Aircraft Lien Searches: Protect Your Purchase From Hidden Claims

Understanding Aircraft Liens

What Is an Aircraft Lien?

A lien is a legal claim against an aircraft that secures payment of a debt. When someone borrows money using an aircraft as collateral, the lender files a lien with the FAA creating a security interest. This lien:

• Gives the lienholder legal rights to the aircraft
• Remains with the aircraft regardless of ownership changes (unless properly released)
• Allows repossession if debt isn't paid
• Must be satisfied before clean title can transfer
• Is public record searchable by anyone

Types of Aircraft Liens

Voluntary Liens (Consensual Liens):

• Purchase Money Liens: Created when financing aircraft purchase
• Refinance Liens: Filed when refinancing existing loans
• Improvement Liens: Securing loans for upgrades or modifications

These liens are filed with owner consent as part of financing arrangements.

Involuntary Liens (Non-Consensual Liens):

• Mechanic's Liens: Filed by repair shops for unpaid maintenance bills
• Tax Liens: IRS or state tax liens for unpaid taxes
• Judgment Liens: Court-ordered liens from lawsuits
• Materialman's Liens: For unpaid parts or materials

These liens can be filed without owner consent and represent serious title problems.

How Liens Affect Aircraft Sales

Existing liens must be resolved before or at closing:

• Seller pays off liens before closing using their own funds
• Buyer's purchase funds pay off liens, with remainder to seller
• Buyer assumes liens (very rare; generally not advisable)

If liens exceed aircraft value, the seller must bring additional money to closing. If sellers can't or won't satisfy liens, the sale cannot proceed with clear title transfer.

How Aircraft Liens Are Recorded

FAA Aircraft Registry

The FAA maintains a central registry in Oklahoma City where all aircraft liens are recorded. Lienholders file:

• AC Form 8050-98: Aircraft Security Agreement detailing the lien
• Filing Fee: $5 per lien filing
• Supporting Documents: Security agreement or promissory note

Properly filed liens are "perfected," giving lienholders priority claim. Unperfected liens (not filed with FAA) are much weaker legally.

Lien Priority

When multiple liens exist, priority is typically:

1. Mechanic's liens (for work that enhanced aircraft value)
2. Federal tax liens
3. Liens in order of filing date (first filed = first priority)

Priority determines which lienholder gets paid first if aircraft is sold to satisfy debts. Lower priority lienholders may receive partial or no payment.

How to Search for Aircraft Liens

FAA Online Search (Free)

The FAA provides free online access to registration and lien records:

1. Visit the FAA Registry at faa.gov
2. Search by N-number, serial number, or owner name
3. Review registration history and recorded liens
4. Download available documents (some may require requests)

Limitations:

• System shows only properly filed liens
• May not show recently filed liens (processing delay)
• Doesn't include pending liens or unrecorded claims
• Requires interpretation and legal knowledge
• No verification that shown liens are actually released

Professional Title Search

Professional searches by title companies or aviation attorneys provide:

• Comprehensive FAA registry search
• Verification of current ownership
• Identification of all recorded liens
• Chain of title review for irregularities
• Verification of lien releases
• Written report with findings and recommendations
• Professional liability insurance backing the search

Cost: $300-$500 for standard searches, $500-$1,000 for complex situations.

Most lenders require professional title searches before funding loans. Even cash buyers benefit from professional verification.

Interpreting Lien Search Results

Reading Lien Documents

Lien filings typically show:

• Lienholder Name and Address: Who has the claim
• Debtor Name: Who owes the money (should match owner)
• Aircraft Details: N-number, make, model, serial number
• Lien Amount: Original debt amount (may differ from current balance)
• Filing Date: When lien was recorded
• Type of Lien: Purchase, refinance, judgment, etc.

Verifying Lien Releases

Paid-off liens should show releases filed. AC Form 8050-41 (Release of Lien) should include:

• Lienholder's signature releasing the claim
• Date of release
• Aircraft identification
• FAA filing date stamp

Red Flag: Liens showing as filed but no corresponding release when seller claims they're paid off. Always verify releases exist for liens the seller claims are satisfied.

Common Lien Problems

• Unreleased Liens: Debts paid but lender never filed release. Requires contacting old lender for late filing.
• Judgment Liens: Court liens from lawsuits. Must verify satisfaction before purchase.
• Tax Liens: IRS or state tax liens. Must be paid or negotiated before clear title.
• Mechanic's Liens: Unpaid maintenance bills. Verify legitimacy and payment before closing.
• Fraudulent Liens: Rarely, invalid liens are filed. Require legal action to remove.

Protecting Yourself From Lien Problems

Always Conduct Lien Searches

Never skip lien searches to save money or time. A $400 search can prevent losing a $200,000 aircraft to an undisclosed lienholder. Even if the seller seems trustworthy, verify everything.

