33323-phx

A P

RACTITIONER

’

UIDE TO THE

ERFECTION

, P

RIORITY

AND

NFORCEMENT OF AN

IRCRAFT

ECHANIC

’

IEN

Gregory J. Reigel*

I. I

NTRODUCTION

............................................. 281

II. B

ASIS FOR THE

IEN

........................................ 282

III. P

ERFECTING THE

IEN

....................................... 282

A. Filing with the Federal Aviation Administration Registry . . 283

B. Registering with the International Registry ............... 286

C. Timing for Filing of the Lien Statement .................. 288

D. Contents of the Lien Statement .......................... 288

IV. P

RIORITY OF THE

IEN

...................................... 290

A. Priority Under State Law ............................... 290

B. Priority Under the Cape Town Convention ............... 291

V. E

NFORCING THE LIEN

........................................ 292

A. The Wait and See Approach ............................. 292

B. Foreclosing the Lien Through Judicial Action ............ 292

C. The Self-Help Approach ................................. 294

VI. D

EFENSES

GAINST THE

IEN

................................ 294

VII. C

ONCLUSION

............................................... 297

VIII. A

PPENDIX

A: A

IRCRAFT

ECHANIC

’

IEN

AWS

............ 298

I. I

NTRODUCTION

The purpose of this Article is to provide aviation attorneys and other legal

practitioners with the general knowledge required to assist clients who store,

repair, or maintain a customer’s aircraft, or who provide other materials to that

aircraft. This Article explains how to assert a “mechanic’s lien” or “artisan’s

* President, Reigel Law Firm, Ltd. Gregory completed his undergraduate degree at the

University of Wisconsin-Madison and also holds a Juris Doctorate degree, cum laude, from Wil-

liam Mitchell College of Law. He handles aviation litigation including aviation insurance matters

and FAA certificate actions, and also aviation transactional matters. He is an Adjunct Professor at

William Mitchell College of Law teaching in the Advocacy and Advance Advocacy courses and

he is also an Adjunct Professor at Minnesota State University-Mankato teaching Aviation Law.

Gregory holds a commercial pilot certificate (single engine land and sea and multi-engine land)

with an instrument rating.

282 PHOENIX LAW REVIEW [Vol. 6:281

lien”

against an aircraft until the client providing the services, the “lien claim-

ant,” has been paid for the services he or she provided to the aircraft. To under-

stand under what circumstances a mechanic’s lien may be asserted against an

aircraft, this Article discusses generally the interplay between federal and state

laws that may affect how to perfect and enforce an aircraft mechanic’s lien.

Specifically, this Article discusses the basis for an aircraft mechanic’s lien:

what a lien claimant must do to perfect the lien, how to determine the priority

of the perfected lien as it may relate to other interests in the aircraft, options

available to the lien claimant for enforcement of the lien, and several defenses

to an aircraft mechanic’s lien. Additionally, this Article includes an Appendix

offering an overview of the various state aircraft mechanic’s lien laws and their

requirements; the Appendix is intended to provide a starting point for a practi-

tioner who is researching these issues.

II. B

ASIS FOR THE

IEN

To begin, it is important to understand the type of work, services, or mater-

ials upon which an aircraft mechanic’s lien may be based. An aircraft

mechanic’s lien arises from work performed, services provided, or materials

furnished to an aircraft that enhance the aircraft’s value.

A lien may also arise

from a lien claimant’s storage of an aircraft.

Lien claims submitted only for

services, such as training fees and pilot fees, typically are not acceptable.

III. P

ERFECTING THE

IEN

Assuming a basis for an aircraft mechanic’s lien exists, a lien claimant may

“perfect” the claim against the aircraft as required or allowed under state and

For purposes of this Article, the author will refer to the aircraft mechanic or artisan’s lien

simply as an aircraft mechanic’s lien or mechanic’s lien.

See, e.g., M

INN

. S

TAT

. § 514.221(1) (2012) (“[A]ny person who makes, alters, repairs, or

otherwise enhances the value of any aircraft at the request of the owner or legal possessor, and

who parts with possession of the aircraft, has a lien upon the aircraft for that person’s reasonable

or agreed charges and for work done or materials furnished”).

See, e.g., A

. C

ODE

. § 18-45-206 (2005) (allowing lien claim based upon storage of

aircraft); F

. S

TAT

. § 25- 713.58 (2012) (allowing lien claim based upon storage of vehicle,

including aircraft); M

ASS

. G

. L

AWS

. ch. 255, § 31E (2012) (allowing a lien claim based

upon tie-down fees).

