Glossary
Lien
Definition: A lien is a legal claim against a vessel that follows its debt. Typical sources: unpaid crew wages, unpaid port fees, unpaid fuel invoices, damage claims, salvage services. Under flag law, liens travel with vessel ownership — meaning a new owner may become responsible.
Why it matters
Critical check at acquisition. The MOA negotiation clause "free from encumbrances" means cleared of liens. Sale without lien-free warranty is risky.
Typical lien types
- Maritime lien — arising from maritime law (crew, salvage, damage)
- Statutory lien — arising from contract (mortgage, supplier contract)
- Tax lien — tax claims
Maritime lien property
Even after a flag change, it stays attached to the vessel. New owner cannot escape liability. Hence legal due diligence is mandatory at acquisition.
Financing side
The bank performs a lien check before perfecting its mortgage. If unpaid claims exist: either seller clears them, buyer clears them, or escrow handles them.