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Aviation & Flight InformationWhen Bad Things Happen To Nice Craft
Buyers: Recognizing
by:
Greg Reigel
Once
Bad Things Happen To Nice Craft
Buyers: Recognizing And Avoiding Craft
Title Problems
By Gregory J. Reigel
© 2004 All rights reserved.
Whether you are buying your 1st craft
or the latest in a succession of aircraft, as an craft
purchaser you need to proceed with caution. If you don’t, after the marketer has left with your money, you may have unreciprocated questions: Do I actually own the aircraft? Have I lost any skeletons concealment in the closet that threaten my continuing
ownership and possession of my aircraft? What happens once
person else claims they own or have a prior interest in my aircraft?
To answer these questions, 1st we need to discuss what the FAA requires for an craft
purchase transaction. Then we wish talk just about several of the problems/issues that an gullible purchaser could face. Finally, we wish address several of the steps an craft
purchaser can take to ensure that he or she wish be the legitimate and undisputed owner of the craft
being purchased.
Recording Purchase Transactions With The FAA. Once
you purchase an aircraft, you obtain an FAA Form 8050-2, Craft
Bill of Sale showing the transfer/sale of the craft
from the marketer to you, the craft
buyer. The bill of sale must then be recorded with the FAA on
with an FAA Form 8050-1, Craft
Registration Application. (Unfortunately, Form 8050-1 is not accessible online, but must be obtained directly from the FAA or your local FSDO). Additionally, for the most part, all interests in aircraft, whether a safety interest, lien, mortgage or judgment, must besides be recorded with the FAA Registry in American state City in order to be valid and the 1st recorded interest normally has priority over interests recorded at a later date.
Failure to timely and properly follow with these filing and recording requirements can result in problems for the craft
buyer. What types of problems can happen? Though a variety of such problems exist, two specific route in which an craft
purchaser can find himself or herself in trouble are once
a marketer fails to convey title to the purchaser or once
a marketer fails to convey "clear" title to the buyer.
Seller Fails To Convey Title. In this situation, the craft
purchaser makes not become the actual owner of the aircraft. The marketer may not necessarily intend for the craft
purchaser not to take title to the aircraft. Rather, the seller’s failure to convey title to the craft
purchaser is accidental or unknowing. One such situation occurs once
the bill of sale contains errors. Potential errors can include once
the person sign language the bill of sale makes not have authority to sign on behalf of the corporation or limited liability institution that owns the aircraft, once
the craft
is incorrectly known
on the bill of sale or once
the person sign language the bill of sale makes not have capacity (e.g. a person sign language the bill of sale is a minor, mentally insane or incompetent).
Unfortunately, situations besides arise in which the seller’s actions are intentional and result in the craft
purchaser not receiving title to the aircraft. This can happen once
a marketer sells an craft
doubly and the second purchaser actually records his or her bill of sale before the 1st buyer. A similar result occurs if the marketer forges the bill of sale or if the craft
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 Convey Clean Title. In this situation, the bill of sale may be valid and convey title to the craft
to the craft
buyer, but that craft
may be subject to the interests of several another third-party. Such prior interests can include judgment liens, tax liens, mechanic’s liens and various another liens and safety interests. These prior interests would-be likely be recorded before the buyer’s bill of sale. It is besides possible, in several limited circumstances, to have an unrecorded, possessory lien against an aircraft. (Unrecorded, possessory liens do a strong case against buying an craft
sight unseen without confirming the location of the craft
and lack of claims by the party in possession if another than the craft
seller).
What To Do? With such potential problems lurking in the shadows, what can/should an craft
purchaser do? Well, one answer is to hire an aviation lawyer to assist you with the transaction. An aviation lawyer wish be familiar with the filing and recording requirements of the FAA and wish do sure that the bill of sale and craft
registration application are completed accurately, properly and filed in a timely manner. An aviation lawyer wish besides be able to perform due diligence on your behalf including a title search and name searches for the marketer to learn any judgments, liens, bankruptcies or safety interests. He or she can besides help you resolve any title defects that may be discovered during due diligence.
An aviation lawyer may further help you obtain an testimony from the marketer affirmatively stating that the marketer is not aware of any judgments, liens or encumbrances poignant the title to the aircraft. This may assist you in following
or declarative
a fraud claim against the marketer if a title issue arises which you can show the marketer was aware of once
the testimony was signed.
Another way to protect yourself is to buy title insurance for your aircraft. The craft
title insurance company wish ensure your documentation is accurate and filed in a timely manner and it wish besides perform the same types of title and name searches an aviation lawyer would-be perform on your behalf. However, the title insurance company may or may not be able to assist you in resolution any title defects and won’t be able to provide you with any legal proposal
regarding the purchase transaction.
The bottom line is that you as an craft
purchaser need to proceed with caution and perform due diligence once
buying an aircraft. Though this may seem like accessorial cost in the short term, in the long run these steps can save you the large expense, and possible loss of your aircraft, that can result from title defects or third-party claims against your aircraft.
As always, fly safe and, once
you are buying an aircraft, buy smart.
Just just about the Author
Greg is an aviation lawyer and holds a commercial pilot certificate with instrument rating. 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 greigel@aerolegalservices.com or check out his website at www.aerolegalservices.com.
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