See supra notes 2-3. See, e.g., F

. A

VIATION

DMIN

., E

XAMINATION

UIDELINES

§§ 4.5.1,

4.5.3 (2008) (Lien statutes focus on services or work (e.g., storage, repairs, etc.) provided directly

to an aircraft that enhance or preserve the aircraft’s value, as opposed to services that may only be

performed in connection with or ancillary to the aircraft and that do not directly enhance or pre-

serve the aircraft’s value) [hereinafter E

XAMINATION

UIDELINES

2012-2013] AIRCRAFT MECHANIC’S LIEN 283

federal law.

As discussed below, these requirements may include governmen-

tal filings, possession, or both.

A. Filing with the Federal Aviation Administration Registry

Congress originally passed § 503 of the Federal Aviation Act of 1958

“to

establish a single national filing system for the recordation of documents evi-

dencing title and security interests in civil aircraft.”

Title 49 U.S.C. § 44107

specifically requires the recording of “conveyances that affect an interest in

civil aircraft of the United States.”

Accordingly, the Federal Aviation Admin-

istration (“FAA”) has established a national filing system, Aircraft Registry,

for the recording of conveyances relating to aircraft.

See U.C.C. § 9-311(a) (2012) (“[T]he filing of a financing statement is not necessary or

effective to perfect a security interest in property subject to: (1) a statute, regulation, or treaty of

the United States whose requirements for a security interest’s obtaining priority over the rights of

a lien creditor with respect to the property preempt section 9-310(a).”). U.C.C. means the Uni-

form Commercial Code that has been adopted, with some variations, by all fifty states. Although

some slight differences may exist between the forms of the U.C.C. ratified by each state, for

purposes of this Article, the author will refer to the form of the U.C.C. as adopted by, and in effect

in, the state of Minnesota under M

INN

. S

TAT

. Ch. 336 (2012). Perfection may also be required

under the Bankruptcy Code which “[f]or purposes of preferential transfer actions, a transfer is

deemed made at the time the transfer is perfected if the perfection occurs more than 30 days after

the transfer takes effect. 11 U.S.C. § 547(e)(2)(B). A transfer of personal property is perfected

when it is entitled to priority against a hypothetical subsequent judicial lien. 11 U.S.C.

§ 547(e)(1)(B).” In re McConnell, 455 B.R. 824, 827 (Bankr. M.D.Ga. 2011).

The Federal Aviation Act of 1958, Pub. L. No. 85-726, 72 Stat. 737 (codified as amended

in 49 U.S.C. § 1301 et seq.). See also 49 U.S.C. § 1403 (1958), amended by 49 U.S.C. § 44107

(1994).

In re S. Air Transp., Inc., 511 F.3d 526, 532 (6th Cir. 2007).

49 U.S.C. § 44107 (2006). The purpose of the recording requirements of the Federal Avia-

tion Act of 1958 was “to substitute for the multiplicity of state registration or recording systems a

single preemptive federal system for registering (1) instruments of title, comparable to state regis-

tration of titles to motor vehicles, and recording (2) security documents of the kinds commonly

comprehended by state recording laws concerning written consensual security interests affecting

personal property. The reason was that the ready mobility of aircraft and their common use across

state lines made it cumbersome and burdensome for persons having concern with title to or incum-

brances on aircraft to have to record or search in all states or localities which could arguably be

claimed to constitute the proper recording situs in relation to the specific owner or incumbrancer

of a particular aircraft.” S. Jersey Airways, Inc. v. Nat’l Bank of Secaucus, 261 A.2d 399, 403-04

(N.J. Super. Ct. App. Div. 1970) (citing Scott, Liens in Aircraft: Priorities, 25 J. A

L. & C

193, 200-203 (1958)).

See Aircraft Certification, F

. A

VIATION

DMIN

., http://www.faa.gov/licenses_certificates/

aircraft_certification/aircraft_registry/about_aircraft_records/ (last modified July 17, 2012). For

purposes of this Article, the Federal Aviation Administration’s Aircraft Registry will be referred

to as the “FAA Registry.”

See generally In re Tower Air, Inc., 319 B.R. 88, 99 (Bankr. D. Del. 2004) (holding that

aircraft engines were not subject to registration requirements).

