Why Bother with a Title Search

I got a call once from a man who was about to board a plane to Nashville to buy a plane from a guy he had never met. He was experiencing sudden cold feet, wondering if the man he was about to meet really owned the plane, had the right to sell it, or owed any money on it. I asked if he had had a title search done on the aircraft and he said, “No, should I have?”

The amount of deals done on a handshake in the aviation industry never ceases to amaze me. No one would ever think of buying a house like that. But it happens in aviation more often than one might think, particularly in the smaller aircraft market where buyers are more reluctant to spend extra money on items like title searches, escrow fees and legal advice.

I’ve explored the benefits of escrow in a previous article, so this one will focus on the benefits of the most basic of services….a search of the FAA records. Better known as a title search, this service can provide a buyer with valuable information about the aircraft. For less than $100 (in most cases), buyers can find out the name of the registered owner of the aircraft and whether a bank or any other entity has an outstanding interest against the aircraft.

Taking the story above as an example, what if the “seller” of the aircraft didn’t really own it. What if he had stolen it from someone else who owed the bank $50,000 for that plane? What would have happened to the buyer when the seller and bank realized the plane was no longer theirs? Think it sounds farfetched? Think again. Philko vs. Shacket is a landmark aviation case where an unscrupulous seller sold the same plane to two separate buyers. As much as we don’t like to admit it, dishonest people exist in this world, and some of them have been known to sell unsuspecting buyers planes they don’t own or have the right to sell. A simple search of the FAA records can help prevent this from happening.

Dishonest sellers aside, searching the FAA records before buying a plane can help prevent title issues on down that line that can result in a plane being grounded. The FAA has strict rules about what documents that are being filed need to look like. The seller’s name has to match the FAA records, only certain titles under signatures are acceptable, there are boxes to check for buyers, and lenders need help releasing outstanding loans or filing new ones. If any documents are not properly filled out when filed, the FAA could refuse to record them, which means it won’t issue causing problems for a buyer on down the line.

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