
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 23, 2000]
[Document not affected by Public Laws enacted between
  January 23, 2000 and December 4, 2001]
[CITE: 46USC31321]

 
                           TITLE 46--SHIPPING
 
                    Subtitle III--Maritime Liability
 
         CHAPTER 313--COMMERCIAL INSTRUMENTS AND MARITIME LIENS
 
                  SUBCHAPTER II--COMMERCIAL INSTRUMENTS
 
Sec. 31321. Filing, recording, and discharge

    (a)(1) A bill of sale, conveyance, mortgage, assignment, or related 
instrument, whenever made, that includes any part of a documented vessel 
or a vessel for which an application for documentation is filed, must be 
filed with the Secretary of Transportation to be valid, to the extent 
the vessel is involved, against any person except--
        (A) the grantor, mortgagor, or assignor;
        (B) the heir or devisee of the grantor, mortgagor, or assignor; 
    and
        (C) a person having actual notice of the sale, conveyance, 
    mortgage, assignment, or related instrument.

    (2) Each bill of sale, conveyance, mortgage, assignment, or related 
instrument that is filed in substantial compliance with this section is 
valid against any person from the time it is filed with the Secretary.
    (3) The parties to an instrument or an application for documentation 
shall use diligence to ensure that the parts of the instrument or 
application for which they are responsible are in substantial compliance 
with the filing and documentation requirements.
    (4)(A) A bill of sale, conveyance, mortgage, assignment, or related 
instrument may be filed electronically under regulations prescribed by 
the Secretary.
    (B) A filing made electronically under subparagraph (A) shall not be 
effective after the 10-day period beginning on the date of the filing 
unless the original instrument is provided to the Secretary within that 
10-day period.
    (b) To be filed, a bill of sale, conveyance, mortgage, assignment, 
or related instrument must--
        (1) identify the vessel;
        (2) state the name and address of each party to the instrument;
        (3) state, if a mortgage, the amount of the direct or contingent 
    obligations (in one or more units of account as agreed to by the 
    parties) that is or may become secured by the mortgage, excluding 
    interest, expenses, and fees;
        (4) state the interest of the grantor, mortgagor, or assignor in 
    the vessel;
        (5) state the interest sold, conveyed, mortgaged, or assigned; 
    and
        (6) be signed and acknowledged.

    (c) If a bill of sale, conveyance, mortgage, assignment, or related 
document is filed that involves a vessel for which an application for 
documentation is filed, and the Secretary decides that the vessel cannot 
be documented by an applicant--
        (1) the Secretary shall send notice of the Secretary's decision, 
    including reasons for the decision, to each interested party to the 
    instrument filed for recording; and
        (2) 90 days after sending the notice as provided under clause 
    (1) of this subsection, the Secretary--
            (A) may terminate the filing; and
            (B) may return the instrument filed without recording it 
        under subsection (e) of this section.

    (d) A person may withdraw an application for documentation of a 
vessel for which a mortgage has been filed under this section only if 
the mortgagee consents.
    (e) The Secretary shall--
        (1) record the bills of sale, conveyances, mortgages, 
    assignments, and related instruments of a documented vessel 
    complying with subsection (b) of this section in the order they are 
    filed; and
        (2) maintain appropriate indexes, for use by the public, of 
    instruments filed or recorded, or both.

    (f) On full and final discharge of the indebtedness under a mortgage 
recorded under subsection (e)(1) of this section, a mortgagee, on 
request of the Secretary or mortgagor, shall provide the Secretary with 
an acknowledged certificate of discharge of the indebtedness in a form 
prescribed by the Secretary. The Secretary shall record the certificate.
    (g) The mortgage or related instrument of a vessel covered by a 
preferred mortgage under section 31322(d) of this title, that is later 
filed under this section at the time an application for documentation is 
filed, is valid under this section from the time the mortgage or 
instrument representing financing became a preferred mortgage under 
section 31322(d).
    (h) On full and final discharge of the indebtedness under a mortgage 
deemed to be a preferred mortgage under section 31322(d) of this title, 
a mortgagee, on request of the Secretary, a State, or mortgagor, shall 
provide the Secretary or the State, as appropriate, with an acknowledged 
certificate of discharge of the indebtedness in a form prescribed by the 
Secretary or the State, as applicable. If filed with the Secretary, the 
Secretary shall enter that information in the vessel identification 
system under chapter 125 of this title.

