aircraft registration

  • NAFA Administrator posted an article
    Aircraft Registration Numbers: Personalized “Plates” for Aircraft see more

    NAFA member, Amanda Applegate, Partner at Aerlex Law Group, discusses aircraft registration numbers.

    First-time aircraft buyers looking at a potential acquisition may not realize that the registration number painted on the fuselage or vertical stabilizer of the aircraft can be changed and personalized by the new owner. “Tail numbers” – the name often used when referring to aircraft registration numbers – can be chosen by an owner in much the same way as a “vanity” license plate for an automobile. When selecting a registration number for a U. S. registered aircraft, the following rules apply:

    An N-Number can be in any of these formats:

    • One to five numbers (N12345)
    • One to four numbers followed by one letter (N1234Z)
    • One to three numbers followed by two letters (N123AZ)

    N-Numbers do not have:

    • A zero as the first number
    • The letters “I” or “O”

    In order to check the availability of a registration number, the following website can be used: 

    http://registry.faa.gov/aircraftinquiry/nnav_inquiry.aspx

    However, it is worth noting that reserving a registration number can be done online, in person at the Federal Aviation Administration (“FAA”) registry filing window or through the mail. Therefore, sometimes a registration number may appear available online when it is not actually available.

    If the registration number is available, it can be reserved for a fee of $10.00. It is important to reserve the registration number under the name of the new owner or a relinquishment and reservation in the new name will have to take place later.

    Once the registration number has been reserved, the FAA will send a written notice of confirmation of the reservation. If this confirmation has been received but the assignment has not yet been approved by the FAA, owners oftentimes will paint the new number on the aircraft but cover it with a decal reflecting the present registration number until such time as the change has been approved by the FAA.

    Once the registration number is reserved, it must be assigned to the aircraft. If the change is being done at the time the aircraft is being purchased, it is best to submit the request for the registration number change with the documents filed for closing with the FAA civil aircraft registry. The letter requesting the registration number change should include the name of the aircraft manufacturer, model designation, serial number, and the current registration number.

    When the FAA approves the registration number change, the agency will mail an AC Form 8050-64 to the owner. This is the Assignment of Special Registration Number and authorizes the placement of the new registration number on the aircraft. Once the owner places the new registration number on the aircraft, the owner must do four things:

    1. Within five days after the number is placed on the aircraft, the owner must complete and return the 8050-64 form showing the date the registration number was placed on the aircraft.
    2. Within 10 days, the owner must take a copy of the 8050-64 form and the existing airworthiness certificate to a FAA Flight Standards District office (FSDO) to obtain a revised airworthiness certificate.
    3. The owner must carry a copy of the AC Form 8050-64 with the current Certificate of Aircraft Registration, AC Form 8050-3. These documents provide temporary authority to operate the aircraft under the new N number until the replacement Certificate of Aircraft Registration is received.
    4. The owner must notify the aircraft insurance provider of the registration change.

    A seller who wishes to keep the registration number currently assigned to an aircraft that is being sold should make retention of that N number one of the terms of sale. If the seller is going to retain the current registration number, then the parties need to determine, as part of their negotiations, which party will pay for the cost associated with the change. Additionally, some sellers may wish to establish a deadline on when the registration number will be assigned back to them. However, it is important to note that neither party controls how fast the FAA issues the 8050-64 form and, therefore, language should not obligate the parties to a timeline they cannot control. If a registration number change is being done in conjunction with a sale, it is best to file the request for the registration number change at the same time the closing transaction documents are filed with the FAA registry.

    Creating a unique and special registration number for your aircraft can add a bit of fun to the ownership experience. However, the cost of the personalization must be properly allocated to the responsible party. Additionally, the timing of the change should be considered in order to avoid causing unnecessary complications in the closing of an aircraft acquisition.

    This article was originally published in BusinessAir Magazine, November 2020, Volume 30, No. 11.

     

  • NAFA Administrator posted an article
    Cross Border Transactions During a Pandemic see more

    NAFA member, Amanda Applegate, Partner at Aerlex Law Group, discusses what to consider during cross border aircraft transactions during a global pandemic.  

