Avionics News July 2013 - 80

LEGAL EASE

Continued from page 79

registered, it may not be possible to
file the lien with the FAA registry.
It may be advisable in some states
to attempt to file the lien with the
FAA registry. Depending on the specifics of the state law, the lien may
be effective, and, in fact, there are
cases in which a lien was rejected
from the FAA registry but was nonetheless considered effective against
third parties because the constructive elements for notice were met
(in states where filing is statutorily
adequate without acceptance by the
FAA).
In states where the law treats an
unregistered aircraft as something

other than an aircraft, it may be
advisable to file an FAA-rejected
lien with the state office for recording such instruments, although
whether that will be legally effective
to provide notice to subsequent owners may vary based on state law.
Because state laws vary, it is
important to base your filing decisions on sound legal advice based
on your particular state law and the
particular facts.
What if you properly filed a lien
against the registration while the
aircraft was still registered with the
FAA registry, but the registration
subsequently expires? This is a question that has not yet been addressed
by the courts, but we can make some
educated guesses about how they

would handle such a situation.
A security interest or lien that
has been recorded with the FAA is
perfected from the date of filing.
Thus, if the security interest or lien
was properly recorded with the FAA,
then it is perfected and enforceable.
If the registration ceases to be effective, then this should not change the
fact that the security interest or lien
was perfected; but it does make it
more difficult for subsequent parties to learn of the perfected lien.
Although state law will control,
some state courts have held that a
perfected lien is effective against
third parties even if the perfected
lien is “hidden” from discovery. For
example, in cases where the FAA has
wrongfully denied acceptance of a
lien, state courts have held that properly filing the “rejected” lien was
sufficient to make it enforceable.
CONCLUSION
The fact that registrations can
expire may make previously filed
liens difficult to identify. But under
the laws of most states, it is likely
that the properly filed liens filed
before a registration expired will
be considered to be perfected and,
thus, effective against third parties.
If the registration expires before the
lien can be filed, then it is highly
possible the FAA will refuse to
accept the lien for filing. In such a
case, the proper course of action can
vary based on state law. The repair
station should consult an attorney
about the proper course of action to
protect the repair station’s rights.
In the next installment of this
series, we will examine strategies for enforcing a lien in order
to use the value of the aircraft to
“get paid” when your customer has
failed to pay the outstanding bill for
services. q

80

avionics news

•

july

2013
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Avionics News July 2013

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