284 PHOENIX LAW REVIEW [Vol. 6:281

A conveyance is defined as a bill of sale, contract of conditional sale, mort-

gage, assignment of mortgage, or other “instrument . . . affecting title to, or an

interest in, property.”

Because a mechanic’s lien claimant asserts an interest

in property, namely the aircraft, under 49 U.S.C. § 44107 an aircraft

mechanic’s lien is a conveyance and a lien claimant must file a lien statement

or claim with the FAA Registry.

Thus, except for the few states that do not have aircraft lien recording or

notice statutes, the lien statement must be filed with the FAA Registry in order

for the lien to be valid or perfected.

Some states may also require a lien

claimant to maintain possession of the aircraft,

file in the local jurisdiction

49 U.S.C. § 40102 (a)(19).

See generally Philko Aviation, Inc. v. Shacket, 462 U.S. 406, 413 (1983) (“[A]ll interests

must be federally recorded before they can obtain whatever priority to which they are entitled

under state law.”). See also State Court Decision Affecting Recordation of Artisan Liens, 70 Fed.

Reg. 53,707 (Sept. 9, 2005) (“The FAA published notice in the Federal Register that the FAA

Aircraft Registry would record artisan liens on aircraft that met the minimum requirements of

state statute. The notice stated that, for aircraft, ‘there is Federal preemption of place of filing:

The FAA Aircraft Registry at Oklahoma City.’ 46 FR 61528, December 17, 1981. The sole

purpose of that notice was to set out the criteria for recording artisan liens with the FAA Aircraft

Registry.”).

49 U.S.C. § 44108(a) (“Until a conveyance, lease, or instrument executed for security pur-

poses that may be recorded under section 44107(a)(1) or (2) of this title is filed for recording, the

conveyance, lease, or instrument is valid only against - (1) the person making the conveyance,

lease, or instrument; (2) that person’s heirs and devisees; and (3) a person having actual notice of

the conveyance, lease, or instrument.”).

See generally I

OWA

ODE

§ 577.1 (2011) (requiring Iowa lien claimant to retain possession

of the aircraft); O

KLA

. S

TAT

. tit. 42, §§ 91A, 98 (2010) (requiring Oklahoma lien claimant to

retain possession of the aircraft); Commercial Jet, Inc. v. U.S. Bank, N.A., 45 So. 3d 887 (Fla.

Dist. Ct. App. 2010), rehearing denied, 76 So. 3d 913 (Fla. Dist. Ct. App. 2011) (requiring a

Florida lien claimant to retain possession of the aircraft in addition to filing with the FAA

Registry).

Accord State Court Decision Affecting Recordation of Artisan Liens, 70 Fed. Reg. 53,707

(Sept. 9, 2005). See also L

. R

. S

TAT

. A

. § 9.4512.A(2) (2011) (requiring the lien claimant

to also record the notice filed with the FAA Registry with “the recorder of mortgages for the

parish where the aircraft was located at the time of labor, services, fuel, or materials were last

furnished.”); M

. R

. S

TAT

. § 430.020 (2011) (requiring a lien claimant “furnishing the labor or

material . . . may retain the lien after surrendering possession of the aircraft or part or equipment

thereof by filing a statement in the office of the county recorder of the county where the owner of

the aircraft or part or equipment thereof resides, if known to the claimant, and in the office of the

county recorder of the county where the labor or material was furnished” and must be filed with

the FAA Registry to bind a bona fide purchaser). See generally Creston Aviation, Inc. v. Textron

Fin. Corp., 900 So. 2d 727 (Fla. Dist. Ct. App. 2005) (holding that federal law pertaining to

recording with the FAA Registry did not preempt a Florida statute requiring that an artisan lien for

work on an aircraft first be filed in the county where the work was performed in order to enforce

the lien under Florida law). As far as this author is aware, the statutes cited in this footnote are the

only statutes that expressly set forth the requirements that the lien statement be filed both with the

FAA Registry and the county or parish. Other statutes reference filing with the “clerk of court,”

2012-2013] AIRCRAFT MECHANIC’S LIEN 285

in which the lien claim arose, or serve notice of the lien claim upon the aircraft

owner,

in addition to filing with the FAA Registry.

In the absence of perfection of the lien claim with the FAA Registry, the

lien claimant may still have rights—with notice—against the aircraft owner or

operator, their heirs, or third parties.

