when bad things happen to good aircraft buyers recognizing

When Bad Things Happen To Acceptable Aircraft Buyers: Recognizing And Avoiding Aircraft Title Problems

By Gregory J. Reigel

© 2004 All rights reserved.

Whether you are purchasing your aboriginal aircraft or the latest in a succession of aircraft, as an aircraft buyer you charge to proceed with caution. If you don’t, after the seller has left with your almighty dollar, you may accept unanswered questions: Accomplish I really own the aircraft? Accept I missed any skeletons hiding in the closet that threaten my continued ownership and possession of my aircraft? What happens when someone else claims they own or accept a prior absorption in my aircraft?

To answer these questions, aboriginal we charge to altercate what the FAA requires for an aircraft purchase transaction. Then we will speak about some of the problems/issues that an unwary buyer could face. Finally, we will inscription some of the steps an aircraft buyer can booty to arrange that he or she will be the legitimate and undisputed owner of the aircraft being purchased.

Disc Purchase Transactions With The FAA. When you purchase an aircraft, you accept an FAA Anatomy 8050-2, Aircraft Bill of Sale showing the transfer/sale of the aircraft from the seller to you, the aircraft buyer. The bill of sale must then be recorded with the FAA along with an FAA Anatomy 8050-1, Aircraft Registration Application. (Unfortunately, Anatomy 8050-1 is not available online, but must be obtained directly from the FAA or your local FSDO). Additionally, for the most allotment, all interests in aircraft, whether a security absorption, lien, mortgage or astuteness, must again be recorded with the FAA Registry in Oklahoma City in adjustment to be valid and the aboriginal recorded absorption usually has priority over interests recorded at a subsequent date.

Failure to timely and properly comply with these filing and disc requirements can aftereffect in problems for the aircraft buyer. What types of problems can happen? Although a array of such problems exist, two specific ways in which an aircraft buyer can acquisition himself or herself in agitation are when a seller fails to back title to the buyer or when a seller fails to back “ablaze” title to the buyer.

Seller Fails To Back Title. In this bearings, the aircraft buyer does not alter to the actual owner of the aircraft. The seller may not necessarily intend for the aircraft buyer not to booty title to the aircraft. Rather, the seller’s failure to back title to the aircraft buyer is inadvertent or unknowing. One such bearings occurs when the bill of sale contains errors. Abeyant errors can accommodate when the person signing the bill of sale does not accept authority to sign on behalf of the corporation or limited liability company that owns the aircraft, when the aircraft is incorrectly identified on the bill of sale or when the person signing the bill of sale does not accept capacity (e.g. a person signing the bill of sale is a minor, mentally insane or incompetent).

Unfortunately, situations again arise in which the seller’s actions are intentional and aftereffect in the aircraft buyer not receiving title to the aircraft. This can happen when a seller sells an aircraft twice and the second buyer actually records his or her bill of sale before the aboriginal buyer. A agnate aftereffect occurs if the seller forges the bill of sale or if the aircraft is subject to judicial proceedings (such as bankruptcy, receivership, probate, conservatorship or dissolution of marriage), and the court has not authorized the sale.

Seller Is Unable To Back Ablaze Title. In this bearings, the bill of sale may be valid and back title to the aircraft to the aircraft buyer, but that aircraft may be subject to the interests of some other third-affair. Such prior interests can accommodate astuteness liens, levy liens, mechanic’s liens and assorted other liens and security interests. These prior interests would likely be recorded before the buyer’s bill of sale. It is again possible, in some limited circumstances, to accept an unrecorded, possessory lien against an aircraft. (Unrecorded, possessory liens accomplish a able position against purchasing an aircraft sight unseen without confirming the location of the aircraft and absence of claims by the affair in possession if other than the aircraft seller).

What To Accomplish? With such abeyant problems lurking in the shadows, what can/should an aircraft buyer accomplish? Able-bodied, one answer is to hire an aviation attorney to abetment you with the transaction. An aviation attorney will be accepted with the filing and disc requirements of the FAA and will accomplish sure that the bill of sale and aircraft registration application are completed accurately, properly and filed in a timely road. An aviation attorney will again be able to perform due diligence on your behalf including a title search and agname searches for the seller to ascertain any judgments, liens, bankruptcies or security interests. He or she can again advice you resolve any title defects that may be discovered during due diligence.

An aviation attorney may further advice you access an affidavit from the seller affirmatively stating that the seller is not aware of any judgments, liens or encumbrances affecting the title to the aircraft. This may abetment you in pursuing or asserting a fraud claim against the seller if a title affair arises which you can appearance the seller was aware of when the affidavit was signed.

Another road to protect yourself is to buy title insurance for your aircraft. The aircraft title insurer will arrange your documentation is accurate and filed in a timely road and it will again perform the selfsame types of title and agname searches an aviation attorney would perform on your behalf. However, the title insurer may or may not be able to abetment you in resolving any title defects and won’t be able to accommodate you with any legal advice regarding the purchase transaction.

The bottom line is that you as an aircraft buyer charge to proceed with caution and perform due diligence when purchasing an aircraft. Although this may seem according to added cost in the short chat, in the continued amble these steps can save you the ample expense, and possible loss of your aircraft, that can aftereffect from title defects or third-affair claims against your aircraft.

As always, fly protected and, when you are purchasing an aircraft, buy acute.

About the Author

Greg is an aviation attorney and holds a commercial aviator certificate with instrument adjudjing. His handles aviation litigation, including insurance matters and creditor’s rights, FAA certificate actions and aviation related transactional matters. He can be reached via e-mail at [email protected] or check out his website at www.aerolegalservices.com.

Originall posted December 23, 2011