Why Check for Unexpected Aircraft Liens?
Check your aircraft for unexpected liens at the FAA registry. Aircraft owners and operators must confirm the aircraft management company is using the funds received from the owners and operators to satisfy invoices of vendors for the correct aircraft. If your funds are used to satisfy invoices due for other aircraft, your aircraft may be subject to third party liens.
Check the FAA Records for Aircraft Liens
You can periodically purchase an FAA title search from an FAA escrow agent to confirm that no liens have been filed with the FAA. The FAA does not alert the aircraft owner when a lien is filed.
Check With Third Party Vendors
You can periodically request confirmation directly from outside vendors (management company, fuel providers, maintenance facilities) that there are no outstanding invoices or obtain a list of the outstanding invoices (which should contain only recent invoices).
The third party confirmation can help identify any cash flow issues, such as whether funds you pay are used to satisfy invoices for your aircraft.
Yes, This Requires Effort, But. . .
Yes, this is an additional burden on you. You hired a management company after you vetted them. You think they are reputable. However, you do not know if circumstances changed. The management company may have accepted business from several aircraft owners who failed to pay their bills, putting the management company and ultimately you, in a financial bind.
Why a Lien is Filed Against Your Aircraft
If a vendor provided fuel or maintenance services to several aircraft managed by your management company, but only received partial payment, the vendor may try to file a lien against every aircraft to which it provided fuel or maintenance services. This may result in a lien against your aircraft when you have timely paid all invoices submitted to you by the management company.
Maintaining vigilance with your aircraft’s service providers and vendors is important, but not easy. Calendar to periodically audit vendors and remind personnel to question anything that seems unusual.
The information provided here is not legal advice and does not purport to be a substitute for advice of counsel on any specific matter. For legal advice, you should consult with an attorney concerning your specific situation.
Please contact Jetstream Aviation Law for help with your business aviation legal issues.