However, those rights will not be valid

against third parties without notice of the lien claimant’s claim.

Currently, the FAA Registry accepts aircraft mechanic’s lien statements

from thirty-seven states.

However, not all states have the required aircraft

“secretary of state,” or “county register” etc. without any specific reference to the FAA Registry.

As a result, it appears the filing requirements in these statutes would be completely pre-empted

under Philko. See, e.g., O

KLA

. S

TAT

. tit. 42, § 98.A.1 (2012); O

. R

. S

TAT

. § 87.252 (2011);

S.D. C

ODIFIED

AWS

§ 44.11.3 (2012); V

. C

ODE

. § 43-34.1 (2012); W

ASH

. R

. C

ODE

§ 60.08.020 (2012); W

. S

TAT

. A

§ 29-7-102 (2012).

See, e.g., C

ONN

. G

. S

TAT

. § 49-92h(a) (2011) (“The lienor shall, within seven days of the

filing, send by certified mail a copy of such notice to the person indicated as the owner of the

aircraft, and to anyone who has filed with the Secretary of the State claiming a legal or equitable

interest in the aircraft.”); M

ICH

. C

OMP

. L

AWS

§ 259.205b (2012) (requiring a lien claimant to

deliver claim of lien together with an itemized statement of the account to the registered owner of

the aircraft by personal service or service by registered or certified mail addressed to the last

known address of the registered owner of the aircraft within sixty days after filing with the FAA

Registry); N

. R

. S

TAT

. § 108.272 (2011) (requiring a lien claimant within 120 days after date

of service or within seven days after the lien claimant receives an order to release the property,

whichever time is less, to serve the legal owner by mailing a copy of the notice of the lien to his

last known address, or if no address is known, by leaving a copy with the clerk of the court in the

county where the work was performed); O

. R

. S

TAT

. §87.252 (2011) (requiring a lien claimant

to send a copy of the lien statement to the aircraft owner “forthwith” and “to holders of perfected

security interests within 30 days after the date of filing”); T

ENN

. C

ODE

. § 66-19-301 (2011)

(requiring that “[a] copy of the notice of lien to be filed shall be sent by first class mail to the last

known address of the party for whose account the work was performed, repairs made or materials

furnished, and upon any other party known by the party asserting the lien to claim an ownership

interest in the subject property.”); T

. P

ROP

. C

ODE

. § 70.304 (West 2011) (requiring a lien

claimant maintaining possession of the aircraft to notify the aircraft owner and any other

lienholders shown of record at the FAA Registry within sixty days of the date the work is com-

pleted via certified or registered mail, return receipt requested); U

TAH

ODE

. § 38-13-201

(LexisNexis 2012) (requiring lien claimant to also send notice of lien to the person against whom

the notice of lien is recorded within thirty days of filing with the FAA Registry).

See infra App. I (providing summary of state aircraft mechanic’s lien statutes and methods

of perfection).

See M

. C

ODE

., C

. L

§ 16-204 (LexisNexis 2012).

See, e.g., N

. R

. S

TAT

. § 108.274 (2012); N.Y. L

IEN

§ 184 (McKinney 2012);

KLA

. S

TAT

. tit. 42, § 91A (2012).

See, e.g., Legal Opinion as to the Recordability of Artisans’ Liens and Identification of

Those States From Which Such Liens Will be Accepted, 46 Fed. Reg. 61,528 (Dec. 17, 1981) (the

FAA’s initial legal opinion on the recordability of artisan liens, identifying Arkansas, Georgia,

Illinois, Indiana, Kansas, Kentucky, Maine, Nebraska, Oklahoma, Oregon, South Carolina, South

Dakota, Virgin Islands, Washington, and Wyoming as states from which it would accept

mechanic’s liens). See also Artisan Liens on Aircraft; Recordability, 70 Fed. Reg. 59,800 (Oct.

13, 2005) (adding Idaho and Utah); Artisan Liens on Aircraft; Recordability, 67 Fed. Reg. 68,902

286 PHOENIX LAW REVIEW [Vol. 6:281

notice or recording statutes and, as a result, the FAA Registry will not accept

lien statements based upon the recording laws of those states.

For those

states from which the FAA Registry will not accept lien statements, the lien

claimant must review the general lien statutes and case law of that particular

state to determine the appropriate method for perfecting a lien against an air-

craft in that jurisdiction.

