MORTGAGES ON PANAMANIAN VESSELS

The following is a brief outline of the procedures and requirements set forth in the laws of the Republic of Panama about the registration of ship mortgages under the laws of Panama.  All enquiries concerning Panamanian matters within the terms of the present memorandum or other matters will be answered within the same day.

A. GENERAL INFORMATION

Panama law requires that the registration of a mortgage be dated on or after the date of the Provisional Navigation License.

Ship mortgages must be formalized in a Public Deed in Spanish if executed in Panama or before a Panamanian Consulate if executed abroad. Ship mortgages may also be executed abroad subject to the formalities prescribed for such instruments by the laws of the country in which it is executed. This should include the acceptance of the mortgage by the mortgagee. In this case, the signatures and corresponding authority of the parties executing the instrument should be authenticated by a Notary Public and the signature of the Notary Public should be legalized by a Panamanian Consulate or by Apostille.

B. REQUIREMENTS

Regardless of the manner in which it is executed, the mortgage instrument must contain, at least the following information:

1.  Full name, civil status, occupation and addresses of the mortgagor and the mortgagee or the corporate identity, its description, nationality and addresses of the parties.

 

2. The sum secured by the mortgage (or the maximum amount in the event of a credit facility) and the sum or sums to which the lien applies for the payment of costs and interest. The rate of interest if it is a fixed or floating rate. The maximum interest rate allowed is 2 percent (2%) per month.

 

3. The dates of repayment of principal and interest, and any other provisions and covenants, which the parties may deem advisable concerning, interest, insurance, assignments, and others.

 

The interest rate may be stipulated by reference to a rate prevailing in a particular market or bank rate to selected borrowers in a given market. The rate may be adopted by reference to the existing rate at the time of execution of the instrument or to fluctuations during the term of credit.

 

4. The name and radio call letters that distinguish the ship. Its complete description, registration data at the Public Registry Office, and the number and date of the Navigation License.

 

5. The amount or price that is assigned to the ship, which will serve as a basis for foreclosure in the event of an auction.

 

6. When several vessels are mortgaged by the same instrument to cover the same credit, it is possible to determine that each vessel is responsible for the total amount secured or only for a part of the lien. If this determination is not made, the mortgagee may enforce the mortgage for the total sum secured against any of the vessels or against all of them.

 

It is advisable that the mortgage instrument contains a clause stating which lawyer or law firm is to effect the permanent registration in Panama.

 

A ship mortgage executed abroad, in English or any other language, will be translated into Spanish in Panama by an Official Authorized Translator, or protocolised before a Notary Public, and finally recorded at the Public Registry in Panama.

C. PRELIMINARY REGISTRATION OF TITLES AND MORTGAGES

In order to facilitate shipping operations, Panamanian titles and mortgages may be filed for preliminary registration at certain Panamanian Consulate with maritime jurisdiction, as made effective by Law No. 14 of May 27, 1980.

Titles to vessels registered in Panama may be preliminarily recorded through any Panamanian Consulate with maritime jurisdiction by filing with said Consulate a petition that shall contain at least the following information:

 

1.  Names (and former names, if any) of the vessel

2.  Navigation license number

3.  Gross and net tonnages.

• In the case of mortgages the interested party should file a petition with the respective Consulate, at least containing the following information;
• The full names and domicile of the mortgagor and the mortgagee
• The amount secured by the mortgage, the interest rate, the date of payment of principal and interest                   
• The name of the vessel (and any former names), the number of its navigation license, its gross and net tonnages and principal dimensions
• The value assigned to the vessel to serve as a basis in case of foreclosure

In both cases, once the information contained in the petition has been verified by the Consul and payment of the pertinent taxes and fees has been made, the Consul will communicate the petition to the Public Registry Office in the Republic of Panama.

 

Upon verification in the Public Registry that no legal impediment exists, the petition will be entered into the Diary of the Public Registry Office and provisionally registered the communication received from the Consulate.

 

Upon such preliminary registration, the Public Registry Office will authorize the Consul to issue an official Certificate of Preliminary Registration, indicating the registration data, the date and hour of the entry in the Diary.

 

The aforementioned preliminary registration has the effect of a permanent registration during six (6) months, starting form the date and hour of the annotation or entry in the Diary of the Public Registry Office (this will be certified by the respective Consulate). Within this six month period, the interested party must have the title and/or mortgage protocolised and filed for permanent registration at the Public Registry Office in Panama through a lawyer or law firm in Panama.

 

Panama law requires that all vessels of Panamanian nationality maintain a local legal representative to serve as liaison with the Panamanian authorities. Such representative must be a lawyer or law firm.

 

If the referred document has not been filed for its permanent registration within said period, its expiration will cause the preliminary registration to be legally void and the Public Registry will automatically make the corresponding annotations.

 

Once the permanent registration has been accomplished, its effects shall be retroactive to the date and time of entry in the Diary of the Public Registry Office of the petition for preliminary registration.

D.  REGISTRATION EXPENSES AND PROFESSIONAL FEES

1. Government charges regarding preliminary registrations

a. Preliminary registration of titles to property at the Public Registry Office US$450.00

b. Preliminary registration of naval mortgages at the Public Registry up to the first US$ 2MM US$450.00 for each additional US$ 1 MM US$150.00 up to a maximum of US$1,200.00 plus 20% surcharge

 

2. Government charges in connection with permanent registration of naval mortgages

 

The registration of naval mortgages fees at the Public Registry is twelve cents (US$0.12) per net ton, and twenty percent (20 %) surcharge on the registration fees.

 

The maximum sum payable is US$600 (one hundred thousand net tons) and twenty percent (20%) surcharge.

 

3.  Professional Fees

a. For preliminary registration of Naval Mortgages: US$350

b. For permanent registration of Ship Mortgages: US$950

c. Notary fees, Translator’s Fees will vary according to the length of the document.

d.Telecommunication expenses and courier services will be charged separately.

e. Legal opinions will be based on the characteristics of the mortgage.

f. Extended or more complicated legal work will be charged at a hourly rate set of US$150.

 

If you are a law firm or shipping professional with a volume of business,  please contact us to discuss special details.