8.1 Introduction

8.1.1 The obligations of a mortgagor under a ship mortgage arise under a combination of common law and statute, and by the terms of the form of mortgage and other contractual arrangements between the mortgagor and the mortgagee. However, it is this last category which is the most important, since the deed of covenant and the underlying facility agreement will stipulate in detail the obligations imposed on the mortgagor, which will be more extensive than those imposed by law. The principal rights of the mortgagor are to redeem the mortgage1 and to retain possession of and to operate the ship. In a statutory mortgage the legal title in the ship remains vested in the mortgagor,2 although this is not the position at common law, where a mortgage transfers legal title to the mortgagee.3