Aircraft Guaranty Corp considers three specific aspects of the Federal Aviation Administration Reauthorization Act of 2018, considering how they could impact aircraft owners going forward...
There were several proposals put forward for the Federal Aviation Administration (FAA) Reauthorization Act of 2018 (HR 302), but not all of them made it through. While privatizing ATC will not be happening, the rules regarding re-registration have once again been changed. The bill also includes an edict that all documents will be digitized soon, along with opening records electronically to the public for the first time.
The 462-page bill passed on October 3, 2018 contains many provisions, a few of which we’ve highlighted here. There are changes on the horizon, and while the overall effects are uncertain, we can surmise some of the possibilities.
Less Frequent Re-Registration
In years past, registration was only required once per owner of the aircraft. In 2010 that changed in an attempt to make FAA records more current, with re-registration required every three years.
While this involved more work, the change helped update and maintain more accurate information on aircraft owners. In Section 556 of the five-year Reauthorization Act, reregistration is changed to every seven years, to be enacted within 180 days of the bill passing.
We can’t be sure why the FAA is modifying the requirement to less frequent updates once again but we are optimistic that the integrity of registration records will not be affected.
There are already a lot of FAA documents consistently digitized, making some functions involving registration and record searches more efficient. What isn’t electronically maintained is held in the public documents room at the FAA and available to those who have access to that room.
Section 546 of the new bill states that everything will be digitized within the next three years, including all registry information such as paper documents, microfilm images and photographs, as well as the registry manual, business operations and functions, and all paper-based processes.
It’s certainly an earth-friendly endeavor, but it could produce some complications of its own regarding access and security.
Public Electronic Database
Possibly the most significant aspect covered in Section 546 of the bill and happening within three years is that the FAA records will be made electronically available to the public. For the first time in history, the general public will be able to view any record and file any document they want at the FAA.
Furthermore, anyone using the public documents room to perform any acts that could have been done with the same efficiency by electronic means, will be charged a fine. The implications of this switch could be quite far reaching.
The ability to submit documents electronically might make it more appealing for anyone to do individually, but it does not mean they should.
While the FAA is opening their records, they are not changing the rules for submitting documents to them. With the extensive rules in place for filing documents, there is a good chance it won’t be done correctly without industry knowledge of FAA rules and regulations for filing of documents.
Furthermore, as the registered owner of the aircraft, an owner trustee is going to want to maintain high standards for creating and maintaining the title to the aircraft. They would therefore be filing all documents affecting title in accordance with their own standards. It would likely mean an unrecordable document otherwise. They also know what to look for in owner trustee documents and would never rely on documents created or filed by someone else.
They would also perform any title searches since an outstanding lien or break in the title can be easily missed without an experienced eye, resulting in the need for clearing clouded aircraft titles.
The Owner Trustee’s Role
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. There are many Benefits to Registering an Aircraft in Trust since the main role of an owner trustee is to represent the interests of the beneficiary.
It is the owner trustee’s responsibility to ensure that all documents filed at the FAA are recorded and kept up-to-date. For an owner trustee then, less frequent re-registration filings do not mean less work since they are regularly in communication with their clients.
In sum, the changes coming forward could be both helpful and harmful. We’re hopeful that all will go smoothly for the FAA and progress will continue. The risks involved with registration, title searches and filing documents will not change though, and representation by an experienced owner trustee company is key.
One question remaining: what will happen to the public documents room - will it become a part of a bygone era where people and paper mixed?
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