What is the purpose of maritime liens?

What is the purpose of maritime liens?

The maritime lien has been recognized as one of the most notable features of admiralty law. It grants rights against a vessel that survive the vessel's sale and take precedence over registered mortgages, even if the lien is not recorded. Those holding liens can collect their debts from the proceeds of the vessel's sale.

Maritime liens arise when there is a contract between a shipowner and a third party (such as a supplier of materials for the ship) that requires the third party to supply goods or services to the shipowner. The third party usually gives the shipowner an invoice as proof of this contract. If the shipowner fails to pay the third party, the third party can claim a right to attach the ship's cargo or other property to get payment. This means that unless the owner transfers all its interest in the cargo to a buyer before it leaves port, the owner remains responsible for paying the debt.

In general, three types of maritime liens exist: materialmen's liens, preferred mortgagees' liens, and common law liens. Materialman's liens are created by statute and allow unpaid suppliers of materials for use on a vessel in foreign trade to have a lien on the vessel. Preferred mortgagee's liens are obtained by those who give a bona fide purchase money mortgage on a vessel.

How do boat liens work?

A marine lien grants a provider of fuel, maintenance services, or other goods and services an automatic claim on the ship to whom the services were rendered. The lien entitles the provider to take the ship and sell it to satisfy the lien and the cost of sale. If the owner pays the debt, the lienholder gives up its right to the vessel.

Generally speaking, a maritime lien is any right or interest that a person has in a vessel which can be enforced against the vessel itself or the owner. The term includes claims arising from repairs or supplies provided to a vessel at her request. However, a warrantee's right under a warranty given at the time he provides services or materials for repair of a vessel is not a lien because it cannot be enforced against the vessel. Rather, it is a contract right that can only be enforced against the owner.

Maritime liens are created by federal law. Specifically, the Maritime Lien Act, 46 U.S.C. ยง 31301 et seq. , provides that certain providers of necessaries to vessels have rights against both the owners and operators of those vessels for their provision of services and materials. Those provisions include a right to payment before other creditors (except for existing bank loans not yet due), a requirement that disputes over the validity of the lien be resolved through arbitration, and a prohibition on attaching the vessel until all debts are paid.

How do you enforce a maritime lien?

A marine lien can only be enforced in one method. Enforcement entails filing a lawsuit in federal court, designating the vessel as a defendant, and detaining the vessel according to a court-issued arrest warrant. If you fail to bring an enforcement action within the time allowed by law, your lien will be extinguished.

The general rule is that an enforcement action must be filed within six months after the first publication of notice of the claim or privilege. However, if the claimant did not know and could not have known about the existence of its claim through reasonable inquiry, then the enforcement period is extended to either ten or twenty years from the date the debt was incurred, depending on the type of claim involved.

For example, if you file a claim against a vessel for repairs done at your facility, your legal right to recover your expense would expire six months after the first publication of notice of the claim. If no action is taken, you would lose your right forever. However, if you can prove that you did not know and could not have known about the existence of your claim through reasonable inquiry, then your legal right to recovery would be extended to either ten or twenty years from the date the repair work was completed, depending on which statute of limitations applies.

In this case, the claim would be considered timely filed because it was filed within the applicable extension period.

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Thad Eason

Thad Eason has been a journalist for over 20 years. He's covered everything from crime to the environment. He loves finding creative ways to tell stories that aren't already being covered by the mainstream media.

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