Use Escrow Services

Escrow companies coordinate lien searches and payoffs, ensuring:

• All liens are identified before closing
• Lienholders are paid from purchase funds
• Releases are obtained and filed
• You don't pay sellers until clear title is confirmed

Read our guide on aircraft title and escrow services.

Require Seller Warranties

Purchase agreements should include seller warranties:

• Seller has clear title free of liens (except disclosed ones)
• No knowledge of pending liens or claims
• All disclosed liens will be satisfied at closing
• Seller will defend buyer against any undisclosed claims

While warranties provide legal recourse, preventing problems through thorough searches is far better than litigation later.

Get Title Insurance

Some title companies offer aircraft title insurance protecting against:

• Undiscovered liens surfacing after purchase
• Title defects not found in searches
• Ownership disputes

While not common for aircraft (unlike real estate), title insurance may be available for high-value aircraft or complex situations.

Dealing With Discovered Liens

Disclosed Liens Being Paid at Closing

If the seller disclosed liens that will be paid from sale proceeds:

1. Verify lien amounts with lienholders (balances may have changed since filing)
2. Obtain payoff quotes with good-through dates
3. Use escrow to ensure payment and release filing
4. Verify seller equity covers liens (they can't sell for less than liens without bringing cash)
5. Don't close until lien releases are obtained

Undisclosed Liens

If searches reveal liens the seller didn't disclose:

• Immediately notify the seller and ask for explanation
• Determine if liens are valid and amount owed
• Request seller satisfy liens before closing
• Consider whether non-disclosure indicates broader honesty issues
• Consult with attorney about purchase agreement rights
• Be prepared to walk away if seller won't or can't clear title

Problematic Liens

Some liens create serious problems:

• Liens exceeding aircraft value: Seller must bring cash to closing; if unable, sale can't proceed
• Disputed liens: Seller and lienholder disagree about validity or amount
• Defunct lienholders: Lender no longer exists; releasing liens requires legal proceedings
• Federal liens: IRS liens may have priority and complex resolution requirements

For complex lien situations, consult with aviation attorneys before proceeding.

Filing and Releasing Liens as an Owner

When You Finance Your Aircraft

Your lender will file a lien using:

• AC Form 8050-98 (Aircraft Security Agreement)
• Detailed loan information and terms
• Your signature consenting to the lien

This protects the lender's interest and is required for most aircraft loans. The lien remains on record until the loan is paid off and a release is filed.

When You Pay Off Your Loan

After paying off an aircraft loan:

1. Request written payoff confirmation from lender
2. Verify lender files AC Form 8050-41 (Release of Lien) with FAA
3. Check FAA records 30-60 days later to confirm release appears
4. Keep copies of release documentation permanently

Some lenders are slow to file releases. Follow up if you don't see the release on FAA records within 60 days. Unreleased liens cause problems when you sell or refinance.

State vs. Federal Lien Recording

Aircraft liens are primarily federal (FAA), but some states also allow recording:

• FAA recording is standard for aircraft liens
• Some lenders also file at state level for additional protection
• State filings vary by jurisdiction
• Professional searches check both federal and applicable state records

Always search both FAA and relevant state records for comprehensive lien identification.

Special Lien Situations

Mechanic's Liens

Repair shops can file liens for unpaid work. These liens:

• Often have priority over other liens
• Must be filed within specific timeframes after work
• Can result from disputes about quality or billing
• Require resolution before aircraft can be sold

If buying aircraft with mechanic's liens, verify the work was performed, bills are legitimate, and seller will pay them.

Liens on Co-Owned Aircraft

When multiple owners hold aircraft:

• Liens can attach to one owner's interest or the whole aircraft
• Co-owners may be unaware of liens filed against their partners
• Separating co-ownership with liens is complex

Extra diligence is required for co-owned aircraft. Learn about aircraft partnership considerations.

Experimental and Homebuilt Aircraft

Liens on experimental aircraft work the same as certified aircraft:

• Filed with FAA using same forms
• Searchable through same registry
• Must be released for clear title

However, financing experimental aircraft can be harder, so fewer liens may exist on this category.

Working With Professionals

Title Companies

Specialized aviation title companies offer:

• Comprehensive lien searches
• Chain of title review
• Written reports and recommendations
• Escrow coordination
• Lien payoff handling

Well-known companies include Aerospace Reports, AIC Title Service, and various aviation law firms.

Aviation Attorneys

Aviation attorneys assist with:

• Complex lien situations
• Disputed liens
• Lien removal proceedings
• Purchase agreement review ensuring lien protections
• Title defect resolution

For aircraft over $100,000 or complex ownership histories, attorney involvement is wise insurance against title problems.

Lien Searches and Financing

All aircraft lenders require lien searches before funding. They need to verify:

• No unexpected liens exist affecting collateral value
• Their lien will have proper priority
• Seller can transfer clear title
• Existing liens will be satisfied at closing

Lenders typically order their own title searches even if you conducted one. Expect this cost ($300-$500) as part of closing costs.

Learn more about the complete aircraft purchase closing process including lien resolution.