Tracey Cheek posted an articleThe Difference between Filed and Recorded FAA Documents & Why it Matters see more
NAFA member, Aircraft Guaranty Corporation, discusses what you need to know about filed and recorded FAA Documents.
There is a difference between the filing and recording of documents at the Federal Aviation Authority (FAA), and it matters when it comes to properly registering your aircraft in trust. This article explores the differences between the two and the effects both unrecorded and improperly recorded documents can have on an aircraft’s title and therefore registration in the U.S.
How are documents filed at the FAA?
The FAA has strict rules about how documents being filed need to look. The seller’s name must match the FAA records, only certain titles under signatures are acceptable, there are boxes to check for buyers, and lenders need help releasing outstanding loans or filing new ones. If any documents are not properly filled out when filed, the FAA could refuse to record them, causing problems for a buyer or owner trustee on down the line.
The FAA reviews all documents that are filed at or received by the central registry in Oklahoma City, Oklahoma. For the time being, there is a window in the Public Documents Room (PD Room) where anyone can walk up and hand in a document for filing. The window attendant will stamp the document with the date and time it was received. This document has now been filed at the FAA.
With the digitization of all records, required by the FAA Reauthorization Bill passed on October 3rd, 2018, the PD Room is likely to be less of a factor in timely filings. However, whether in person, by mail, or via the internet, the rules and processes for filing documents remain the same.
How does the FAA record documents that have been filed?
Filed documents are put through a rigorous review process, which can take up to six weeks to complete. The FAA has an extensive list of rules and regulations that documents must meet in order to be eligible for recording. If you’re not familiar with the rules, specifically those that apply to your situation, there’s a good chance that your document will not be in the proper recording format.
Documents that meet all the requirements are stamped a second time with the new date and time reflecting that the document has been recorded by the FAA. They are then placed in the main aircraft file.
Interestingly, in most cases, the priority of recorded documents relates back to the filing date, giving “first in time, first in right” status to recorded documents based on the time they were filed, not recorded. In other words, generally, first to file wins (although this is ultimately decided by a court of competent jurisdiction).
If a document is rejected by the FAA because it doesn’t meet their regulations, it is not stamped as recorded and it is placed in a separate file called “suspense”. The suspense file is publicly available, so anyone can view what was filed and by whom, but questions always arise about the validity of these rejected documents.
Any unrecorded documents that remain in the suspense file of an aircraft create a “cloud” in the title that will have to be addressed before registering in trust. These unrecordable documents have a profoundly negative effect on an entity’s title, and they can be costly and time consuming to fix.
Are all documents that are recorded with the FAA valid?
While the review process is thorough and careful, it is not always the case that a document is properly recorded. In other words, just because a document is recorded doesn’t mean it’s 100% accurate or valid – clouds may exist even for documents that have been recorded by the FAA.
In general, the FAA does not validate the documents that are filed or recorded there. Rather, the registry will record documents if they are submitted correctly and within the allotted time frame.
The validity of all documents is ultimately determined by a court of law in the relevant jurisdiction, but you can be pretty sure that there will be challenges to the validity and priority of documents that have not been recorded by the FAA.
What does this mean to an aircraft owner in trust?
Navigating the rules and regulations related to filing documents with the FAA can be tedious at best. The filing of documents is not necessarily the difficult part of the process – meeting all the necessary FAA requirements to get them properly recorded though is a challenge without industry knowledge and experience.
There are many possibilities for error in the registration process, increasing the amount of time and money spent. It’s complicated and requires experts for error-free and timely filings. The main role of an owner trustee is to represent the interests of the beneficiary, and as such, it is our responsibility to ensure that all documents filed at the FAA are recorded and kept up to date.
This article was originally published by Aircraft Guaranty Corporation on January 8, 2020.