Jet and Aircraft Transactions and Escrow

FAA Registration, Ownership, and Recorded Documents

FAA registration and legal ownership answer different questions. Under 49 U.S.C. § 44103(c)(2), a registration certificate is not evidence of ownership in a proceeding where ownership is or may be in issue. A certificate therefore should not be treated as a title guarantee. Reviewing the bill of sale, the seller's authority, financing documents, and recorded interests remains a separate part of the transaction.

The FAA's recording system covers eligible conveyances affecting interests in U.S. civil aircraft and specified other instruments and releases under 49 U.S.C. § 44107. Registering the aircraft and recording a conveyance are distinct steps. A transaction checklist should identify each document and confirmation rather than describing all of them as “registering the title.”

Why Filing and Recordation Both Matter

49 U.S.C. § 44108(a) limits the effect of a covered instrument before it is filed for recording, while preserving its effect against the maker, the maker's heirs and devisees, and people with actual notice. Under 49 U.S.C. § 44108(b), once the instrument is recorded, its stated effect runs from the filing date, subject to the statute's qualifications. Filing and completed recordation should therefore be identified separately in the closing instructions.

Federal recording does not by itself settle every competing claim. In Philko Aviation, Inc. v. Shacket, 462 U.S. 406, 412-13 (1983), the Supreme Court explained that recordation does not itself grant priority; state law remains relevant to priority. The current statute also makes an instrument's validity subject to the applicable law of its delivery location and preserves the specified treaty rules. 49 U.S.C. § 44108(c)(1); 49 U.S.C. § 44108(c)(2). The legal review must address the actual documents and interests involved.

Check the Proposed Owner's Registration Eligibility

Registration eligibility should be checked before the closing documents identify the buyer. For private ownership, 49 U.S.C. § 44102 requires that the aircraft not be registered under foreign law and describes qualifying ownership routes: a U.S. citizen, an individual foreign citizen lawfully admitted for permanent residence, or a qualifying noncitizen corporation organized and doing business under U.S. or state law whose aircraft is based and primarily used in the United States.

Forming a company does not by itself answer all eligibility questions. The proposed owner, governing documents, ownership information, and intended aircraft use need to be reviewed against the applicable requirements. Company or trust structures can require further analysis; this overview does not determine whether a particular buyer qualifies.

The International Registry and Individual Engines

Some jet transactions involve two systems: FAA recorded documents and the Cape Town International Registry. The FAA identifies qualifying airframes and engines separately, including jet engines with at least 1,750 pounds of thrust. Its registration guidance expressly addresses eligible U.S. aircraft and engines. Whether searches, registrations or discharges are needed depends on the aircraft objects and transaction. A U.S. transaction should not be assumed outside the framework simply because no export is planned.

Inspection Findings and Contract Acceptance

The technical evaluation and the purchase contract answer different questions. The FAA describes varying pre-buy inspection scopes, including review of maintenance logs, equipment and airworthiness directives. For a jet, the agreed review can address the airframe and each engine’s records and condition. The contract can specify who evaluates discrepancies, what condition permits rejection, correction deadlines and how acceptance affects the deposit. An inspection report does not itself create a contractual cancellation right or guarantee that every defect has been found.

The Owner and the Flight Operator

Buying or registering a jet does not itself authorize charter service. FAA AC 91-37B, currently active, explains operational control: authority over starting, conducting or ending a flight. The FAA cautions that lease labels and separate aircraft-and-pilot contracts do not settle who actually operates the flight. Proposed management, leasing and passenger arrangements therefore need their own review, including the operating authority required for the intended use.