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Blog for May 16th 2011

We entertain a lot of questions from our clients about registering on the International Registry. Many of those who are filing a US registration with the FAA wonder about the redundancy of also having to put the aircraft and its engines on the IR. The answer really lies more in strategic planning than it does in the short-term requirements to get the plane in the air after a sale- especially if you aren’t planning to fly it until the wheels fall off.

According to every aviation expert I can find- more aircraft will be sold internationally in the foreseeable future than ever before. This means bankers will be entertaining more complex underwriting and a very clear- well-documented line of title will become increasingly important. The United States became a party in March 2006 to the Convention on International Interests in Mobile Equipment and the Protocol to the Convention on International Interests in Mobile Equipment on Matter Specific to Aircraft Equipment- both signed in Cape Town- South Africa in November 2001. Banks in most countries where the Convention has been adopted see registration on the IR as a perfection of the contract between buyer and seller- lender and debtor- or lessor and lessee. Typically their underwriters want to see all the I’s dotted and the T’s crossed.

While to date there has not been an instance of a case reaching trial concerning these mobile interests- it cannot hurt to have the extra insurance of registration on the IR. If you’re financing—or may finance the asset in the future- the lender will likely require it. And if you ever plan to sell the asset- the purchaser’s banker may want that clean paper trail as well.

According to Aircraft Escrow Agent Debbie Mercer of Wright Brothers Aircraft Title- in order to lodge an international interest with the International Registry- both the seller and buyer- lender and debtor- or lessor and lessee- have to electronically sign up and be recognized as company users of the International Registry system. The reason for this is because the electronic system is set up so that one party sends an electronic request to the second party to lodge the interest and the second party then has to electronically consent to the creation of the interest. No ownership- security interest or lease interest can be created without both parties' participation as users of the International Registry system.

For more information on the International Registry- you can visit ...
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