When the time comes to buy or sell a private aircraft, problems may arise from unsettled mechanic’s liens that have been filed and/or recorded with the FAA.
How Mechanic’s Liens are Filed: The FAA and State Law
The instructions for filing and recording an aircraft mechanic’s lien has varied by state since 1981. State law determines whether a lien must be recorded and how much time mechanics have in which it can be filed. Mechanic’s lien state filing requirements range from 30 days to 180 days after work is completed on an aircraft.
State law also dictates if and how a mechanic’s lien must be filed: locally, at the FAA, both locally and at the FAA, or neither locally nor at the FAA. Not all states record claims of liens, and the FAA only records liens if the applicable state law complies with the process. If these state requirements are not correctly followed, it could have a profound effect on the validity and the enforceability of that lien.
Just because a mechanic’s lien is filed and recorded at the FAA, that doesn’t make it valid. It doesn’t make it enforceable. For example, a mechanic may get angry with an aircraft owner and file a mechanics lien against an aircraft at the FAA. Enforceability will go back to the state, and it will ultimately be determined if the lien is valid based on state law by a court of competent jurisdiction.
The list of regulations is complex and extensive, and you should rely on an expert who can understand what applies to your specific situation.
FAA Handling of Mechanic’s Liens
We previously wrote about the difference between filing and recording documents, and these same rules apply to mechanic’s liens. The FAA will accept and review all liens that are filed at the central registry, but not all documents will be recorded. The process could take up to six weeks from the time in which the document is filed until it is recorded.
Anything that is filed but not recorded goes into suspense. This often happens with mechanic’s liens. In some cases, a mechanic may file too long after they completed the work. Or, even if their state law does not permit recording liens against aircraft, mechanics may send the document to the FAA nevertheless. If you have a disgruntled mechanic who believes they have a right to your plane based on work that has been done, they might file a lien just to cloud your title.
Clearing a Mechanic’s Lien
The FAA provides Disclaimer of Interest forms, which state that the party filing does not have any interest in the aircraft. Disclaimers may not eliminate the need for a release or clear the aircraft title. Ultimately, the validity of a mechanic’s lien is not decided by the FAA. Instead, it is handled by state law and is determined by a court of competent jurisdiction.
If filings and recordings are not valid and correct or if they are not released, the aircraft will likely have a clouded title, causing problems for its owner. This is a big challenge when selling the plane. Often, a mechanic will agree to release a lien upon receipt of payment of some kind. If a mechanic refuses to release or disclaim interest in the lien, the only entity that can decide if he or she has a valid interest is a court of law. Read our blog, Clearing Clouded Aircraft Titles, to learn more about this complex topic.
Mechanic’s liens on aircraft titles are a challenge for airplane owners. Wright Brothers has the knowledge and experience to help you navigate these murky waters and understand the best ways to handle them.