    During the global pandemic, many US based aircraft buyers are only considering US registered aircraft due to the logistical challenges caused by COVID-19. However, a willing buyer with an expert acquisition team may be able to find a better pedigreed foreign-registered aircraft at a lower price in today’s market. Cross border transactions in 2020 are unpredictable, challenging, time consuming and require a team who can handle unexpected issues and react to various situations which may arise. Here are some of the important elements to consider in these complicated 2020 cross border transactions.

    1. The aircraft purchase agreement (the “Agreement”) should be a detailed road map of the transaction. It should set forth the chronology of the entire purchase process, and identify who will pay for each step. The timelines in the Agreement must allow for delays which are outside of the control of the parties due to COVID-19. Also, the parties should determine if extensive delays would allow termination of the Agreement, and if so, include in the Agreement. In addition to all of the key concepts that should be in every Agreement, the Agreement for a cross border transaction in 2020 should also clearly specify: (i) which party pays for the correction of airworthy items necessary to allow the aircraft to be registered in the US; (ii) which party pays the cost of import into the US; (iii) which party has the responsibility for the export, import and customs documents; (iv) when the full purchase price has to be in escrow; and (v) when the deregistration process starts and when all of the documents can be released for filing.

    2. The Agreement should allow for a visual inspection. With the COVID-19 travel restrictions changing frequently, it is important that the team who conducts the visual inspection understands local restrictions. During the visual inspection, it is important for the buyer to have a designated airworthiness representative (“DAR”) present to determine if the aircraft will be considered airworthy in the United States. If the aircraft is not deemed airworthy, the DAR can assess what work will need to be done to meet the standards required for issuance of an US airworthiness certificate, and a repair facility can estimate the cost of these items. Understanding these expenses before incurring the inspection fees and before the deposit becomes nonrefundable is very important. It can be very useful to have the pre-purchase inspection take place in the United States so that the buyer can easily view the aircraft prior to purchase and eliminate some of the complexities with traveling during the pandemic. If this is the case, it is important to make sure the seller correctly imports the aircraft into the United States prior to the start of the inspection.

    3. The Buyer needs to build an expert transaction team that includes an onsite technical representative at the inspection facility, the DAR mentioned above, a licensed and bonded United States Customs Broker, and aviation counsel that can, among other responsibilities, coordinate and gather relevant information from local tax counsel, and local title counsel to insure that there are no tax issues with closing and that good title is being conveyed to the buyer free and clear of any local liens or encumbrances that may have attached to the aircraft in the country of registration.

    4. Following a satisfactory visual inspection and pre-purchase inspection, buyer will move towards closing the purchase of the aircraft. In order to start this process, seller deregisters the aircraft from the current country of registration. Depending on how the Agreement is drafted, the seller may also be required to provide an export certificate of airworthiness in favor of the United States.

    5. The Agreement should require that, immediately upon receipt of the notice of deregistration and without any further requirements, the escrow agent will simultaneously wire the proceeds of the sale to the seller and file the bill of sale and registration application with the FAA.

    6. The FAA treats aircraft entering the United States from a foreign registry as a priority and a Temporary Certificate of Aircraft Registration (“Fly Wire”) is typically issued within one to two days following confirmation of deregistration and filing of the appropriate registration documents with the FAA. If the aircraft has been deregistered outside of the United States, the aircraft cannot be ferried to the United States until issuance of the Fly Wire.

    7. The Temporary Certificate of Aircraft Registration should be sent to the DAR who is ready to issue the Certificate of Airworthiness (“C of A”). Prior to issuing the C of A, the DAR will need confirmation that the aircraft has the new United States registration number on it and the transponders have been re-strapped. 

    The key items to remember in purchasing a foreign registered aircraft are: perfecting the Agreement; hiring a DAR, a licensed and bonded United States Customs Broker and an expert transaction team; understanding the costs of obtaining the C of A (and who pays those costs); and sequencing the buying process in a way to properly deregister, register, export and import the aircraft while, at the same time, avoiding unnecessary taxes. To be sure the process is more complicated than buying a US registered aircraft, but if the transaction is managed properly, the benefits to the savvy buyer can make the purchase of a foreign-registered aircraft very rewarding.

    This article was originally published by Aerlex Law Group on September 23, 2020 in Articles, BusinessAir Magazine, The Latest.

  • NAFA Administrator posted an article
    NAFA Webinar: Bringing Title and Registration Into the 21st Century see more

    The FAA is updating and modernizing its title and registration system in accordance with the GAO report, but how much do you know about what changes are actually being made and how those changes might affect your business operations, costs, and registration systems. 

