Aircraft abstract of title: what it shows, and what it leaves out

An aircraft abstract of title is the list, in date order, of every document recorded against an aircraft at its registry: bills of sale, security agreements, leases, releases. It shows who has held title and which interests remain open. It does not say who owns the aircraft today: that conclusion is drawn by a lawyer, in an opinion of title.

The roles of the escrow agent and the registry, and the three checks to ask for, are set out in our article on escrow, title and registration. This one reads the file itself.

What the FAA aircraft record contains

For an aircraft on the United States register, the FAA aircraft record has three elements: information on the registered owner, the security interests recorded against the aircraft, and airworthiness information. The record is public, and the FAA states that the existence of recorded liens, and their priority, can be determined by a careful review of its documents.

Copies are ordered from the FAA online, by post or by fax, on paper or as one record per CD-ROM. Certain ancillary documents are not included and are requested separately. The FAA does not carry out title searches: the file is reviewed by you, a lawyer or a title search company, which produces the abstract or a title report.

How to read an abstract, line by line

Each entry identifies a document: its date, the parties, the FAA recording number and the date of recording. Read in sequence, the entries should form an unbroken chain of title, from one bill of sale to the next, up to the current seller.

Four things to look for:

• a break in the chain: a seller who never appears as a buyer, or a name that changes between two documents;
• an interest without a release: each recorded security agreement or lease should be matched by a release, signed by the secured party, or by the FAA’s recordation notice returned with the release statement signed;
• separate collateral: an engine or propeller can carry its own interest; in the United States, any identified engine of at least 550 horsepower can be recorded against separately;
• major alterations: some title reports also list Form 337s, which record major repairs and alterations.

What the abstract does not show

The FAA record holds only what has been filed and has met its recording requirements. There is no federal obligation to file a lien there; state law governs liens, and some, such as a repair shop’s, may never reach the federal register. Title companies also point out that federal tax liens are not filed with the FAA.

Timing matters too. A document is filed for recording on the date and at the time the FAA receives it, and until then it is valid only against the person who signed it, their heirs and anyone with actual notice of it. A search closed on one date therefore says nothing about a document sent the day after. Hence the update of the search on the eve of closing.

Last, the certificate of registration is not evidence of ownership in a proceeding where ownership is in issue (49 U.S.C. § 44103). The certificate in the cockpit gives the aircraft its nationality, not its owner.

The International Registry: a second search

Interests under the Cape Town Convention are recorded with the International Registry, not in the FAA file. The search there is made by the manufacturer’s serial number, for the airframe and each engine, and produces a priority search certificate, which also shows who holds the right to discharge each registration. A free guest account on the registry is enough to search.

The abstract and the priority search certificate are read together: one gives the chain of title on the national register, the other the international interests and their order of priority.

On a European register

Each register has its own documents. In France, the online register data are given for information only; for any official use, a signed extract is requested from the official who keeps the register. Mortgages are recorded on the register; recording a lease is optional, but it makes the lease enforceable against third parties.

In the United Kingdom, the Civil Aviation Authority searches its Register of Aircraft Mortgages on request. The result gives the registered owner, the mortgages, the parties and the date and time of each entry. It does not cover liens or unpaid landing fees, and it is valid only at the date and time shown. Any aircraft can be searched by type and serial number, even if it is not on the UK register.

Questions for your lawyer

• Does the abstract cover the aircraft’s whole history, on every register it has been on?
• Which interests remain unreleased, and who will obtain their releases before closing?
• Which liens could exist outside the register, under the law of the place where the aircraft has been kept or maintained?
• Will the opinion of title, or title insurance, be issued in your name, and on what date?

Conclusion

The abstract shows what has been recorded; the opinion of title says what follows from it. Between the two, the International Registry, the European registers and the liens that are never filed are checked separately, before funds leave escrow.

Our business aviation acquisitions work covers the search for the aircraft and the introduction to its seller. The records the seller provides go to your lawyer before the title work begins.