46a USC Rule - Documentation of completed vessel under laws of United States; delivery to purchaser; first mortgage to secure deferred payments

Upon completion of the construction of any vessel in respect to which a construction-differential subsidy is to be allowed under this subchapter and its delivery by the shipbuilder to the Secretary of Transportation, the vessel shall be documented under the laws of the United States, and concurrently therewith, or as soon thereafter as practicable, the vessel shall be delivered with a bill of sale to the purchaser with warranty against liens, pursuant to the contract of sale between the purchaser and the Secretary of Transportation. The vessel shall remain documented under the laws of the United States for not less than twenty-five years, or so long as there remains due the United States any principal or interest on account of the purchaser price, whichever is the longer period. At the time of delivery of the vessel the purchaser shall execute and deliver a first-preferred mortgage to the United States to secure payment of any sums due from the purchaser in respect to said vessel: Provided, That notwithstanding any other provisions of law, the payment of any sums due in respect to a passenger vessel purchased under section 1737(b)  ^[1] of the Appendix to title 50, reconverted or restored for normal operation in commercial services, or in respect to a passenger vessel purchased under subchapter V of this chapter, which is delivered subsequent to March 8, 1946, and which

(i) is of not less than ten thousand gross tons,

(ii) has a designed speed approved by the Secretary of Transportation but not less than eighteen knots,

(iii) has accommodations for not less than two hundred passengers, and,

(iv) is approved by the Secretary of Defense as being desirable for national defense purposes, may, with the approval of the Secretary of Transportation be secured only by a first-preferred mortgage on said vessel. With the approval of the Secretary of Transportation, such preferred mortgage may provide that the sole recourse against the purchaser of such a passenger vessel under such mortgage, and any of the notes secured thereby, shall be limited to repossession of the vessel by the United States and the assignment of insurance claims, if the purchaser shall have complied with all provisions of the mortgage other than those relating to the payment of principal and interest when due, and the obligation of the purchaser shall be satisfied and discharged by the surrender of the vessel, and all right, title, and interest therein to the United States. Such vessel upon surrender shall be

(i) free and clear of all liens and encumbrances whatsoever, except the lien of the preferred mortgage,

(ii) in class, and

(iii) in as good order and condition, ordinary wear and tear excepted, as when acquired by the purchaser, except that any deficiencies with respect to freedom from encumbrances, condition, and class, may, to the extent covered by valid policies of insurance, be satisfied by the assignment to the United States of claims of the purchaser under such policies of insurance. The purchaser shall also comply with all the provisions of section 868 of this Appendix.

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[1]  See References in Text note below.

Source

(June 29, 1936, ch. 858, title V, § 503,49 Stat. 1997; June 23, 1938, ch. 600, § 15,52 Stat. 957; July 17, 1952, ch. 939, § 3,66 Stat. 761; Pub. L. 86–518, § 1,June 12, 1960, 74 Stat. 216; Pub. L. 91–469, §§ 8, 35(a),Oct. 21, 1970, 84 Stat. 1021, 1035; Pub. L. 97–31, § 12(84),Aug. 6, 1981, 95 Stat. 161.)

References in Text

Section 1737 of the Appendix to title 50, referred to in text, was repealed by Pub. L. 101–225, title III, § 307(12),Dec. 12, 1989, 103 Stat. 1925.

Amendments

1981—Pub. L. 97–31substituted “Secretary of Transportation” for “Secretary of Commerce” wherever appearing.

1970—Pub. L. 91–469substituted “purchaser” for “applicant” in three places, “sale between the purchaser and the Secretary of Commerce” for “purchase between the applicant and the Commission” in first sentence; and “Secretary of Commerce” for “Commission”, in four places, respectively.

1960—Pub. L. 86–518substituted “twenty-five years” for “twenty years”.

1952—Act July 17, 1952, amended section to provide that as to passenger vessels delivered after Mar. 8, 1946, the balance of the payments shall be secured by a first preferred mortgage, that the purchasers’ obligation to pay will be discharged by surrender of the vessel and all rights to the Government, and to set up conditions governing type of vessel.

1938—Act June 23, 1938, amended section generally, substituting “construction-differential subsidy” for “construction subsidy”, and “or so long as there remains due” for “and so long as there remains due”.

Effective Date of 1960 Amendment

Amendment by Pub. L. 86–518applicable only to vessels delivered by the shipbuilder on or after Jan. 1, 1946, and with respect to such vessels shall become effective on Jan. 1, 1960, and with respect to vessels delivered by the shipbuilder before Jan. 1, 1946, the provisions of this chapter existing immediately before June 12, 1960, shall continue in effect, see section 8(a) ofPub. L. 86–518, set out as a note under section 1125 of this Appendix.

Revision of Contracts, Commitments To Insure Mortgages, Mortgages, and Mortgage Insurance Contracts Entered Into Prior to June 12, 1960

For provisions authorizing revision, see section 8(c) ofPub. L. 86–518, set out as a note under section 1125 of this Appendix.

Commercial Expectancy or Period of Depreciation of Tankers and Other Liquid Bulk Carriers

Nothing in any amendment made by Pub. L. 86–518to operate or be interpreted to change from 20 to 25 years the provisions of this chapter relating to the commercial expectancy or period of depreciation of any tanker or other liquid bulk carrier, see section 9 ofPub. L. 86–518, set out as a note under section 1125 of this Appendix.