In previous blogs we have discussed the paperwork gaps that can occur around aviation escrow transactions and how Wright Brothers helps to Close the Gaps, whether between the time you pay for an aircraft and the time the necessary documents are filed with the Federal Aviation Authority (FAA), or between documentation Filing and Recording at the FAA.
There is also a gap between filing at the FAA and registering at the International Registry (IR). In each of these scenarios, an escrow agent, as a “PUE”, can help close the gap with a more seamless transaction for a “TUE”, ensuring representation for each party. In the gap between the FAA and IR specifically, “The Closing Room”, a virtual safekeep for all notices between parties, can be a key factor and a huge help.
TUE? PUE? – The Differences
The terms TUE and PUE are often used in the world of aviation escrow, but what do they mean? A TUE is a Transacting User Entity, such as a buyer or seller, lender or debtor, whereas a PUE is a Professional User Entity, like Wright Brothers for example. Why is this important in terms of filing at the FAA or registering an interest with the IR?
While a TUE is the party named in the filing or registration, a PUE is not. A Professional User Entity can however file or register on behalf of a Transacting User Entity. Representation by a PUE, like WBAT, can ensure that the correct steps for both filing at the FAA and registering at the IR are followed, securing the interests of all parties involved and only upon the approval of each.
Between the FAA and the IR – Possible Repercussions
Documents are filed at the FAA for recording, and notices of interest are registered at the IR. In general, a U.S. document is filed with the FAA first, where a code is then issued to register the notice of that same interest with the IR.
What happens if you file at the FAA and not the IR? The IR was granted super priority over the FAA, and the IR gives “first in time, first in right” status to all notices registered there. This basically means that if you file at the FAA but do not register the notice at the IR, and someone else files a notice of a competing interest at the IR before you get there – they win.
The same is true if you file at the FAA and intend to register at the IR, but someone registers a competing interest before you do. They got there first, so they win. This makes the gap between filing at the FAA and registering at the IR extremely important.
The Closing Room – How it Helps Save Time
The Closing Room is an IR function that allows a coordinator, a PUE like Wright Brothers, to set up a virtual space for the interested parties (sometimes PUEs and TUEs) to hold all registrations until they are approved and ready to process. This space allows the PUE to “preposition” registration information in conjunction with any other claimed interests before submitting them. It allows for all PUEs and TUEs to view each registration and requires the approval of each in order to “close” the room, which then releases all registrations. Closing the room and filing at the FAA can thus happen almost simultaneously.
In this way, “The Closing Room” helps close the time gap between the registering of an interest at the IR and the filing of documents at the FAA, especially if there is a competing claim. Of significant note here is that in order to lessen the number of “hands in the pot” and really streamline the process and close the gap, the PUE should be handling all FAA filings and IR registrations on a regular basis so that all documents among all parties are handled correctly. Having interests preapproved and consented to before closing is always a good thing.