---
kind: "section"
citation: "46 U.S.C. § 53715"
title: "46"
title_heading: "Shipping"
number: "53715"
heading: "Escrow fund"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/46/53715"
units:
  - "Subtitle V — Merchant Marine"
  - "Part C — Financial Assistance Programs"
  - "Chapter 537 — Loans and Guarantees"
  - "Subchapter I — General"
---

# §53715. Escrow fund

- (a) **In General.—** If the proceeds of an [obligation](/usc/46/53701.md?p=9) guaranteed under this chapter are to be used to finance the [construction](/usc/46/53701.md?p=3), [reconstruction](/usc/46/53701.md?p=3), or [reconditioning](/usc/46/53701.md?p=3) of a [vessel](/usc/46/53501.md?p=9) that will serve as security for a guarantee under this chapter, the [Secretary](/usc/46/53101.md?p=8) or [Administrator](/usc/46/53701.md?p=2) may accept and hold in escrow, under an escrow [agreement](/usc/46/53201.md?p=8) with the [obligor](/usc/46/53701.md?p=11), a portion of the proceeds of all [obligations](/usc/46/53701.md?p=9) guaranteed under this chapter whose proceeds are to be so used which is equal to—
  - (1) the excess of—
    - (A) the principal amount of all [obligations](/usc/46/53701.md?p=9) whose proceeds are to be so used; over
    - (B) 75 percent or 87.5 percent, whichever is applicable under [section 53709(b) of this title](/usc/46/53709.md?p=b), of the amount paid by or for the account of the [obligor](/usc/46/53701.md?p=11) for the [construction](/usc/46/53701.md?p=3), [reconstruction](/usc/46/53701.md?p=3), or [reconditioning](/usc/46/53701.md?p=3) of the [vessel](/usc/46/53501.md?p=9); plus
  - (2) any interest the [Secretary](/usc/46/53101.md?p=8) or [Administrator](/usc/46/53701.md?p=2) may require on the amount described in [paragraph (1)](#a-1).
- (b) **Security Involving Both Uncompleted and Delivered Vessels.—** If the security for the guarantee of an [obligation](/usc/46/53701.md?p=9) relates both to a [vessel](/usc/46/53501.md?p=9) to be constructed, reconstructed, or reconditioned and to a delivered [vessel](/usc/46/53501.md?p=9), the principal amount of the [obligation](/usc/46/53701.md?p=9) shall be prorated for purposes of [subsection (a)](#a) under regulations prescribed by the [Secretary](/usc/46/53101.md?p=8) or [Administrator](/usc/46/53701.md?p=2).
- (c) **Disbursement Before Termination of Agreement.—**
  - (1) **Purposes.—** The [Secretary](/usc/46/53101.md?p=8) or [Administrator](/usc/46/53701.md?p=2) shall disburse amounts in the escrow fund, as specified in the escrow [agreement](/usc/46/53201.md?p=8), to—
    - (A) pay amounts the [obligor](/usc/46/53701.md?p=11) is obligated to pay for—
      - (i) the [construction](/usc/46/53701.md?p=3), [reconstruction](/usc/46/53701.md?p=3), or [reconditioning](/usc/46/53701.md?p=3) of a [vessel](/usc/46/53501.md?p=9) used as security for the guarantee; and
      - (ii) interest on the [obligations](/usc/46/53701.md?p=9);
    - (B) redeem the [obligations](/usc/46/53701.md?p=9) under a refinancing guaranteed under this chapter; and
    - (C) pay any excess interest deposits to the [obligor](/usc/46/53701.md?p=11) at times provided for in the escrow [agreement](/usc/46/53201.md?p=8).
  - (2) **Manner of payment.—** If a payment becomes due under the guarantee before the termination of the escrow [agreement](/usc/46/53201.md?p=8), the amount in the escrow fund at the time the payment becomes due, including realized income not yet paid to the [obligor](/usc/46/53701.md?p=11), shall be paid into the appropriate account under [section 53717 of this title](/usc/46/53717.md). The amount shall be credited against amounts due or to become due from the [obligor](/usc/46/53701.md?p=11) to the [Secretary](/usc/46/53101.md?p=8) or [Administrator](/usc/46/53701.md?p=2) on the guaranteed [obligations](/usc/46/53701.md?p=9) or, to the extent not so required, be paid to the [obligor](/usc/46/53701.md?p=11).
- (d) **Payments Required Before Disbursement.—**
