In a Notice published today, the FAA Chief Counsel stated that the FAA will now accept transfer statements that are executed under the Section 9-619 of the Uniform Commercial Code, as adopted by the various states, for filing with the FAA Aircraft Registry. The Notice is in response to a request for the FAA to address the situation in which a default on a secured transaction results in foreclosure of an aircraft owner/lessor’s interest in the aircraft. The foreclosing party then wants the FAA aircraft records to reflect its interest in the aircraft lease so that the foreclosing party can transfer “lessor’s rights” to a new aircraft owner/lessor.
Prior to the Notice, absent an assignment of lessor’s rights in the leases, which the lessee was often unwilling to deliver, the foreclosing party has been unable to cause the FAA aircraft records to reflect its rights in the leases. The Notice now provides that, in appropriate circumstances, transfer statements may be recordable instruments that the FAA Registry will accept for recording. This will allow the foreclosing party to transfer “lessor’s rights” to a new aircraft owner/lessor. However, it is important to note that the validity of a transfer statement will be determined under the applicable state law (e.g. State adoptions of Section 9-619 of the UCC).
If you would like further information regarding the recording of transfer statements, you may read the FAA’s legal opinion contained in the Notice or contact Joseph R. Standell, Aeronautical Center Counsel, AMC-7, Federal Aviation Administration, P.O. Box 25082, Oklahoma City, OK 73125-4904, or call (405) 954-3296.
