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Releasing LiensReleasing Liens

Releasing Liens

Aircraft sales are sometimes complicated by unreleased liens, legal claims on an aircraft for money owed, frequently for maintenance done on the aircraft.

FAR 49.17(d)(5) states that once a debt has been satisfied, the lien holder shall complete AC Form 8050-41, Part II — Release, and return the form to:

FAA Aircraft Registry
Department of Transportation
Post Office Box 25504
Oklahoma City, Oklahoma 73125

Quite often, banks or other institutions not knowledgeable in aviation will fail to notify the FAA once a debt is satisfied.

The FAA will clear a lien with only one of the following:

  1. Release of lien from the lien holder; or
  2. A court judgment, in so many words, declaring a lien null and void.

If an "unreleased lien" is reported that the buyer or seller believes was previously satisfied, the aircraft owner may request that the lien holder complete another AC Form 8050-41 or send a letter to the FAA Aircraft Registry that includes:

  • A description of the original lien
  • Date the lien was received by the FAA
  • Names of all parties
  • The date of FAA recording
  • The recorded conveyance number.

If the lien holder cannot be found, as in the case of a company going out of business or a mechanic moving his shop, and an extensive search is unsuccessful, a court judgment can be requested to "nullify" the lien. Because this process is dependent upon state law, AOPA suggests consulting with an attorney.

In most cases, the search for the lien holder needs to be documented. Suggested search methods:

  • A bank: Ask your local banker for help: every bank situation can be tracked and is known to the Dept. of Commerce. FAA attorneys at FAA Aircraft Registry may also help: 405-954-3116. It may take some number of calls to get to an officer-level employee (AVP and up) at the successor Bank, but they are required by state law to release the claim if they cannot prove that it is still valid.
  • To find a person: Use a "white pages" database via the Internet or CD-ROM. If unsuccessful, hire a private investigator. In any case, a court will not grant a judgment without proof of an extensive search.
  • To find a corporation: Corporations (including banks) are bought, merge, or file for bankruptcy. Request the status of a corporation from the Secretary of State in the state where the business was incorporated. If the corporation was dissolved, request official written confirmation, and file it with the FAA to "offset" the lien. If a successor is located, they are required by state law to provide a release if the debt has been satisfied.

Depending upon state law, if a judgment is granted, it only releases the aircraft as collateral; the lien holder may still seek payment from the debtor.

The AOPA Title Service vendor, AIC Title: 800/711-0087, provides a clearance-of-lien service that may be simpler than doing the above work yourself.. Price will be quoted starting at $500. You may also be able to purchase title insurance to cover contingences around some lien clearance situations. Ask AIC Title.

Updated Wednesday, February 25, 2009 4:48:00 PM