  - (1) **In general.—** No disbursement shall be made under [subsection (c)](#c) to any [person](/usc/46/53101.md?p=6) until the total amount paid by or for the account of the [obligor](/usc/46/53701.md?p=11) from sources other than the proceeds of the [obligation](/usc/46/53701.md?p=9) equals at least 25 percent or 12.5 percent, whichever is applicable under [section 53709(b) of this title](/usc/46/53709.md?p=b), of the aggregate [actual cost](/usc/46/53701.md?p=1) of the [vessel](/usc/46/53501.md?p=9), as previously approved by the [Secretary](/usc/46/53101.md?p=8) or [Administrator](/usc/46/53701.md?p=2). If the aggregate [actual cost](/usc/46/53701.md?p=1) of the [vessel](/usc/46/53501.md?p=9) has increased since the [Secretary](/usc/46/53101.md?p=8)’s or [Administrator](/usc/46/53701.md?p=2)’s initial approval or if it increases after the first disbursement is permitted under this subsection, then no further disbursements shall be made under [subsection (c)](#c) until the total amount paid by or for the account of the [obligor](/usc/46/53701.md?p=11) from sources other than the proceeds of the [obligation](/usc/46/53701.md?p=9) equals at least 25 percent or 12.5 percent, as applicable, of the increase, as determined by the [Secretary](/usc/46/53101.md?p=8) or [Administrator](/usc/46/53701.md?p=2), in the aggregate [actual cost](/usc/46/53701.md?p=1) of the [vessel](/usc/46/53501.md?p=9). This paragraph does not require the [Secretary](/usc/46/53101.md?p=8) or [Administrator](/usc/46/53701.md?p=2) to consent to finance any increase in [actual cost](/usc/46/53701.md?p=1) unless the [Secretary](/usc/46/53101.md?p=8) or [Administrator](/usc/46/53701.md?p=2) determines that such an increase in the [obligation](/usc/46/53701.md?p=9) meets all the terms and conditions of this chapter or other applicable law.
  - (2) **Documented proof of progress requirement.—** The [Secretary](/usc/46/53101.md?p=8) or [Administrator](/usc/46/53701.md?p=2) shall, by regulation, establish a transparent, independent, and risk-based process for verifying and documenting the progress of projects under [construction](/usc/46/53701.md?p=3) before disbursing guaranteed loan funds. At a minimum, the process shall require documented proof of progress in connection with the [construction](/usc/46/53701.md?p=3), [reconstruction](/usc/46/53701.md?p=3), or [reconditioning](/usc/46/53701.md?p=3) of a [vessel](/usc/46/53501.md?p=9) or [vessels](/usc/46/53501.md?p=9) before disbursements are made from the escrow fund. The [Secretary](/usc/46/53101.md?p=8) or [Administrator](/usc/46/53701.md?p=2) may require that the [obligor](/usc/46/53701.md?p=11) provide a certificate from an independent party certifying that the requisite progress in [construction](/usc/46/53701.md?p=3), [reconstruction](/usc/46/53701.md?p=3), or [reconditioning](/usc/46/53701.md?p=3) has taken place.
- (e) **Disbursement on Termination of Agreement.—**
  - (1) **In general.—** If a payment has not become due under the guarantee before the termination of the escrow [agreement](/usc/46/53201.md?p=8), the balance of the escrow fund at the time of termination shall be disbursed to—
    - (A) prepay the excess of—
      - (i) the principal amount of all [obligations](/usc/46/53701.md?p=9) whose proceeds are to be used to finance the [construction](/usc/46/53701.md?p=3), [reconstruction](/usc/46/53701.md?p=3), or [reconditioning](/usc/46/53701.md?p=3) of the [vessel](/usc/46/53501.md?p=9) used or to be used as security for the guarantee; over
      - (ii) 75 percent or 87.5 percent, whichever is applicable under [section 53709(b) of this title](/usc/46/53709.md?p=b), of the [actual cost](/usc/46/53701.md?p=1) of the [vessel](/usc/46/53501.md?p=9) to the extent paid; and
    - (B) pay interest on that prepaid amount of principal.
  - (2) **Remaining balance.—** Any remaining balance of the escrow fund shall be paid to the [obligor](/usc/46/53701.md?p=11).
- (f) **Investment.—** The [Secretary](/usc/46/53101.md?p=8) or [Administrator](/usc/46/53701.md?p=2) may invest and reinvest any part of an escrow fund in [obligations](/usc/46/53701.md?p=9) of the [United States](/usc/46/53101.md?p=10) Government with maturities such that the escrow fund will be available as required for purposes of the escrow [agreement](/usc/46/53201.md?p=8). Investment income shall be paid to the [obligor](/usc/46/53701.md?p=11) when received.
- (g) **Terms To Protect Government.—** The escrow [agreement](/usc/46/53201.md?p=8) shall contain other terms the [Secretary](/usc/46/53101.md?p=8) or [Administrator](/usc/46/53701.md?p=2) considers necessary to protect fully the interests of the Government.