B. Registering with the International Registry

In addition to filing with the FAA Registry, one familiar with the Cape

Town Convention

may wonder whether a lien claimant must also file a lien

(Nov. 13, 2002) (adding Louisiana, Massachusetts, and Rhode Island); Artisan Liens on Aircraft;

Recordability, 58 Fed. Reg. 50,387 (Sept. 27, 1993) (adding California (General Aviation only),

Connecticut, Ohio, and Virginia); Artisan Liens on Aircraft; Recordability, 56 Fed. Reg. 36,189

(July 31, 1991) (adding Iowa); Artisan Liens on Aircraft; Recordability, 56 Fed. Reg. 27,989

(June 18, 1991) (adding Arizona); Artisan Liens on Aircraft; Recordability, 55 Fed. Reg. 31,938

(Aug. 6, 1990) (adding Michigan and Tennessee); Artisan Liens on Aircaft; Recordability, 54 Fed.

Reg. 51,965 (Dec. 19, 1989) (adding North Dakota); Artisan Liens on Aircraft; Recordability, 54

Fed. Reg. 38,584 (Sept. 19, 1989) (adding Texas); Artisan Liens on Aircraft; Recordability, 53

Fed. Reg. 23,716 (June 23, 1988) (adding Missouri); Legal Opinion as to the Recordability of

Artisans’ Liens and Identification of Those States From Which Such Liens Will be Accepted, 51

Fed. Reg. 21,046 (June 10, 1986) (adding Minnesota and New Mexico); Legal Opinion as to the

Recordability of Artisans’ Liens and Identification of Those States From Which Such Liens Will

be Accepted, 49 Fed. Reg. 17,112 (April 23, 1984) (adding Florida, Nevada, and New Jersey);

XAMINATION

UIDELINES

, supra note 4, at § 4.5.12 (adding North Carolina).

See sources cited supra note 20. The FAA Registry will not accept lien statements from

Alabama, Colorado, District of Columbia, Hawaii, Montana, New Hampshire, New York, Penn-

sylvania, Vermont, West Virginia, and Wisconsin. See sources cited supra note 20.

See W

. S

TAT

. § 779.43(3) (2011) (“[E]very person or corporation, municipal or private,

owning any airport, hangar or aircraft service station and leasing hangar space for aircraft, shall

have a lien thereon and may retain the possession thereof for the amount due for the keep, support,

storage or repair and care thereof until paid.”); see generally In re S. Air Transp., Inc., 511 F.3d

526, 533 (6th Cir. 2007) (“[W]here a state law does not require, or even provide for, the filing of

an instrument in order for a possessory artisan’s lien against an aircraft to be perfected, the failure

to file an instrument evidencing the lien with the FAA registry does not invalidate the lien.”).

Thus, because the FAA Registry will not accept a lien statement for an aircraft mechanic’s lien

arising in Wisconsin the lien claimant must perfect the claim by retaining possession of the air-

craft. See sources cited supra note 20.

Int’l Inst. for the Unification of Private Law (UNIDROIT), Convention on International

Interests in Mobile Equipment (Nov. 16, 2001) [hereinafter Cape Town Convention], available at

http://www.unidroit.org/english/conventions/mobile-equipment/mobile-equipment.pdf. See also

49 U.S.C. § 44107 (2012) (requiring filing with the FAA Registry and approval of the filing); 49

U.S.C. § 44107(e)(1) (2006) (establishing the Federal Aviation Administration Civil Aviation

Registry is designated as the United States Entry Point to the International Registry); UNIDROIT,

Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to

Aircraft Equipment (Aug. 9, 2004) [hereinafter Cape Town Protocol], available at http://www.

unidroit.org/english/conventions/mobile-equipment/aircraftprotocol.pdf. Many people simply

refer to the Convention and the Protocol collectively as the Cape Town Treaty or Cape Town

2012-2013] AIRCRAFT MECHANIC’S LIEN 287

claim for certain aircraft or engines with the International Registry. The Cape

Town Convention is an international treaty that went into effect in the United

States on March 1, 2006;

it applies to many twin-engine, and most jet, air-

craft.

The Cape Town Convention is important because it changed the man-

ner in which interests in aircraft and engines are documented and recorded,

and it also changed the priorities of those interests.

However, the United

States has not filed a declaration identifying the categories of non-consensual

rights or interests (e.g., an aircraft mechanic’s lien) that shall be registrable

with the International Registry.

