In the U.S., the administrator of the Federal Aviation Administration (FFA) must provide for the recordation of a conveyance that affects an interest in a civil aircraft of the U.S., and lease or instruments that are executed for security purposes[i]. The administrator must also provide for recording releases, cancellations, discharges, and satisfactions related to a conveyance, lease, or instrument that is already recorded.
Prior to the recording of such conveyance, lease, or instrument, an acknowledgement of such recordation must be made to[ii]:
- a notary public; or
- any another officer authorized under the laws of the U.S., a state, the District of Columbia, or a territory or possession of the U.S. to acknowledge deeds.
The lease or instruments that need to be recorded include conditional sale contracts, assignments, and amendments, whose subject matter include[iii]:
- a specifically identified aircraft engine having at least 550 rated takeoff horsepower or its equivalent;
- a specifically identified aircraft propeller capable of absorbing at least 750 rated takeoff shaft horsepower;
- an aircraft engine, propeller, or appliance maintained for installation or use in an aircraft, aircraft engine, or propeller by or for an air carrier holding an air carrier operating certificate; and
- spare parts maintained by or for an air carrier holding an air carrier operating certificate.
While recording a conveyance, lease, or instrument, the administrator must abide by the following requirements[iv]:
- s/he must keep a record of the time and date when each conveyance, lease, and instrument is filed and recorded with the administrator; and
- s/he must record each conveyance, lease, and instrument filed with the administrator in the order of their receipt, and must index them by the names of the parties to each conveyance, lease, and instrument, and the identifying description of the aircraft, aircraft engine, or propeller, or location specified in a lease or instrument.
A conveyance, lease, or instrument executed for security purposes and which is not recorded is valid only against the person making the conveyance, lease, or instrument, such person’s heirs and devisees, and a person having actual notice of the conveyance, lease, or instrument[v]. However, a conveyance, lease, or instrument which is recorded by the administrator is valid against all persons with certain exceptions, without other recordation, from the date of filing[vi].
Further, in case of a sale, conditional sale, transfer, or conveyance of an aircraft, the person having ownership interest in an aircraft possessing certificate of registration must file a notice with the secretary of the treasury within 15 days from the sale, conditional sale, transfer, or conveyance[vii]. In addition, an application for issuance or renewal of an airworthiness certificate of an aircraft for which ownership has not been recorded under 49 USCS § 44107 must submit along with the application the following[viii]:
- information related to the ownership of the aircraft ;and
- kind and extent of the interest in the aircraft.
By coding the registration or recordation of conveyances and liens affecting the title to aircrafts under the federal system, Congress has preempted the state law from the field of recording the ownership, conveyances, and encumbrances pertaining to aircrafts[ix]. Accordingly, state recording statutes are not applicable to title instruments. However, state law will be applied in determining the priority of interests in aircraft and the underlying validity of any such conveyance or instrument. Although state law determines the priority of interests in aircraft, each interest must be recorded under federal law before it obtains the priority to which it is entitled under state law.
In Southern Air Transp., Inc. v. Northwings Accessories Corp. (In re Southern Air Transp., Inc.), 255 B.R. 715 (Bankr. S.D. Ohio 2000), the court observed that “it was the intent of Congress, and the Administrator of the Federal Aviation Administration (FAA) to preempt state laws that would recognize the validity of unrecorded liens against spare aircraft parts, whether arising by agreement or by statute, as against innocent transferees or lien holders who have recorded with the FAA. This conclusion is based on the language set forth in 49 U.S.C.S. §§ 44107, 44108, as well as the implementing regulations, which are inconsistent with affording validity to unrecorded liens of any type that affect, among other things, spare aircraft parts.”
However, a federal recording will not save an instrument that is void under the appropriate state law.
As a result, the U.S. Supreme Court has established three principles regarding recordation. They are[x]:
- that an interest in an aircraft which is never recorded with the FAA will have no effect against the rights of any third parties who lack actual notice of the interest;
- that all state laws permitting undocumented or unrecorded transfers to affect the interests of third parties are preempted by the Federal Aviation Act; and
- that as between competing interests which are recorded with the FAA, state law determines priorities.
[i] 49 USCS § 44107(a).
[ii] 49 USCS § 44107(c).
[iii] International Atlas Services, Inc. v. Twentieth Century Aircraft Co., 251 Cal. App. 2d 434 (Cal. Ct. App. 1967).
[iv] 49 USCS § 44107(d).
[v] Haynes v. General Electric Credit Corp., 432 F. Supp. 763 (D. Va. 1977).
[vi] 49 USCS § 44108.
[vii] 49 USCS § 44109.
[viii] 49 USCS § 44704(d)(2).
[ix] Curtin v. Port Auth., 183 F. Supp. 2d 664 (S.D.N.Y. 2002).
[x] Compass Ins. Co. v. Moore, 806 F.2d 796 (8th Cir. Mo. 1986).