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Don’t let aircraft liens ruin your purchase

On Behalf of | Dec 19, 2023 | Aviation Law |

Buying an aircraft can be an exciting experience. Whether you are about to purchase your first privately-owned aircraft after obtaining your pilot’s license, or are adding to a company fleet, the purchase of a new or pre-owned aircraft is often a sound investment, and a highly effective business tool. The price for a pre-owned aircraft is typically far lower than the cost of a similar factory-new aircraft, and for that reason, it is a more effective hedge against value depreciation.  Factory new aircraft can be the better choice, however, if you have substantial taxable income that you are looking to offset through accelerated depreciation on your tax return.

Along with the excitement, there are a few risks that come with purchasing a pre-owned aircraft. One of those risks is the potential for undisclosed damage or wear on the airframe, engines, or major components that might compromise safety or the value of the aircraft.  That risk is best mitigated through a thorough and properly managed pre-purchase inspection.  Another risk is the potential for unresolved clouds on the title. These can include undischarged security agreements from prior financing entities, undischarged liens from a previous maintenance facility, or even from unpaid landing fees or fuel charges incurred at an airport previously visited.

Mechanics and parts suppliers

Maintenance and repair centers (MROs) which work on aircraft perform a broad range of services on aircraft to keep them airworthy. The services which they provide must meet the very rigorous aviation standards established by the US aviation authorities, and by others around the world. Even seemingly minor repairs will often cost thousands of dollars.  The same is true of many unanticipated mechanical breakdowns while on a trip. If the previous owner didn’t make completed arrangements to pay for those charges, the MRO facility can lien the aircraft through the applicable aircraft registry. This lien will likely include both the expense of services performed on the aircraft, as well as the cost of any parts supplier charges.

Hangers and airfield operators

There are numerous facilities around the world, generally referred to as Fixed Base Operators (FBOs) which provide ramp, fuel, light maintenance and overnight hangar services to aircraft owners and operators.  In addition, airport authorities commonly charge landing and other access fees.  Some of these services providers are a part of airport authority facilities, and others are private businesses. The law in most jurisdictions allows these service providers and airport authorities to file a lien on visiting aircraft whose owner or operator fails to make timely payment for the services and charges imposed.

Fuel companies

Charges for aircraft fuel is one of the most regularly incurred significant expense of most flights. Many fuel suppliers offer credit opportunities for customers permitting them to fuel up when they need it and then pay the bill later after returning to home base. Some aircraft owners or operators who fell on hard times may have failed to make payment on substantial past-due fuel on their aircraft. Those unpaid fuel providers will likely place a lien against the aircraft’s title to prevent the owner from transferring it to someone else without first paying what they owe in full.

All of these hazards require due diligence by prospective purchasers of privately owned aircraft.  That due diligence is best handled through the retention of experienced aviation legal and title services secured in advance. Discovering and resolving lien or title issues early in the purchase process will make your aircraft purchasing experience a successful one.