As a result, the International Registry will

not accept registration of an aircraft mechanic’s lien.

Convention. For purposes of this Article, the author will simply refer to the Convention and the

Protocol collectively as “the Cape Town Convention,” except when citing specific provisions

within the Convention or the Protocol.

See Federal Aviation Administration, Civil Aviation Registry, Aircraft Registration Branch

Practices Related to the Cape Town Treaty, 71 Fed. Reg. 9,907 (Feb. 28, 2006) (to be codified at

14 C.F.R. part 49). The Convention was originally ratified or acceded to by the United States,

Ethiopia, Ireland, Malaysia, Nigeria, Panama, and Pakistan. See Protocol to the Convention on

International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment, Adoption,

UNIDROIT.

ORG

, http://www.unidroit.org/english/implement/i-2001-aircraftprotocol.pdf (last vis-

ited Jan. 6, 2013). The eighth ratification required for the Convention to become effective

occurred on November 2, 2005, when Malaysia deposited its ratification. Id.

Cape Town Protocol, supra note 23, at art. 1, 2(a) and (c). The aircraft and engines subject

to the Cape Town Convention include: (1) Aircraft that are type certificated for at least eight (8)

persons including crew; or goods in excess of 2750 kilograms (6,062 pounds); (2) Helicopters that

are type certificated for at least five (5) persons including crew; or goods in excess of 450 kilo-

grams (990 pounds); and (3) Aircraft engines having at least 1750 pounds of thrust or at least 550

rated take-off shaft horsepower. Id. at art. I, (b), (e), & (l). The Cape Town Convention does not

contain any provisions for registering propellers. See id.

Cape Town Convention, supra note 23, at art. 16 (establishing one worldwide electronic/

computerized registry called the “International Registry” located in Ireland). The URL for the

International Registry is https://www.internationalregistry.aero. All filings of interests in subject

aircraft are performed through the International Registry website. Although the actual processes

and procedures for performing a filing with the International Registry are beyond the scope of this

Article, you may obtain more information from the International Registry at https://www.interna-

tionalregistry.aero/irWeb/showFAQs.do.

See discussion infra Part IV.A-B.

See generally Declarations Deposited Under the Cape Town Convention on International

Interests in Mobile Equipment Regarding Article 40, UNIDROIT.

ORG

, http://www.unidroit.org/

english/conventions/mobile-equipment/depositaryfunction/declarations/byarticle/article40.htm

(confirming that the United States has not deposited any declarations pursuant to Article 40) (last

visited Jan. 8, 2013).

See generally Cape Town Convention, supra note 23, at art. 40 (“A Contracting State may

at any time in a declaration deposited with the Depositary of the Protocol list the categories of

non-consensual right or interest which shall be registrable under this Convention as regards any

category of object as if the right or interest were an international interest and shall be regulated

accordingly.”).

288 PHOENIX LAW REVIEW [Vol. 6:281

C. Timing for Filing of the Lien Statement

The lien statement must be filed within the amount of time established by

state law.

Depending upon the state, this time period can range anywhere

from thirty days to 180 days either from the last date the lien claimant per-

formed work on the aircraft,

or from the date when the lien claimant relin-

quished possession of the aircraft.

D. Contents of the Lien Statement

For the FAA Registry to accept the lien statement for recording, the state-

ment must at a minimum include the following information: (1) the identifica-

tion of the aircraft by N-number and serial number; (2) the make and model of

the aircraft; (3) the registered owner of the aircraft; (4) the type of work per-

formed by the lien claimant; (5) the last day when the lien claimant worked on

the aircraft; and (6) the amount of the lien claimed by the lien claimant.

Additionally, some states may require lien claimants to use a prescribed form

for the lien claim or, if the state does not have a prescribed form, local law may

require that the lien statement contain additional information beyond what is

required by the FAA Registry.

The FAA Registry will only record the lien

statement against the aircraft, and not separately against its engines, propellers,

or accessories.

The lien statement sent to the FAA Registry for recording

XAMINATION

UIDELINES

, supra note 4, at § 4.5.2.

See generally C

. C

ODE

§ 9798.2 (West 2011) (requiring filing within 180 day of

completion of work); I

. C

ODE

§ 32-33-10-6 (2012) (requiring filing within sixty days from date

service or part is supplied).

