Purchasing Aircraft Title Insurance

 

Why does an aircraft require title insurance?

Aircraft titles can be subject to fraud, unresolved claims, and record errors just like land titles. An aircraft title can be made unenforceable for many reasons. This could lead to property loss, lawsuits or the payment of unpaid taxes or liens. Insurance companies will prepare an "title opinion" or abstract for your aircraft based on a detailed investigation of its fractional aircraft ownership. This is the first step to acquiring title insurance.

The initial title search is done to identify any issues with the ownership rights of the aircraft and, if necessary resolve them before the sale closes.

 

Titles are often associated with problems:

Unreliable FAA Title Records. The Federal Aviation Administration requires all aircraft to be registered through the FAA. However, FAA records don't have legal authority to determine rightful ownership. Certificates of Registration or FAA Registration are not the final authority to determine ownership. Only state courts can decide if there are reasonable disputes regarding rightful ownership.

Fraud. Aircrafts that originate from another country can be difficult to trace and even though the title may appear to be legal, the seller could have forger the deregistration notice. Even if the liens are international, buyers of stolen aircraft still have rights to lien attached to their title. It is possible to defraud records by having them resold to someone else before the FAA has had a chance to file a security arrangement.

Mistakes in recording. Clerks, title lawyers and aircraft brokers can make mistakes from time-to-time. Insurance underwriters can misinterpret FAA records. Title agents, aircraft brokers and escrow agents can make mistakes in document registration, filing, and creation. Incorrectly or incorrectly filed documentation could lead to inaccurate abstracts.

Any unpaid taxes or liens. The new owner of an aircraft is responsible for all unpaid taxes and mortgages on the aircraft's title.

Title opinions and abstracts are usually presented to an aircraft buyer or broker before ownership is transferred. However, some problems may not be apparent in the initial abstract.

What aviation title insurance can I get?

Title searches and abstracts are meant to protect aircraft owners against asset loss and legal attacks on their aircraft's title. However, hidden fraud and human error still pose a risk. Afraidowners need to be sure that their assets and legal rights are protected by purchasing insurance.

Title insurance covers the costs of legal defense for airplane owners. The insurance also covers the title owner for any property or financial loss due to title disputes up to a certain amount. Aircraft title insurance is an essential commodity that aircraft owners should have at a cost less than 1% of their purchase price.