    What issues might arise from a newer, more modern electronic filing system and digital signatures?  What is the difference between digital and electronic signatures, and what position is the FAA taking on this in the modernization process.  

    And what about GATS?  What is it and how does it fit into the new modernization system? 

    Watch our webinar to learn more about everything that is happening to bring Title and Registration Procedures into the 21st Century.   

     

    Meet our Moderator and Panelists:

    Ford von Weise, Director & Head - Global Aircraft Finance & Aircraft Advisory Services, Citi Private Bank (Moderator)

    Scott McCreary, Shareholder, Director, McAfee & Taft

    Debbie Mercer-Erwin, President of Wright Brothers Aircraft Title 

    Jeff Towers, VP & General Counsel for TVPX

    Ed Kammerer, Shareholder for Greenberg Traurig, LLP 

     

    Webinar slides can be viewed here.This NAFA webinar originally aired on November 10, 2020.

  • NAFA Administrator posted an article
    Filing Aircraft Registration Documents With The FAA Registry During The COVID-19 Pandemic: What You see more

    NAFA member, Greg Reigel, Partner with Shackelford, Bowen, McKinley & Norton, LLP, discusses filing documents with the FAA Registry during the COVID-19 Pandemic.

    In another instance of a “new-normal” resulting from COVID-19, the window at the FAA Registry, where real-time filing of aircraft registration documents used to occur, has closed.  Although the FAA Registry is still open (for now), it has implemented new procedures for filing of aircraft registration documents.  Three options are now available for recording documents:

    Document Drop Bins.

    The FAA has placed two bins outside the Public Documents room.   One bin will be marked “Priority” and one bin will be for “Normal” processing (i.e. not priority).  The FAA will retrieve documents from the Priority Bin every hour. It will retrieve documents submitted for normal processing twice a day.

    Documents are filed when they are placed in one of the bins. However, will not be possible to obtain an immediate filing time for the documents as was the case in the past.  Actual filing times will only be available after the documents are indexed in, scanned and available for viewing online.  It is presently unclear how long that process will take.

    E-Mail Filing To An Electronic Portal.

    The FAA has a new e-mail filing process available subject to a number of limitations. Submitted documents must be digitally signed (i.e. Docusign, Adobe Sign, etc.) and each document must be 20 pages or less. Only one aircraft may be submitted in each e-mail and filing fees must be pre-paid at Pay.gov.

    After submission, FAA will send an e-mail acknowledging receipt.  However, documents will be processed during normal business hours with filing times available the same as when documents are filed via the bins.

    Filing Via Mail.

    As has always been the case, documents can still be filed via U.S. Mail, FedEx and UPS. And similar to the bin and e-mail filing, actual filing times will only be available once the documents are processed and in the FAA Registry’s system.

    These new processes will also impact timing for receiving a “fly-wire” and for receiving Form 135 needed to accomplish International Registry filings.  But it is unclear how much longer it will take to receive these back from the FAA.

    Conclusion.

    The good news:  The FAA Registry is still open and processing aircraft registration documents (for now). The bad news:  These updated procedures will result in some delays in closing transactions, and a little less certainty regarding when documents were actually “filed” by the FAA. For example, in a transaction transferring risk of loss at the time of filing, that could present a problem.

    Parties to aircraft transactions should review their documents to determine whether they are consistent with the new procedures. If they aren’t, parties should amend as needed.

    This article was originally published by Shackelford, Bowen, McKinley & Norton, LLP. on March 23, 2020.

  • Tracey Cheek posted an article
    Using Digital Signatures in Aircraft Title & Registration see more

    NAFA member, Debbie Mercer-Erwin, President of Wright Brothers Aircraft Title, discusses the use of digital signatures in the aircraft title and registration process. 

    It is an exciting topic and a fundamental priority for Wright Brothers Aircraft Title (WBAT) to stay current with technology, especially when it has the potential to increase efficiency and security in our services, as well as help reduce time and cost in transactions for our clients. We are always looking forward to how our company could put certain applications to use, even Blockchain in Aviation Escrow Transactions. For this month’s topic, we don’t have to guess though. 

