Purchasing an airplane is a major investment. Whether it is the first small plane an individual acquires or an addition to a small commercial fleet, the airplane may cost tens of thousands of dollars. Purchasing directly from a previous owner can sometimes lead to a better deal for a buyer looking to acquire an airplane.
Unfortunately, there can be complications that arise during the transaction. For example, there might be blemishes on the title record of the plane. A pre-existing aviation lien could prevent the transfer of a plane’s title until the seller resolves the issue that led to the lien.
What do aviation liens indicate?
Liens represent unpaid plane-related debts
A number of different businesses and professionals can potentially request a lien against the title of an airplane. Mechanics who service an airplane without full payment can obtain a lien. Parts suppliers who provide the materials for necessary repairs can also request a lien against the title of an airplane. Hanger operators and fuel companies can also request liens in response to unpaid invoices.
A lien serves as a way of securing the debt owed by the owner of the plane. The owner cannot sell or refinance the plane until they pay the other party in full. They are also at risk of the other enforcing the lien and forcing them to sell or refinance to pay what they owe.
The seller may need to arrange to use a portion of the sale proceeds to remove the lien. Other times, it may be preferable to have them handle the lien on their own before the transaction proceeds. In scenarios where the current owner technically already satisfied the lien, they might be able to go to court to ask for its removal by presenting evidence that they have resolved the issue.
Until the owner addresses the lien, it is not actually possible for a new owner to acquire legal ownership of the plane. Lenders financing an aviation transaction may decline to fund a purchase when there are blemishes on the title records for the airplane.
Discussing a lien with the seller and exploring solutions with a skilled legal team can potentially help a buyer move forward with a pending airplane purchase transaction if a previous lien raises concerns about the purchase. Buyers who do their due diligence, possibly by having an attorney review title records for a plane, are less likely to end up frustrated by a transaction that could otherwise fall apart at the last moment.