(Pub. L. 100-710, title I, Sec. 102(c), Nov. 23, 1988, 102 Stat. 4741; 
Pub. L. 101-225, title III, Sec. 303(2), Dec. 12, 1989, 103 Stat. 1923; 
Pub. L. 104-324, title III, Sec. 305, Oct. 19, 1996, 110 Stat. 3918.)

                      Historical and Revision Notes
------------------------------------------------------------------------
          Revised section                Source section (U.S. Code)
------------------------------------------------------------------------
31321(a)(1).......................  46:921(a)
31321(a)(2).......................  46:1012
31321(a)(3).......................  New
31321(b)..........................  46:926(a), (b)
31321(c), (d).....................  New
31321(e)..........................  46:921(b)
31321(f)..........................  46:925(b)
31321(g)..........................  New
31321(h)..........................  46:925(b)
------------------------------------------------------------------------

    Section 31321(a)(1) provides for the filing of a bill of sale, 
conveyance, mortgage, assignment, or related instrument of a vessel. 
This subsection makes substantive changes to law. The bill would allow a 
bill of sale, conveyance, mortgage, assignment, or related instrument to 
be filed at the same time an application for documentation under chapter 
121 is filed. The Committee intends that the types of related 
instruments required to be filed be defined by regulations prescribed by 
the Secretary of Transportation. A major change the bill makes is that 
the instrument needs only be filed with the Secretary of Transportation 
to be valid. It is not necessary that it be recorded. This change is 
being made to eliminate a problem under existing law that prevents a 
person from recording an instrument when the vessel has not been yet 
documented. When filed with the Secretary, it is valid (to the extent 
the vessel is involved) against any person except the grantor, 
mortgagor, or assignor, their heirs or devisees, and a person having 
actual notice of that instrument. Clauses (A)-(C) make no substantive 
change to law.
    Paragraph (2) provides that each bill of sale, conveyance, mortgage, 
assignment, or related instrument that is filed in substantial 
compliance with the requirements of this section is valid against any 
person from the time it is filed with the Secretary.
    Paragraph (3) provides that it is the responsibility of the parties 
to an instrument to use diligence to ensure that the particulars of a 
filed instrument for which they are responsible are in substantial 
compliance. It is not the responsibility of the Secretary to validate 
the information in the instrument. If an instrument is later found to be 
invalid because it is not in substantial compliance, and the parties 
lose the benefits of a preferred mortgage, it is their fault, not the 
Secretary's.
    Section 31321(b) sets out the requirements that an instrument must 
meet to be properly filed. To be filed the instruments must: (1) 
identify the vessel; (2) state the name and address of each party to the 
instrument; (3) state, if a mortgage, the amount of the direct or 
contingent obligations (in one or more units of account as agreed to by 
the parties) that is or may become secured by the mortgage, excluding 
interest, expenses, and fees; (4) state the interest of the grantor, 
mortgagor, or assignor; (5) state the interest sold, conveyed, 
mortgaged, or assigned; and (6) be signed and acknowledged. While most 
of these items are required under current law to be included in the 
index, and therefore required to be submitted to the Secretary to be 
recorded, this subsection makes a number of substantive changes to law. 
First, while vessel names are currently required to be submitted, this 
requirement has been broadened so that hull identification numbers and 
official numbers can be used to more specifically identify a vessel 
(since many vessels have the same name). Second, it requires the 
mortgage to state the maximum amount of the obligation, including 
principal, interest, fees, etc., that are secured by the mortgage. It 
also clarifies that the mortgage obligation may be payable in more than 
one unit of account, such as yen, franc, or special drawing right. 
Third, it recognizes that under some modern financing practices an 
instrument may not have a date of maturity. The requirement for 
supplying the date of maturity has been eliminated.
    Section 31321(c) provides that if an instrument filed involves a 
vessel that has not yet been documented, and the Secretary decides that 
the vessel cannot be documented by the applicant, then the Secretary 
shall send notice of that denial to the parties, including the reasons 
for the Secretary's decision. If the parties have not corrected the 
deficiencies within 90 days, the Secretary may terminate the filing and 
return the instruments. This invalidates the instruments.
    Section 31321(d) prohibits a person from withdrawing an application 
for documentation of a vessel for which a mortgage has been filed unless 
the mortgagee consents. Since the withdrawal will invalidate the 
mortgage, the mortgagee should be allowed to prohibit the withdrawal.
    Section 31321(e) makes a substantive change to law. It requires the 
Secretary to record instruments in the order they are received for 
filing, not in the order in which they were received for recording. It 
also makes a substantive change by eliminating the specific indexes 
required under the law and substituting a general requirement for the 
Secretary to maintain indexes of instruments filed or recorded, or both, 
for use by the public. These indexes, prescribed by regulations, must be 
in keeping with U.S. obligations under treaties to which the United 
States is a party. Since section 104 [105] of this Act makes the 
existing rules and regulations applicable under this subsection, the 
current indexing system will be maintained that includes the names of 
the vessels; names of the parties to the instruments; time and date each 
instrument was received; the interest in the vessel that was sold, 
conveyed, mortgaged, or assigned; and the date of the maturity of the 
mortgage, if any. However, it allows the Secretary by regulation to 
automate the system with computers, as long as the new system provides 
the public with an adequate method of finding and examining these public 
records.
    Section 31321(f) makes a substantive change to law by eliminating 
the requirement that a partial discharge of indebtedness be filed with 
the Secretary. The bill requires that on the full and final discharge of 
indebtedness the mortgagee, on request of the Secretary or mortgagor, 
shall provide the Secretary with a written, acknowledged certificate of 
discharge of the indebtedness. This subsection also makes a substantive 
change by requiring that the mortgagee, not the mortgagor, provide the 
certificate of discharge. The Secretary shall then record the 
certificate. However, this does not prohibit a person from submitting a 
certificate of discharge under subsection (a) since it is a related 
instrument. This subsection also makes a substantive change to law by 
eliminating the requirement that the discharge be endorsed on the 
vessel's certificate of documentation, and that the Customs Service only 
may clear a vessel after an endorsement has been made. This change is 
made because of the elimination of endorsements under section 31322.


