Second Question: Aircraft Liens and Failed Banks

hook_dupin

hook_dupin

Well-Known Member
An aircraft I recently purchased had a lien on it way back in 1968. During the course of the security, the bank changed names. The newly-named bank released the lien, but the FAA didn't accept the bank's documentation that their name change was legitimate. This issue remained open until 1986 when the bank failed in the S&L scandal.

How can I easily clear the title on the aircraft? Is hiring a title company like Aero-Space Reports the only answer, or can the average joe write the FAA with the bank history from the FDIC?
 
Honestly, if you know the lien was released, I wouldn't worry about it. I guess it could be a negative if you go to sell the plane later but someone will come along that understands how stupid the FAA is and not care as long as you can prove that it's a dumb paperwork issue. If your issue is that your bank has a problem with giving you a loan, then that's a different story. I would try the cheapest thing first. That's for sure.
 
Sounds like something for AOPA legal. Do you pay the couple bucks extra for that?
 
How difficult depends on a few things. If the bank history clearly shows the succession (sounds like you may have already checked the FDIC Institution Directory, it should not be a huge problem to fix.

But there can be things to make it more difficult. For example, in one case I handled some years ago, the bank that originally had had the loan planned on changing its name and some idiot decided it was ok to use it before regulatory approval. The name was never changed and the bank was purchased. The result was, by that name, the bank never existed, so it was was very difficult to prove the succession three banks down. Took a little arm wrestling (legal style) to get that one fixed.

You can certainly try a DIY if you can document a clear succession but you may find it more efficient in the long run to get an attorney or other firm that deals with issues like this.
 
Again, sorry for the delay but MidlifeFlyer is on the money. The documentation of a clear succession of ownership and/or name changes is key. I once bought and sold 51 airplanes over the course of a year. About one in eight had some sort of title issue and maybe one in twenty got at least a little complicated (and occasionally a lot complicated). There are lots of ways buyers, sellers, banks, maintenance shops, etc. can make your life complicated when it comes to clearing the title of an airplane that has been around for a while. The good news is that - at least in my case - they all got sorted out. The lease expensive way to do this is to chase it down yourself. A good (sometimes hard to find, but they're out there) aircraft dealer or broker can sometimes be useful to help with this process. Last resort - shooting myself in the foot here - hire a lawyer.
 
Is there a way to quitclaim chattel, like how you would with real estate, in order to take title to an aircraft?
 
jtrain609 said:
Is there a way to quitclaim chattel, like how you would with real estate, in order to take title to an aircraft?
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It's not really a "quitclaim" jargon-wise, but essentially yes. There won't be anything different about the bill of sale (which is pretty much a quitclaim anyway) but the buyer and seller can make whatever agreement they want to. The FAA won't reject a title transfer because there is an unsatisfied lien on the title. But just like with real estate (or a car), the transfer will be subject to the lien, so the buyer who decides, "what the heck," is still stuck with what appears to be an unsatisfied lien on the record.
 
MidlifeFlyer said:
It's not really a "quitclaim" jargon-wise, but essentially yes. There won't be anything different about the bill of sale (which is pretty much a quitclaim anyway) but the buyer and seller can make whatever agreement they want to. The FAA won't reject a title transfer because there is an unsatisfied lien on the title. But just like with real estate (or a car), the transfer will be subject to the lien, so the buyer who decides, "what the heck," is still stuck with what appears to be an unsatisfied lien on the record.
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Ok another (possibly stupid) question: where are filing statements (for the security) normally filed with aircraft, being that the transaction occur in a location where neither the buyer nor the seller live.

My securities course only really discussed in state filings, with no multi-jurisdictional transactions.
 
jtrain609 said:
Ok another (possibly stupid) question: where are filing statements (for the security) normally filed with aircraft, being that the transaction occur in a location where neither the buyer nor the seller live.

My securities course only really discussed in state filings, with no multi-jurisdictional transactions.
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Depends what you are talking about. If it's the security interest in the aircraft (not "securities" - that means stocks and bonds).

If you're talking about a security interest in the aircraft itself (and limited group of other items, such as engines above a certain size), those are all filed centrally in the FAA Registry. In certain cases, there would also be an International Registry filing. (It can get complicated)

If, OTOH, you are talking about a UCC security interest in other items, such as avionics, the rules are the same whether one state or multiple states are involved. UCC security interests in goods are filed in the state where the person/organization/etc granting the security interest the security interest is located.
 
Autothrust Blue said:
No, I'm legitimately curious. (I know approximately zero about what he said.)
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Transfer of title to real property is through a document called a "deed" (you probably know this). The typical deed in a sale is called a "warranty deed." In this kind of a deed, the seller/transferor guarantees to the buyer certain things, including that the transferor had completely clean title to the property — that there are no mortgages or other claims against it.

There are situations where a transferor cannot or does not guarantee title to that degree. It may be a transfer among family or a transfer from an individual to his business entity or any number of other reasons. But instead of "I guarantee I have completely clear title," all he really wants to say is, "I'm only giving you whatever I do have; no promises. I may not even have anything." That's what's usually referred to as a "quitclaim" deed, although there are state-specific variations here and there.

So when train asks whether you can quit claim a chattel (a "chattel just means personal property — a car, an airplane, a baseball bat, a stove...) he's just asking whether the seller can transfer the airplane without promising his title is clear.

That help?
 
MidlifeFlyer said:
Transfer of title to real property is through a document called a "deed" (you probably know this). The typical deed in a sale is called a "warranty deed." In this kind of a deed, the seller/transferor guarantees to the buyer certain things, including that the transferor had completely clean title to the property — that there are no mortgages or other claims against it.

There are situations where a transferor cannot or does not guarantee title to that degree. It may be a transfer among family or a transfer from an individual to his business entity or any number of other reasons. But instead of "I guarantee I have completely clear title," all he really wants to say is, "I'm only giving you whatever I do have; no promises. I may not even have anything." That's what's usually referred to as a "quitclaim" deed, although there are state-specific variations here and there.

So when train asks whether you can quit claim a chattel (a "chattel just means personal property — a car, an airplane, a baseball bat, a stove...) he's just asking whether the seller can transfer the airplane without promising his title is clear.

That help?
Click to expand...
Great answers. I would only add that while most states have adopted the UCC there can be minor - but sometimes important - variations form state to state both in the statutes and in the filing process. A little research or a call to an attorney in the appropriate jurisdiction may be worthwhile.
 
I ended up being able to find an article of incorporation clearly lining out the succession from one bank name to another. Once the registration comes back, I'll send my data in and hope it works out.
 
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