SHIP MORTGAGE IN CAMEROON- Approved guidelines and procedure 2023
Ship mortgage is a form of security wherein the ship owner (“Mortgagor”) gives a lender (“Mortgagee”) an interest in a ship as security for a loan via a Deed and the same is discharged upon repayment of the loan. Mortgages may either be equitable or statutory. The essential feature of a mortgage is that it is only a security transaction, where the property is redeemable by the mortgagor upon satisfaction of the debt. The mortgagee shall not by reason of the mortgage be deemed the owner of the vessel or share of it nor shall the mortgagor be deemed to have ceased from being the owner thereof.
STATUTORY SHIP MORTGAGE IN CAMEROON
A ship registered in Cameroon, or a share in the ship may be made a security for a loan or other valuable consideration, and there shall be a properly written instrument creating the security. The document used for creating this security is a Deed of Mortgage. It is best that such a mortgage is registered and stamp duty paid.
The mortgage of a ship creates the status of propriety claim pursuant to the Admiralty Jurisdiction Act 1991 which is usually superior to a general maritime claim. This entitles the Mortgagee to institute an action in rem against the ship to realize its security. An action in rem is an action, which is brought directly against a property.
Usually, a statutory mortgage creates superior security and ranks in priority over all unregistered mortgages or subsequently registered mortgages.
In principle, the property is realizable by the mortgagee if it is not redeemed by the stipulated date. The law as regards the realization of a mortgage on a ship is that if the mortgagor defaults or does anything that tends to jeopardize the security, the mortgagee of a controlling number of shares may take possession of the ship.
Upon taking possession, the mortgagee may use the ship within limits or sell her. The mortgagee may use the ship for the purpose of earning freight. The mortgagee is however not at liberty to do whatever he likes with the ship. He must consider the interest of the mortgagor and succeeding mortgagees and the law requires him to use the ship only as a prudent man will use her. He will be liable to the mortgagor for any loss sustained through the imprudent use of the ship.
EQUITABLE MORTGAGE IN CAMEROON
An equitable mortgage is a mortgage in which the lender is secured by taking possession of all the original title documents of the property that serves as security for the mortgage. Sometimes it could be created by words. The most important element in this type of mortgage is that there is intent by parties to create the mortgage. It is safe to state that this type of mortgage is only used where legal formalities are not complied with. An equitable mortgage is not a reliable and dependable security interest.
In practical terms, the lender who has an equitable mortgage acquires some preferential or recognizable interest in the vessel concerned, subject always to the over-riding interest of existing legal mortgages and maritime lien holders. Where there is a breach of the mortgage deed by the Mortgagor or a default in payment, the Mortgagor can take a number of actions as listed below:
• Action in personam against the ship-owner;
• Entitled to arrest the ship by an action in rem at the High Court
• Right to repayment;
• Right to take possession for the sale of a ship; and
• Take benefit of insurance (if applicable).
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guide to the subject matter. We insist specialist advice be sought depending on
your specific circumstance’’
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