Encumbrance

An encumbrance is any third-party claim or security interest that burdens title to a ship: a registered mortgage, a maritime lien, an arrest, a charter, or a tax or detention claim. In a sale, the standard forms require the seller to deliver the vessel free of encumbrances, maritime liens, and any other debts. Norwegian Saleform 2012 clause 9 carries the seller’s warranty that the ship is delivered free of encumbrances and an indemnity for claims incurred before delivery. Buyers and their banks search the registry and class records before closing to confirm clean title.