See generally A

RIZ

. R

. S

TAT

. A

. § 33-1022 (2012) (requiring filing within thirty days

of relinquishment of possession); K

. R

. S

TAT

. A

. § 376.270 (West 2011) (requiring filing

within six months after possession is relinquished).

See E

XAMINATION

UIDELINES

, supra note 4, at § 4.5.3; Lester G. Robinson, The FAA Air-

craft Registry and its Operation, 29 I

. C

OUNSEL

J. 238, 241 (1972).

XAMINATION

UIDELINES

, supra note 4, at § 4.5.3.

See generally id. at § 4.5.1. Perfection of such a lien will be governed solely by the

requirements of the applicable state law. Id. Sometimes this will require that the lien claimant

retain possession of the aircraft engine and, in many instances, perfection will also involve filing

of a lien statement or a UCC-1 Financing Statement with the appropriate state or county offices.

See sources cited supra notes 14-17 and accompanying text. But see 14 C.F.R. § 49.41(a) (2006)

that specifically references and impliedly recognizes the recording of “other lien[s] . . . which

affects title to, or any interest in, any specifically identified aircraft engine of 550 or more rated

takeoff horsepower, or the equivalent of that horsepower, or a specifically identified aircraft pro-

peller capable of absorbing 750 or more rated takeoff shaft horsepower” and 14 C.F.R. § 49.43

(2012) that states “[a] conveyance is eligible for recording under this subpart only if, in addition to

the requirements of §§ 49.11, 49.13, and 49.17, the following requirements are met: (a) It affects

and describes an aircraft engine or propeller to which this subpart applies, specifically identified

by make, model, horsepower, and manufacturer’s serial number.” Although the regulations

appear to allow filing of a mechanic’s lien, presumably because none of the lien recording statutes

2012-2013] AIRCRAFT MECHANIC’S LIEN 289

must also be an original executed document with the signature in ink.

Fur-

ther, if local law requires the lien statement to be verified (e.g., notarized or

acknowledged before a notary public), then the signature on the lien statement

must also be verified; otherwise, the FAA Registry will reject the lien

statement.

Once the lien statement is accepted by the FAA Registry for recording, the

FAA Registry sends an Aeronautical Center (AC) Form 8050-41, Conveyance

Recordation Notice, to the lien claimant as well as to the registered owner of

the aircraft.

This form describes the affected aircraft, or engine, and also

identifies the recorded document by the date, the identified parties, the FAA

Registry recording number, and the date of recordation.

The FAA Registry

sends this recordation notice to confirm that the lien has been recorded and that

the aircraft’s record reflects the lien.

The FAA Registry merely records aircraft lien statements or claims submit-

ted by lien claimants; it takes no position regarding the validity or enforceabil-

ity of the lien statement or claim, nor does it get involved with disputes

between the aircraft owner and lien claimant.

As a result, the validity of a

lien against an aircraft is governed by state law and determined between the

parties without any involvement by the FAA Registry.

Once perfected, the

specifically reference engines or propellers separately from aircraft, the FAA Registry does not

have the authority to record a lien claim against a specific engine or propeller. See generally In re

Tower Air, Inc., 319 B.R. 88, 99 (Bankr. D. Del. 2004) (holding that the term “aircraft,” under

“C.G.S.A. § 15-34(5), was not intended to include engines, or other components or parts of air-

craft separate from the aircraft itself” and, as a result, a mechanic’s liens for work performed on

aircraft engines is not required to be filed and recorded under either 49 U.S.C. § 44107(a)(1) or 49

U.S.C. § 44107(a)(2) to be perfected and enforceable against third parties). See also M

INN

. S

TAT

§ 514.221(a) (2011) (describing a lien against an “aircraft” as defined by Minn. Stat. 360.013(37)

as “any contrivance now known or hereafter invented, used, or designed for navigation of or flight

in the air” without reference to engines or propellers). Additionally, a lien claimant retaining

possession of the engine or propeller would also be able to perfect a claim under the applicable

state’s Uniform Commercial Code. U.C.C. § 9-311 (2012).

14 C.F.R. § 49.33 (2012).

XAMINATION

UIDELINES

, supra note 4, at § 4.5.3.

Id. See also 14 C.F.R. § 49.17(d)(5) (2006).

XAMINATION

UIDELINES

, supra note 4, at §§ 4.5.7, 6.1.

