December 23, 2013 – Newsletter
And the Grinch, with his Grinch-feet ice cold in the snow, stood puzzling and puzzling, how could it be so? It came without ribbons, it came without tags, it came without packages, boxes or bags. And he puzzled and puzzled ’til his puzzler was sore – then the Grinch thought of something he hadn’t before: What if Christmas, he thought, doesn’t come from a store? What if Christmas, perhaps, means a little bit more.
Recording Security Instruments at the FAA
To be eligible for recording an instrument granting a security interest in an aircraft, the document must be signed in ink and describe the aircraft by manufacturer, model, serial number, and registration number. The document must specifically state that the debtor is granting a security interest to the lender in the stated collateral. The debtor must be the registered owner of the aircraft, be the owner of record on the date the instrument is executed as evidenced by documents on file with the FAA Aircraft Registry, or the security document must be accompanied by the debtor’s evidence of ownership, application for registration and $5.00 registration fee. A recording fee for of $5.00 for each aircraft listed on the security instrument must accompany the document.
FAA allows recording of security instruments for engines (if t hey are at least 550 rated take-off horsepower – 1750 lbs of thrust is equivalent to 550 hp) and propellers (if they are designed for use on engines of at least 750 rated take-off shaft horsepower). There is a recording fee of $5 per engine and per propeller. The engines and propellers must be described by manufacturer, model and manufacturer’s serial number.
Types of security conveyances eligible for recording
Amended and Restated Instruments
Bill of Sale to Secure Debt
Conditional Sale Contract
Cross-Collateralization Security Agreement
Deed of Trust
Transfer of Interest Agreement
Return of original conveyance: The FAA will return the original conveyance to the submitter if the original is accompanied by a certified true and complete copy of the original. The FAA will compare the original with the certified copy, record and retain the certified copy (if it meets the recording requirements) and return the original. The copy must be legible and reproducible.
Mortgage by one co-owner: A mortgage by one co-owner may be recorded provided the conveyance specifically sets forth that he is mortgaging his interest only.
Submission of security conveyances after the registration is revoked or canceled:
Liens may not be recorded on aircraft that are in an unregistered or canceled status. On a revoked aircraft the procedure varies on a case-to-case basis; on a canceled aircraft, the lien is returned to the submitter.
BATI – IR and FAA Updates
Agreement of names on documents submitted to FAA
A corporation has only one name under which it is incorporated, do not use abbreviated or shortened names. An individual should avoid the use of nicknames and should show “Jr.” and “Sr.” if applicable. A woman’s full given name should be used (Harriet A. Jones) rather than her married name (Mrs. George E. Jones).
When a trade name is used by an individual, by co-owners or by a corporation, the trade name alone is not sufficient since it is not the legal entity owning the aircraft. The trade name may appear on the conveyances in addition to the legal name of the owner (Harriet A. Jones dba The Window Lady).
When a corporate name change occurs, file a certified copy of the document issued by the Secretary of State showing the change and a new registration application in the new corporate name. Not sure if FAA requires a new registration application but it makes the record very clear when one is filed!
In a future newsletter we will discuss bank name changes!
Meantime if you have a question regarding agreement of names or name changes, give us a call!
BATI Pot-Pourri –