December 30, 2013 – Newsletter

Posted by on December 30, 2013

BATI Quotes

Become a “possibilitarian”.  No matter how dark things seem to be or actually are, raise your sights and see possibilities – always see them, for they’re always there.

-Norman Vincent Peale 

BATI Knowledge

Leases
The Aircraft Registry records at least two types of leases:  leases which are conditional sale contracts in which the lessee is to become the owner, or has the option of becoming the owner at the end of the term of the lease (sometimes called finance leases) and operating leases, which are merely rental agreements and do not affect the ownership of the equipment which is the subject of the lease.  In operating leases the lessee has possession of the aircraft during the term of the lease and at the expiration of the lease term, the aircraft is returned to the lessor.  In conditional sales leases, the lessee has possession of the aircraft during the term of the lease and retains possession at the expiration of the lease when it becomes the owner of the aircraft.

Here is where I want to mention that you should definitely be using FAA special counsel if you are planning on drawing up a lease, signing a lease, or filing a lease with the FAA!    The lease with a valid purchase option is treated like a conditional sale contract if the purchase option is for 10% or less than the fair market value of the aircraft – and FAA requires that the aircraft be registered to the lessee.  There are other criteria that might persuade the Registry to register to the lessee, for instance, if the purchase option is more than 10% of the fair market value but the lessee is obligated to purchase the aircraft at the end of the term of the lease, and during the lease is responsible for all maintenance and taxes, etc.

Terminating leases.
On a conditional sale lease, the lessor files a unilateral termination of lease.  Once recorded at FAA, title reverts to the lessee; on an operating lease, both the lessor and lessee file a termination of lease.    In the event both lessor and lessee terminate a conditional sale lease, then a bill of sale from lessor to lessee would also be filed with FAA, along with a NEW registration application (even though the lessee is already the registered owner!).

It is also important to note here that if financing has been involved on behalf of the lessor or lessee then the lender would have no doubt taken a collateral assignment of the lease itself to further secure payment of its note.  In this case, it is very important for the lender not only to release its security agreement, but also to describe the lease itself on the security agreement release (in addition to the description of the security agreement)  – that way we won’t be chasing down releases from lenders on leases which have already been terminated!

BATI – IR and FAA Updates

Searching the International Registry for registrations of entities or interests at http://www.internationalregistry.aero

 One does not need an approved account to conduct searches of the IR records.  If you wish to review an introductory training video how to perform a priority search please visit the IR’s YouTube Channel at http://www.youtube.com/user/IntlRegistry.

To search for an entity:  The searching party may enter the full or partial name of an entity in the search field.  The results displayed will show a list of entities which contain the search criteria entered.  The search is not case sensitive.

Informational search – go to the International Registry website and select ‘search’ and then ‘search registrations’.  Click the ‘Search Object(s)’ option.  Select ‘informational search’ and enter the serial number you wish to search against; select the ‘search’ option and based on the serial number entered a search is conducted against the known objects which are all objects provided by the manufacturers and objects entered via free text by users as part of a registration.  The list will tell you whether there are any registrations on your objects.

Priority Search – To built a list of objects you wish to generate priority searches on, select the check box beside each object you wish to add to your list and click ‘add’.  You can then search again and add further objects as often as required.  When finished adding objects click ‘close’.    You are able to remove things from the list if you change your mind.  To generate priority searches against the objects on the list, click ‘next’ – enter who the beneficiary of the search is (yourself) and payment details (your credit card).  Searches are $22 per airframe, and per engine.  The priority search reports will then populate.   These reports include all of the details of a registrations: parties’ names, e-mail addresses, type of registration and specific file numbers assigned to the registration.  On International Interests (as opposed to contact of sale registrations) it will also show who holds the Right to Discharge the interest.

Be aware that if you are not an approved user you will not be able to access your search history, so be sure to print and save the searches you produce!

The IR interface has become much easier to use over the past several years – but if you run into a snag, you have only to call our office and we will (patiently, I promise!) walk you through the process! 

BATI Pot-Pourri  

bati2014

Happy New Year from your friends at BATI
Who hope your New Year will be happy, healthful,
peaceful and prosperous!