    One huge hindrance to efficiency in aircraft title registration is the paperwork involved – handling and distributing numerous paper documents between multiple parties, whether in the United States or internationally. Printing, signing, mailing – more than once if corrections are needed, let alone if the documents are lost in the mail altogether – is enormously time-consuming. 

    WBAT wanted to find a way to streamline certain processes and reduce our amount of paperwork, while maintaining a high level of security – to save time and money within our business and for our clients. We were immediately interested in the use of Digital Signatures, which is a specific implementation of an electronic signature (eSignature).

    The US Federal ESIGN Act defines an eSignature as “an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record”. A Digital Signature takes this a bit further with the addition of encryption/decryption technology – securing the data associated with an electronically signed document and creating a robust audit trail.

    Digital Signatures have been used for electronically signing an array of documents – sales contracts, offer letters, lease agreements, liability waivers, financial documents, etc. – and are legally enforceable in most business transactions throughout most of the world.

    We needed to make sure this solution would work with multiple signers on complex documents though and be compliant with the Federal Aviation Authority guidelines, including their Notice of Policy Clarification for Acceptance of Documents With Digital Signatures (81 FR 23384), which requires Digital Signatures – traceable and digitally encrypted – not just eSignatures.

    DocuSign was the clear answer for our business – meeting some of the most stringent US, EU, and global security standards, and using the strongest data encryption technologies available. It also happens to be the leading eSignature brand, with the ability to:

    • Easily upload and send documents for signing
    • Sign at any time, on a wide variety of devices, from nearly anywhere
    • Check signing status and send reminders to keep things moving forward

    This software has enabled us to get agreements done faster with fewer errors, which directly translates to lower cost, for our business and our clients. We’ve accomplished this with using Digital Signatures mainly for Bill of Sale and Application for Registration documents, which directly benefits our buyers and sellers.

    There are more benefits on the horizon though with more widespread use of this technology. With more lenders in the industry using Digital Signatures, it might not even be necessary to presign a release of the lien. Instead, the involved parties would digitally sign at closing when money is distributed, reducing the risk for all. 

    We’re excited to see where this technology takes us and the aviation finance industry. In the meantime, we’re thrilled with the results we’ve already seen and the time and cost savings we’re able to pass down to our clients. 

    This article was originally published by Wright Brothers Aircraft Title on September 16, 2019.

     

  • Tracey Cheek posted an article
    TUE and PUE: Closing the Gap Between the FAA and IR see more

    NAFA member, Debbie Mercer-Erwin, President of Wright Brothers Aircraft Title, writes about closing the gap between filing at the FAA and registering at the International Registry.

    In previous blogs we have discussed the paperwork gaps that can occur around aviation escrow transactions and how Wright Brothers helps to Close the Gaps, whether between the time you pay for an aircraft and the time the necessary documents are filed with the Federal Aviation Authority (FAA), or between documentation  Filing and Recording  at the FAA.  

    There is also a gap between filing at the FAA and registering at the International Registry (IR). In each of these scenarios, an escrow agent, as a “PUE”, can help close the gap with a more seamless transaction for a “TUE”, ensuring representation for each party. In the gap between the FAA and IR specifically, “The Closing Room”, a virtual safekeep for all notices between parties, can be a key factor and a huge help. 

    TUE? PUE? – The Differences 

    The terms TUE and PUE are often used in the world of aviation escrow, but what do they mean? A TUE is a Transacting User Entity, such as a buyer or seller, lender or debtor, whereas a PUE is a Professional User Entity, like Wright Brothers for example. Why is this important in terms of filing at the FAA or registering an interest with the IR?  

    While a TUE is the party named in the filing or registration, a PUE is not. A Professional User Entity can however file or register on behalf of a Transacting User Entity. Representation by a PUE, like WBAT, can ensure that the correct steps for both filing at the FAA and registering at the IR are followed, securing the interests of all parties involved and only upon the approval of each. 

    Between the FAA and the IR – Possible Repercussions 

    Documents are filed at the FAA for recording, and notices of interest are registered at the IR. In general, a U.S. document is filed with the FAA first, where a code is then issued to register the notice of that same interest with the IR.  

    What happens if you file at the FAA and not the IR? The IR was granted super priority over the FAA, and the IR gives “first in time, first in right” status to all notices registered there. This basically means that if you file at the FAA but do not register the notice at the IR, and someone else files a notice of a competing interest at the IR before you get there – they win.   

