5.3 Owner and mortgagees
In most instances, the vessel is mortgaged before the vessel is bare boat chartered, and it may be further mortgaged during the charter period. These encumbrances will be in the Norwegian register when flagging-out and in a foreign register when the vessel is flagged-in.
A mortgage may have clauses on the nationality of the vessel and/or restrictions regarding registration. Such clauses (covenants) may prevent bare boat registration or set limits (e.g., on period or state of registration). The mortgage agreement may include a number of other clauses to protect the interests of the creditor – all of them with the possibility of declaring foreclosure in the event of breach. In addition, there are of course general principles that in case of a breach may lead to enforcement. Before we move onto some remarks on Norwegian law with regard to the enforcement of claims, it is first necessary to say a few words about liens.