If you provide storage, repair, maintenance or other services to aircraft, you have the ability to assert a lien on that aircraft and retain possession until you have been paid. This is commonly referred to as a mechanic’s lien.
What isn’t as commonly known is that, in Minnesota, you don’t necessarily lose your lien rights if you no longer have possession of the aircraft. The situation arises when an owner pays you with a check and leaves with the aircraft. Later, the bank dishonors the check. Now what?
Under Minnesota Statute § 514.221, you can re-assert your mechanic’s lien against an aircraft by filing a verified statement and description of the aircraft and the work done or material furnished. The Statement must be filed with the “appropriate office under the Uniform Commercial Code.” This would be the FAA’s Aircraft Registry in Oklahoma City, OK.
The verified statement must include N-number, make and model of the aircraft, amount owed for the services and date of last work. The statement must be signed in ink, with title if on behalf of a corporation or limited liability company and must be accompanied by the $5.00 filing fee.
Also, if the owner of the aircraft is located in Minnesota, you may want to file the statement with the Secretary of State. Although it is not necessary to perfect your lien, it will provide notice to anyone who doesn’t know to check with the Aircraft Registry.
This is called “perfecting” your mechanic’s lien and must be done within 90 days after you provide the work, materials or service. Once perfected, you now have a lien on the aircraft.
Perfection secures the amount you are owed with the aircraft. You then have several options. First, in order to sell the aircraft, the owner will need to pay you and obtain a release before the owner can give a buyer clear title to the aircraft.
Second, you also have the ability to repossess and foreclose on the aircraft. This means you can force a sale of the aircraft and then receive payment out of the proceeds of the sale. Any excess money is given to the owner.
Under the first option, you run the risk of having to wait until the owner attempts to sell the aircraft. The second option gives you more control, but is also more costly than simply waiting. However, under either option you are definitely in a better position to get paid than you would be without the lien.
The information contained in this web-site is intended for the education and benefit of those visiting the Aero Legal Services site. The information should not be relied upon as advice to help you with your specific issue. Each case is unique and must be analyzed by an attorney licensed to practice in your area with respect to the particular facts and applicable current law before any advice can be given. Sending an e-mail to Aero Legal Services or Gregory J. Reigel does not create an attorney-client relationship. Advice will not be given by e-mail until an attorney-client relationship has been established.