46 U.S.C. § 31323 — Disclosing and incurring obligations be-

Page 282 TITLE 46—SHIPPING § 31323 ‘‘(B) a state or federally chartered financial institu- tion that satisfies the controlling interest criteria of section 2(b) of the Shipping Act, 1916 (46 U.S.C. 802(b)); ‘‘(C) a person that complies with the provisions of section 12102(c)(4) of this title.’’ Subsecs. (f) to (h). Pub. L. 107–20, § 2202(c), added sub- secs. (f) to (h). 1999—Subsec. (a)(4). Pub. L. 106–31 made technical amendment to directory language of Pub. L. 105–277, § 202(b). See 1998 Amendment note below. 1998—Subsec. (a)(4). Pub. L. 105–277, § 202(b), as amend- ed by Pub. L. 106–31, added par. (4). Subsec. (b). Pub. L. 105–383, § 401(c)(1), added subsec. (b) and struck out former subsec. (b) which read as fol- lows: ‘‘A preferred mortgage filed or recorded under this chapter may have any rate of interest that the parties to the mortgage agree to.’’ Subsec. (d)(1). Pub. L. 105–383, § 401(c)(2), substituted ‘‘mortgage, security agreement, or instrument’’ for ‘‘mortgage or instrument’’ in introductory provisions and subpar. (B). Subsec. (d)(2). Pub. L. 105–383, § 401(c)(4), substituted ‘‘mortgages, security agreements, or instruments’’ for ‘‘mortgages or instruments’’ in introductory provi- sions. Subsec. (d)(3). Pub. L. 105–383, § 401(c)(3), added par. (3) and struck out former par. (3) which read as follows: ‘‘A preferred mortgage under this subsection continues to be a preferred mortgage if the vessel is no longer titled in the State where the mortgage was made.’’ 1996—Subsec. (a). Pub. L. 104–324 amended subsec. (a) generally. Prior to amendment, subsec. (a) consisted of 2 pars. with substantially similar provisions defining a preferred mortgage except that it included a mortgage with a State, the United States Government, a feder- ally insured depository institution, or specified indi- vidual as mortgagee. 1989—Subsec. (a)(2). Pub. L. 101–225, § 303(3)(A), amend- ed par. (2) generally. Prior to amendment, par. (2) read as follows: ‘‘Paragraph (1)(D) of this subsection does not apply to a vessel operated only as a fishing vessel, fish processing vessel, or a fish tender vessel (as defined in section 2101 of this title) or to a vessel operated only for pleasure.’’ Subsec. (d)(1). Pub. L. 101–225, § 303(3)(B), substituted ‘‘granting a security interest perfected under State law’’ for ‘‘representing financing of a vessel under State law that is made under applicable State law’’. Subsec. (e). Pub. L. 101–225, § 303(3)(C), substituted ‘‘the status of the preferred mortgage’’ for ‘‘the valid- ity of the preferred mortgage’’ in pars. (1) and (2). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2001 AMENDMENT Pub. L. 107–20, title II, § 2202(d), July 24, 2001, 115 Stat. 170, provided that: ‘‘Section 31322 of title 46, United States Code as amended in this section, and as amended by section 202(b) of the American Fisheries Act (Public Law 105–277, division C, title II) shall not take effect until April 1, 2003, nor shall the Secretary of Transpor- tation, in determining whether a vessel owner complies with the requirements of section 12102(c) of title 46, United States Code [now 46 U.S.C. 12113(b)(2) to (d)], consider the citizenship status of a lender, in its capac- ity as a lender with respect to that vessel owner, until after April 1, 2003.’’ EFFECTIVE DATE OF 1998 AMENDMENT Pub. L. 105–277, div. C, title II, § 203(a), Oct. 21, 1998, 112 Stat. 2681–619, provided that: ‘‘The amendments made by section 202 [amending this section and former section 12102 of this title] shall take effect on October 1, 2001.’’ 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 other excep- tions and qualifications, see section 107 of Pub. L. 100–710, set out as a note under section 31301 of this title. § 31323. Disclosing and incurring obligations be- fore executing preferred mortgages (a) On request of the mortgagee and before executing a preferred mortgage, the mortgagor shall disclose in writing to the mortgagee the existence of any obligation known to the mort- gagor on the vessel to be mortgaged. (b) After executing a preferred mortgage and before the mortgagee has had a reasonable time to file the mortgage, the mortgagor may not incur, without the consent of the mortgagee, any contractual obligation establishing a lien on the vessel except a lien for— (1) wages of a stevedore when employed di- rectly by a person listed in section 31341 of this title; (2) wages for the crew of the vessel; (3) general average; or (4) salvage, including contract salvage. (c) On conviction of a mortgagor under section 31330(a)(1)(A) or (B) of this title for violating this section, the mortgage indebtedness, at the option of the mortgagee, is payable imme- diately. (Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988, 102 Stat. 4744.) HISTORICAL AND REVISION NOTES Revised section Source section (U.S. Code) 31323(a) ........................................ 46:924(1) 31323(b) ........................................ 46:924(2) 31323(c) ........................................ 46:941(b) (last sentence) Section 31323(a) requires the mortgagor to disclose any obligations on the vessel before executing a pre- ferred mortgage. This subsection makes no substantive change to law. Section 31323(b) provides that, after executing a pre- ferred mortgage, the mortgagor may not incur, without consent of the mortgagee, any contractual obligations establishing a lien on the vessel—except a lien for ste- vedore wages, crew wages, general average, and sal- vage. The only substantive change to law made by this subsection is that the reasonable time to record a mortgage is changed to a reasonable time to file the mortgage, and the elimination of the reference to en- dorsements. These changes are in keeping with the changes made in section 31322. Section 31323(c) provides that if a mortgagor is con- victed of a violation of this section, then the mortgage indebtedness, at the option of the mortgagee, is pay- able immediately. This subsection makes no sub- stantive change to law. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective Jan. 1, 1989, with certain exceptions and qualifications, see section 107 of Pub. L. 100–710, set out as a note under section 31301 of this title. § 31324. Retention and examination of mortgages of vessels covered by preferred mortgages (a) On request, the owner, master, or indi- vidual in charge of a vessel covered by a pre- ferred mortgage shall permit a person to exam- ine the mortgage if the person has business with the vessel that may give rise to a maritime lien