Since 2009, David Williams has served as American Bar Association (ABA) Advisor to the Drafting Committee of the Uniform Law Commission (ULC) with respect to a Uniform Certificate of Title Act for Vessels. At its Annual Meeting in July, 2011, the ULC approved the new Certificate of Title Act, which now will be presented for enactment in states around the country.
The ULC is a 350 member group of appointed law commissioners who draft legislation that addresses problems common to all states. The ULC was, for instance, the author of the Uniform Commercial Code.
David is widely recognized for his expertise on vessel financing and admiralty and maritime law. David has drafted several portions of our federal preferred ship mortgage financing statutes, has testified in that respect on Capitol Hill, and has been published in the field.
Lenders often require the security of a preferred ship mortgage as a condition to financing a vessel documented under U.S. flag. Smaller boats not qualifying for documentation total over 99% of the vessels in this country, however; they must be registered under state law and titled in the 34 states where titling is now available. Security interests on undocumented boats must be perfected under state law. Even in states with titling laws there is great lack of uniformity and often a lack of integration between the titling law and other state laws (the Uniform Commercial Code) governing a lender’s collateral security in the vessel.
The purposes of the new Certificate of Title Act are, among others, to establish uniformity among states, integrate with federal and state laws on vessel registration and applicable provisions of the Uniform Commercial Code, and thereby facilitate ownership transfers and financing. The Act also will integrate with the federal Vessel Identification System (VIS) to help deter and impede theft and prevent fraud.
The new Act includes two major innovations. A vessel titled under the Act in a state participating in the VIS will satisfy federal requirements permitting a lender to enjoy the rights of the holder of a federal preferred ship mortgage by reason of only the perfection of its state law security interest by notation on the vessel title. States that adopt the new Certificate of Title Act will thereby help facilitate financing for boats by permitting lenders to obtain preferred mortgage status on their boat loans in that state.
Another major innovation of the new Certificate of Title Act is its title “branding” provision which will serve as a permanent designation on a boat title to disclose significant prior hull damage to consumers, insurers, and lenders.
The new Certificate of Title Act was approved by the ULC this July after several years of work by the Drafting Committee advised by David. As ABA Advisor to the Drafting Committee, as well as chair of the ABA Committee on Maritime Financing and past chair of the Committee on Marine Financing of the Maritime Law Association of the United States, David’s role was to be a resource to the Drafting Committee as well as a conduit of information on the new Act. Hopefully the many benefits of the new Act will be recognized by widespread enactment of this new Act.