    The same is true if you file at the FAA and intend to register at the IR, but someone registers a competing interest before you do. They got there first, so they win. This makes the gap between filing at the FAA and registering at the IR extremely important.   

    The Closing Room – How it Helps Save Time 

    The Closing Room is an IR function that allows a coordinator, a PUE like Wright Brothers, to set up a virtual space for the interested parties (sometimes PUEs and TUEs) to hold all registrations until they are approved and ready to process. This space allows the PUE to “preposition” registration information in conjunction with any other claimed interests before submitting them. It allows for all PUEs and TUEs to view each registration and requires the approval of each in order to “close” the room, which then releases all registrations. Closing the room and filing at the FAA can thus happen almost simultaneously.  

    In this way, “The Closing Room” helps close the time gap between the registering of an interest at the IR and the filing of documents at the FAA, especially if there is a competing claim. Of significant note here is that in order to lessen the number of “hands in the pot” and really streamline the process and close the gap, the PUE should be handling all FAA filings and IR registrations on a regular basis so that all documents among all parties are handled correctly. Having interests preapproved and consented to before closing is always a good thing. 

    This article was originally published by Wright Brothers Aircraft Title on May 21, 2019.

     

  • Tracey Cheek posted an article
    Private aviation usage growth may be due to increased demand for long-range international travel. see more

    NAFA members, Scott McCreary at McAfee & Taft and Jeffrey Towers at TVPX, weigh in on deciding where to register an aircraft that is operated in multiple jurisdictions.  Originally published in Corporate Jet Investor's Official Guide to Aircraft Registration - April 2018.  

    As many aircraft are regularly operated in multiple jurisdictions, corporate aircraft owners are faced with multiple choices as to where they will register their aircraft for nationality purposes. Once the pros and cons of each registry are fully considered, owners often choose to register their aircraft on a registry that does not correspond with the nationality of the corporate jet owner. One of the most frequently chosen aircraft registries is the United States Federal Aviation Administration (FAA) Aircraft Registry, commonly referred to as the N Registry.

    The FAA is the primary US regulatory agency that governs and oversees registration, maintenance and operation of aircraft. In addition, the United States Department of Transportation further provides economic authority for certain aircraft operations and protects consumers from unfair and deceptive trade practices involving the sale of air transportation. The FAA Aircraft Registry located in Oklahoma City, Oklahoma, issues Certificates of Aircraft Registration for both commercial and general aviation aircraft. To register an aircraft with the FAA, the applicant for registration must file documents evidencing ownership of the aircraft in the name of the applicant, as well as an AC Form 8050-1 aircraft registration application. To perfect liens or encumbrances against aircraft registered with the FAA, parties must (i) file the security documents with the FAA and (ii) comply with the registration requirements under the Cape Town Treaty, when applicable.

    Why is the US a preferred jurisdiction for aircraft registration?

    There are several advantages to registering an aircraft in the US. The FAA is widely respected for its easy, secure and inexpensive processes for filing aircraft title transfer, registration and security documents. There is also a long history of court decisions and other legal precedents regarding the processes for registering and canceling aircraft from the FAA, as well as the validity, priority and enforceability of security interests in aircraft. The US was also one of the first countries to adopt the Cape Town Treaty, thus providing the additional comfort and assurance that interests properly created and registered under the Cape Town Treaty will be recognized in other Contracting States. The clarity of applicable law and long history of legal precedents for enforcing rights of owners and lenders for US-registered aircraft appeals to aircraft lenders, lessors and borrowers.

    The FAA provides an efficient system for owners and lenders to file documents and now accepts documents bearing appropriate digital signatures, which simplifies and expedites the closing process. There is a large pool of internationally-recognized aviation attorneys and other professionals in the US available to assist aircraft owners and lenders. Many parties also take comfort in the fact that the FAA, as part of the US government, has the resources and wherewithal to properly oversee and enforce its rules and obligations as an aircraft registry. Finally, there is ample evidence that registration with the FAA helps to preserve the value of a business aircraft, both because the FAA’s standards for aircraft operations and maintenance are among the highest in the world and because the US is the most active market for
    aircraft sales.

    Read more at McAfee & Taft and Corporate Jet Investor.