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Letters From page 6


try. And it appears to be working as


reported in The Log’s story, “New San Diego open-air fish market a sweet smelling venue for all” in the Sept. 11- 25 edition. “The opening of the new seafood


market on Fish Harbor Pier is a mile- stone that our fishing community, the Port of San Diego and the County of San Diego have worked very hard to achieve,” said Jennifer Windle, direc- tor of marketing and communications for the Port of San Diego. Peter Halmay, a San Diego-based


commercial fisherman for more than 40 years, agreed with Windle, adding that Tuna Harbor Dockside Market builds community awareness of San Diego’s thriving commercial fishery. Find more information on Tuna


Harbor Dockside Market, at thdock- sidemarket.com.


Attorney From page 6


As we have discussed many times in this column, most maritime liens arise without the need for a written docu- ment and without the need to record the claim with the Coast Guard, or anywhere else (see, for example, “Ask a Maritime Attorney — A Lesson on Liens,” The Log, August 24, 2006). A mortgage is the exception to this rule because it is technically not a maritime lien. A mortgage against a documented vessel (technically known as a “Preferred Ship Mortgage”) must be in writing, it must properly identify the vessel, it must include the notarized signature of the vessel owner and it must be recorded with the Coast Guard.


A conventional maritime lien may include a contract between the parties, and we often see work orders or simi- lar paperwork in connection with a shipyard project or a significant engine repair. However, since these forms are not required for the perfection or enforcement of a maritime lien, the language in that paperwork varies


quite a bit between the various service providers, and we often see no paper- work at all. Conversely, since a mortgage must


be in writing, the form contracts that are used have evolved to the point where the rights and responsibilities of the parties are set out in considerable detail, and the language is very com- mon from lender to lender. From the standpoint of our reader’s question, the most significant language found in almost all Preferred Ship Mortgages is a provision that allows the lender, upon default by the vessel owner, to repossess and sell the vessel “without judicial process.” Courts have upheld this provision and interpreted it to mean that the lender may proceed without the involvement of the court, repossess the vessel through a private repossession and sell the vessel through a private sale. A potential buyer may therefore


purchase a repossessed vessel in a pri- vate sale without concern about the lender’s legal authority to sell the ves- sel — assuming, of course, that the lender had a properly recorded mort- gage and that the boat owner had, in fact, defaulted on the loan and mort- gage. The lender must prepare an affi- davit of repossession attesting to its right to foreclose (authorized pursuant to the Code of Federal Regulations, Title 46, sec. 67.83), and the affidavit will be submitted to the Coast Guard with the Bill of Sale. So, a lender may repossess and sell a vessel through the simplified proce- dure described above without a court order, but this may not always be the best approach for the lender or a potential buyer.


A lender may wish to use the federal


court procedure, because it is per- formed with the participation and oversight of a U.S. Marshal and a fed- eral judge. The marshal has a badge and a gun, and as such, any possibility of a confrontation with the boat owner at the time of the repossession is mini- mized. The judge is involved at every step — and questions involving the disposition of personal property aboard the boat, claims by competing creditors or disputes about whether the vessel was sold at a fair price are quickly and conclusively resolved by


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the judge. Buyers may prefer the


federal court procedure because they are assured of obtaining clear title at the time of their purchase. Only a federal judge may issue an order that is recognized any- where in the world to sell a vessel free and clear of all liens. In the end, lenders will typically choose the foreclosure method that makes the most sense under the cir- cumstances presented, based upon the value of the boat, the amount of equity involved and the likelihood of compet- ing creditors. The federal court proce- dure is quite expensive, and they will avoid that cost if they can. A buyer who is considering the pur- chase of a repossessed vessel through a private sale should consult an experi- enced maritime attorney if he or she has any questions about the issues dis- cussed here.


David Weil is licensed to practice law in the state of California and, as such, some of the infor- mation provided in this column may not be applicable in a juris- diction outside of California. Please note also that no two legal situations are alike, and it is impossible to provide accurate legal advice without knowing all the facts of a particular situation. Therefore, the information pro-


The Log • Sept. 26 - Oct. 9, 2014 • 19


vided in this column should not be regarded as individual legal advice, and readers should not act upon this information with- out seeking the opinion of an attorney in their home state.


David Weil is the managing attorney at Weil & Associates (weilmaritime.com) in Long Beach. He is an adjunct professor of Admiralty Law at Loyola University Law School, is a mem- ber of the Maritime Law Association of the United States and is former legal counsel to the California Yacht Brokers Association. He is also one of a small group of attorneys to be certified as an Admiralty and Maritime Law Specialist by the State Bar of California. If you have a maritime law question for Weil, he can be contacted at (562) 438-8149 or at dweil@weilmar- itime.com.


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October 10-12, 2014 Two Harbors - The Isthmus


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