                          house floor statement

    Section 31321 has been changed to clarify that a mortgage, whenever 
made, must be filed to be valid against third parties. This 
clarification allows mortgage closings to occur previous to filing of an 
instrument, and to eliminate the need for a fictional simultaneous 
closing and filing.
    Subsection (g) clarifies that if an application for documentation is 
filed for a vessel covered by a preferred mortgage under section 
31322(d) (as enacted by this Act), the preferred mortgage must be filed 
with the Secretary at the same time the application for documentation is 
filed to be valid against third parties. If the preferred mortgage is 
filed with the Secretary at the time the documentation application is 
filed, it is valid from the time it became a preferred mortgage under 
section 31322(d).
    When a State preferred mortgage under section 31322(d) is finally 
discharged, subsection (h) of this section requires the mortgagee to 
provide upon request to the Secretary or a State, whichever is more 
appropriate, an acknowledged certificate of discharge of indebtedness. 
This is necessary when a vessel in the system moves from a participating 
titling State and is not retitled in another participating State. In 
this case, there is no way to update the status of the indebtedness 
through the original titling State. The Secretary is required to accept 
this information to be maintained in the vessel identification system 
under section 12503(c) of title 46 (as enacted by this Act).


                               Amendments

    1996--Subsec. (a). Pub. L. 104-324 added par. (4).
    1989--Subsec. (c). Pub. L. 101-225 substituted ``for which an 
application for documentation is filed'' for ``that has not yet been 
documented'' in introductory provisions and ``interested party to'' for 
``party whose name and address is stated on'' in par. (1).


                             Effective Date

    Section effective Jan. 1, 1989, not to affect any civil action filed 
before that date, and, insofar as applicable to vessels for which an 
application for documentation has been filed, effective Jan. 1, 1990, 
with further provision for an instrument filed before Jan. 1, 1989, but 
not recorded before that date, and with other qualifications, see 
section 107 of Pub. L. 100-710, set out as a note under section 30101 of 
this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 12111, 12503, 31301, 31322, 
31325, 31330 of this title.
