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Ventucky Red

Ventucky Red

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Jon
Here is the Cliff note version

A.) The plane was bought with a loan.

B.) The plane was later used to collateralize another loan

C.) The loan on B is paid off and the bank has released the lien on the plane.

D.) The loan on A is still showing on the plane's title.

This has been like this since the current owner purchased the plane in 2009 and the FAA registry has the plane in their name. And, this all happened pre-2008 Finacial Meltdown, and the bank, nor the lendee are around anymore to release the lien in A.

Question 1: Someone mentioned taking title insurance that would cover any claims made to the pane subsequent to the purchase. Thoughts?

Question 2: Will the FAA even allow the plane to be registered in my name with the lien on the plane, or do they not care?

Thanks
 
Had to deal with this on my MIL's home when we had to sell it after her death. Somebody owns that lien. You'll need a good aviation title search company to track it down. Depending on how good the title company is they can also negotiate what they need to be paid to settle the debt and release the lien. OR the title company finds that the loan was settled years ago and then petitions the court to reissue the title without the lien.

1) It's a mess
2) Yes, if you buy it get title insurance
 
You won't be able to buy title insurance until the Lien from loan A has been released.
 
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Will title insurance cover a known issue????
 
It’s not going to be easy ,hire a professional company to handle it for you .
 
I’d try to handle it yourself first

My plane had a few loans on it when I bought it, I looked at the title from the $5 FAA CD I ordered, the old owner and I squared up with his debtors with some of the purchase money, I got a copy of the release paperwork, I made copies and sent the wet ink versions to the FAA, it wasn’t very hard if you have a phone and the internet

I think the FAA will allow the registered owner to transfer the title, however creditors still have their interest and could potential take the new owner to court or whatever and cash their chip so to speak
 
In my experience, transferring ownership of the aircraft will not be hindered by having a lien on it. The lien will simply remain until it is released. Depending on how complicated the situation is, an owner or purchaser may be able to get this cleared on their own, but it may be more than they want to or can handle. If it is something the owner doesn’t want to handle, I’d suggest contacting one of the aircraft title services and see if this is something they are able to assist with.
 
Ventucky Red said:
Will the FAA even allow the plane to be registered in my name with the lien on the plane, or do they not care?
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FAA's concern is the chain of ownership. Provided you're buying from the person listed on the current registration, or their legal agent, you should have no issue with registration. I'll defer on the lien to the other replies. However, if you have any questions, you could always call the Reg Branch but use the local number and not the 1-800 number.
 
Ventucky Red said:
… this all happened pre-2008 Finacial Meltdown, and the bank, nor the lendee are around anymore to release the lien in A…
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I seem to remember @midlifeflyer knows of a website dealing with the institutions that are no longer around. Those places didn’t just up and vaporize.

That could help you get the lien released later…don’t know if a settlement would be required though.
 
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Among many other things, I have a dealer's license and have bought, sold and brokered a couple of planes.

You need to contact a company like AIC. I worked with a lady by the name of Darzhane who cleared my most recent title issue. They can, for a small fee, do what is called a "quiet title" process if they cannot find the original creditors (unlikely.)
 
Ventucky Red said:
Here is the Cliff note version

A.) The plane was bought with a loan.

B.) The plane was later used to collateralize another loan

C.) The loan on B is paid off and the bank has released the lien on the plane.

D.) The loan on A is still showing on the plane's title.

This has been like this since the current owner purchased the plane in 2009 and the FAA registry has the plane in their name. And, this all happened pre-2008 Finacial Meltdown, and the bank, nor the lendee are around anymore to release the lien in A.

Question 1: Someone mentioned taking title insurance that would cover any claims made to the pane subsequent to the purchase. Thoughts?

Question 2: Will the FAA even allow the plane to be registered in my name with the lien on the plane, or do they not care?

Thanks
Click to expand...

If this is a plane you are looking to buy, then I suggest you instruct the seller to hire a title company to fix it and keep looking.

If this were not my problem, I would not pay thousands of dollars to make it my problem unless I understood how to address it and I received a substantial discount for the work.

Having said that, in the case of home liens (I presume the process is similar with aircraft), this could potentially be released by tracking down the claimant or (in an extreme example) hiring a lawyer to prove that the claimant is unable to unwilling to reasonably process the lien and therefore have it released by default judgement in a lawsuit. Most title companies have done this enough to have it streamlined to a point where they can give you an idea of what it will cost to remediate the title before selling title insurance, so I would start there.
 
Brad Z said:
You won't be able to buy title insurance until the Lien from loan A has been released.
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Lindberg said:
Or you can buy insurance, but it will exclude this lien.
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Usually it will exclude, but sometimes it won't. Just like with real estate title insurance. You don't really know until you ask.
 
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