In aship mortgage, ashipownergives a lender (or mortgagee) an interest in a ship as security for a loan. Similar to other types ofmortgage, a ship mortgage legally consists of three parts: the mortgage loan, the mortgage document (deed) and the rights derived from the mortgage deed ontomoney lender. Ship mortgages differ from other types of mortgage in three ways. First, some privileged claims could have a higher ranking over that of mortgagee against the ship. Second, ships naturally move between jurisdictions. And third, a ship is always at risk of partial or total damages at sea. The use of ship mortgages emerged as a widely accepted practice inshipping industryin the 19th century as a major source of finance for ship owners.
