Quiet enjoyment letter

A quiet enjoyment letter (QEL) is an undertaking from a vessel’s financier or mortgagee to a charterer that, so long as the charterer performs, the financier will not disturb the charterer’s use of the ship even if the owner defaults on the loan. Charterers on long time or bareboat charters demand a QEL because a mortgagee enforcing its security could otherwise arrest or repossess the vessel and cut the charter short. The letter ranks the charterer’s possession ahead of the bank’s enforcement for the charter term. It is standard in ship-finance and sale-leaseback deals.