Troubling aircraft title issues

March 25, 2013

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Ron Golden

Ron Golden

  • Attorney, Counsel to AOPA
  • More than 30 years of aviation legal experience
  • Serves on the Board of Directors, Seaplane Pilots Association
  • Pilot since 1975, owns a Cessna Cardinal RG

Buying or selling an aircraft? Be careful. Over the years, we become complacent. It can happen to all of us. We decide to take a shortcut to save time and money. Frequently it does not become a problem. However, once in a while it comes back to bite us.

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Federal law requires the FAA to establish a system for recording conveyances that affect an interest in civil aircraft of the United States. That FAA facility is in Oklahoma City. Unfortunately, that means it is not as convenient as it might be to research the status of an aircraft title. We have to contact a title company in Oklahoma City and have them do the work for us. But that’s a step we should not skip.

Consider the experience of a person I know. He purchased his first aircraft when it was less than a year old, had been used as a demonstrator for 50 hours, and was owned by an aircraft dealership. He paid cash for the aircraft. Since he paid cash, no bank required a title search … and he did not request one. After all, it was a “brand new” airplane with no prior owners and purchased directly from the dealer. What could possibly go wrong?

He owned the aircraft for nearly 14 years. He decided to sell it to buy another aircraft. The prospective purchaser asked that he request a title search on the aircraft. He (the seller) gladly complied. He certainly did not expect to find a problem.

The title search showed a dealer financing lien that a bank had recorded with FAA before he purchased the aircraft. It was very embarrassing. Getting the lien released was not so simple. The bank had gone out of business. Its assets had been acquired by another bank. Eventually, the lien was cleared, but not before the title company made several embarrassing comments about how much simpler it would have been if he had only done a title search before purchasing the aircraft. Even worse, it held up the sale for several months.

So remember, always get a title search when buying an aircraft. Make sure the seller actually owns clear title to it. Once you buy it, its problems become your problems.

Fortunately, the AOPA Legal Services Plan/Pilot Protection Services can help. Included in the plan is consultation on sale and purchase of aircraft. The staff can answer any legal questions you might have. They can also help you find a local attorney to assist you with the transaction. To learn more about the program or to enroll, visit AOPA Pilot Protection Services.

In addition, AOPA has a Strategic Partner in Oklahoma City that can also help. Aero-Space Reports is a one-stop shop for aircraft title search, title insurance, escrow, or other related services you might need. The experienced and dedicated staff is an excellent resource for advice as well as all your aircraft title services.

Ron Golden