## Source credit

(Pub. L. 109–304, § 8(c), Oct. 6, 2006, 120 Stat. 1614; Pub. L. 109–163, div. C, title XXXV, § 3507(a)(1)(H), (3), Jan. 6, 2006, 119 Stat. 3555; Pub. L. 110–181, div. C, title XXXV, § 3522(a)(10)(B), (11), (b), Jan. 28, 2008, 122 Stat. 598.)

## Notes

| Historical and Revision Notes |  |  |
| --- | --- | --- |
| Revised<br>Section | Source (U.S. Code) | Source (Statutes at Large) |
| 53715(a) | 46 App.:1279a(a) (less proviso). | June 29, 1936, ch. 858, title XI, § 1108, formerly § 1111, as added Pub. L. 86–127, § 1(2), July 31, 1959, 73 Stat. 272; renumbered Pub. L. 92–507, § 5, Oct. 19, 1972, 86 Stat. 916; Pub. L. 97–31, § 12(136), Aug. 6, 1981, 95 Stat. 166; Pub. L. 108–136, title XXXV, § 3521(a), Nov. 24, 2003, 117 Stat. 1799. |
| 53715(b) | 46 App.:1279a(a) (proviso). |  |
| 53715(c) | 46 App.:1279a(b). |  |
| 53715(d) | 46 App.:1279a(g). |  |
| 53715(e) | 46 App.:1279a(c). |  |
| 53715(f) | 46 App.:1279a(d), (e). |  |
| 53715(g) | 46 App.:1279a(f). |  |

### Editorial Notes

### Amendments

2008—Pub. L. 110–181, § 3522(b), repealed Pub. L. 109–163, § 3507(a)(1)(H), (3). See 2006 Amendment note below.

Pub. L. 110–181, § 3522(a)(10)(B), (11), incorporated the substance of the amendment by Pub. L. 109–163, § 3507(a)(1)(H), (3), into this section by inserting “or Administrator” after “Secretary” wherever appearing and “or Administrator’s” after “Secretary’s” in subsec. (d)(1). See 2006 Amendment note below and section 18(a) of Pub. L. 109–304, set out as a Legislative Purpose and Construction note preceding section 101 of this title.

2006—Pub. L. 109–163, § 3507(a)(1)(H), (3), which directed the amendment of section 1279a of the former Appendix to this title from which this section was derived, was repealed by Pub. L. 110–181, § 3522(b). See 2008 Amendment notes and Historical and Revision notes above.