly provided in s.8, Sch. 1 of Merchant Shipping (Registration, etc.) Act, 1993 which provides as follows: <font color=red>the priority of the mortgagees between themselves shall ..... be determined by the order in which the mortgages were registered (and not by reference to any other matter)</font color=red>. It would be perverse, it seems to me, if the first mortgagee under an unregistered mortgage was able to sustain his interest against a subsequent innocent purchaser but not against a second mortgagee, who (it seems) could even have actual knowledge of the first (unregistered) mortgage but secures first mortgage priority by registering his second mortgage first.
I'm not sure whether there is express statutory provision that an unregistered mortgage on a Part I registered ship will be unenforceable in the way I describe. If not, then I suggest that it will arise in equity, by estoppel. I stand to be corrected but I don't think your first post does it.
The risk in the other scenario you describe (removal of tonnage board) I do not disagree with but, I think, should be eliminated by reasonable due diligence.
<hr width=100% size=1><P ID="edit"><FONT SIZE=-1>Edited by Observer on 11/06/2003 11:06 (server time).</FONT></P>
I agree that a lender will take good security from a mortgage of an unregistered or Part III registered ship (which will necessarily be unregistered). However, if: (i) a ship is Part I registered; (ii) the registered owner grants a mortgage; and (iii) the mortgagee fails to register the mortgage, it seems to me that the security must be unenforceable against a subsequent purchaser in good faith buying without actual or constructive knowledge of the mortgage.
It is certainly the case that the mortgagee under a second mortage, which is registered, will have priority over the unregistered or subsequently registered first mortgage. This is expressly provided in s.8, Sch. 1 of Merchant Shipping (Registration, etc.) Act, 1993 which provides as follows: <font color=red>the priority of the mortgagees between themselves shall ..... be determined by the order in which the mortgages were registered (and not by reference to any other matter)</font color=red>. It would be perverse, it seems to me, if the first mortgagee under an unregistered mortgage was able to sustain his interest against a subsequent innocent purchaser but not against a second mortgagee, who (it seems) could even have actual knowledge of the first (unregistered) mortgage but secures first mortgage priority by registering his second mortgage first.
I'm not sure whether there is express statutory provision that an unregistered mortgage on a Part I registered ship will be unenforceable in the way I describe. If not, then I suggest that it will arise in equity, by estoppel. I stand to be corrected but I don't think your first post does it.
The risk in the other scenario you describe (removal of tonnage board) I do not disagree with but, I think, should be eliminated by reasonable due diligence.
<hr width=100% size=1><P ID="edit"><FONT SIZE=-1>Edited by Observer on 11/06/2003 11:06 (server time).</FONT></P>
ari
Well-known member
JFM,
I agree with you entirely, I am sure that the courts would take a dim view of a finance company lending a substantial amount and not registering their interest on the Part One register.
However my understanding is that legally the finance company would still have a right. How enforcable that right would be I guess is up to the judge, but non the less the right exists.
I cannot understand why no one sets up a finance register based on hull number and engine numbers (harder to tamper with, particularly as all boats have a hidden hull number these days).
If it were then stated that all finance companies must then either register their interst on the finance register or have no lien on the boat then finance companies would be better able to protect themselves and purchasers would be way more secure.
All a buyer would need to do is submit the hull and engine numbers and a check could be made. Changing the boats name or removing a Registered Tonnage plate would make no difference.
It boggles the mind that you can buy a second-hand 1/2 million pound boat without the ability to ensure no finance company is going to appear in six months time and claim the boat against a previous owners bad debt.
Ari.
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I agree with you entirely, I am sure that the courts would take a dim view of a finance company lending a substantial amount and not registering their interest on the Part One register.
However my understanding is that legally the finance company would still have a right. How enforcable that right would be I guess is up to the judge, but non the less the right exists.
I cannot understand why no one sets up a finance register based on hull number and engine numbers (harder to tamper with, particularly as all boats have a hidden hull number these days).
If it were then stated that all finance companies must then either register their interst on the finance register or have no lien on the boat then finance companies would be better able to protect themselves and purchasers would be way more secure.
All a buyer would need to do is submit the hull and engine numbers and a check could be made. Changing the boats name or removing a Registered Tonnage plate would make no difference.
It boggles the mind that you can buy a second-hand 1/2 million pound boat without the ability to ensure no finance company is going to appear in six months time and claim the boat against a previous owners bad debt.
Ari.
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jfm
Well-known member
Yes agreed. The finance co might just about scrape together a 1/2 arsed claim, and so might take legal proceedings, so even if you eventually win you are out of pocket time/money (legal fees) and have praps 9 months of worry in meantime..... All best avoided
Your register is a good idea but alas it needs legislation and this lot are more into timewasting on other stuff, like inventing useless red tape, 90 pages of new law to tax stock options, the euro, and suchlike. Plus their 10 week summer recess/holiday. They just want to confiscate our money rather than help us spend it on boats. So it aint gonna happen......
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Your register is a good idea but alas it needs legislation and this lot are more into timewasting on other stuff, like inventing useless red tape, 90 pages of new law to tax stock options, the euro, and suchlike. Plus their 10 week summer recess/holiday. They just want to confiscate our money rather than help us spend it on boats. So it aint gonna happen......
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ari
Well-known member
Fair enough, keep thinking since we elected them they must work for us and for our best interests. Dumb huh!?
Cheers,
Ari.
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Cheers,
Ari.
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