For a general discussion of the timing and procedures involved in the FAA Registry’s

processing of documents received for recording, see generally E

XAMINATION

UIDELINES

, supra

note 4; Robinson, supra note 33.

14 C.F.R. § 49.17(c) (2006) (stating “[t]he recording of a conveyance is not a decision of

the FAA that the instrument does, in fact, affect title to, or an interest in, the aircraft or other

property it covers.”).

49 U.S.C. § 44108(c)(1) (2006) (“The validity of a conveyance, lease, or instrument that

may be recorded under section 44107 of this title is subject to the laws of the State, the District of

Columbia, or the territory or possession of the United States at which the conveyance, lease, or

instrument is delivered, regardless of the place at which the subject of the conveyance, lease, or

290 PHOENIX LAW REVIEW [Vol. 6:281

lien claimant’s claim (the amount which the lien claimant believes he or she is

owed) is established against all others who may claim an interest in the

aircraft.

IV. P

RIORITY OF THE

IEN

A. Priority Under State Law

The laws of the state in which the lien claim arose determine the priority of

that claim as it relates to the interests of others in the aircraft.

In some states,

the aircraft mechanic’s lien will have priority over all other interests, including

those recorded with the FAA Registry.

In other states, the lien claim will be

prior to all other claims except those previously recorded with the FAA

Registry.

instrument is located or delivered. If the conveyance, lease, or instrument specifies the place at

which delivery is intended, it is presumed that the conveyance, lease, or instrument was delivered

at the specified place.”); see also Aircraft Trading & Serv. Inc. v. Braniff, Inc., 819 F.2d 1227,

1231 (2d Cir. 1987) (“Although state law determines priorities, all interests must be federally

recorded before they can obtain whatever priority to which they are entitled under state law.”);

Sanders v. M.D. Aircraft Sales, Inc., 575 F.2d 1086, 1088-89 (3d Cir. 1978) (holding that state

law determines the legal effect of a recorded instrument).

49 U.S.C. § 44108(a) (2006); see also M

INN

. S

TAT

. § 336.9-311(c) (2011) (“[D]uration and

renewal of perfection of a security interest perfected by compliance with the requirements pre-

scribed by a statute, regulation, or treaty described in subsection (a) are governed by the statute,

regulation, or treaty.”); In re Brice, 188 F.3d 576, 577 (4th Cir. 1999) (holding that perfection of

security interest by filing with FAA Registry is not forfeited if secured party does not file a

continuation statement); Travel Express Aviation Maint. Inc. v. Group, 942 N.E.2d 694, 696-97,

(Ill. App. Ct. 2011) (holding that once a security interest is recorded with the FAA Registry, the

secured creditor does not need to record a continuation statement with the FAA Registry for the

security interest to remain perfected).

Philko Aviation v. Shacket, 462 U.S. 406, 413 (1983).

See N.J. S

TAT

. A

. § 2A:44-2 (West 2012) (stating “[t]he lien shall be superior to all other

liens, except liens for taxes.”); N.M. S

TAT

. A

§ 48-3-29 (A)-(B) (2011) (stating that a posses-

sory lien perfected by filing with the FAA Registry “shall have priority over all other liens, includ-

ing recorded liens on the aircraft, except liens for taxes” but if possession is lost then the lien

“shall be subordinate to prior recorded liens on the aircraft.”); In re S. Air Transp., Inc., 511 F.3d

526, 533-34 (6th Cir. 2007).

See I

OWA

ODE

. § 577.1 (1) (2011) (“[S]uch lien shall be subject to all prior liens of record,

unless notice is given to all lienholders of record and written consent is obtained from all

lienholders of record to the making, repairing, improving, or enhancing the value of any inanimate

personal property and in this event the lien created under this section shall be prior to liens of

record.”) (emphasis added); M

INN

. S

TAT

. § 514.221(3) (2011) (stating “[a] lien created by this

section is prior and paramount to all other liens upon the aircraft except those previously filed in

the appropriate filing office.”). But see S.D. C

ODIFIED

AWS

§ 44-11-2 (2012) (a mechanic’s lien

“shall be subject only to liens, mortgages, and conditional sales contracts properly filed on or

before the time that the property comes into the possession of the lien claimant.”).

2012-2013] AIRCRAFT MECHANIC’S LIEN 291

B. Priority Under the Cape Town Convention

With respect to priority, one may wonder what impact, if any, the Cape

Town Convention’s priority rules bear on aircraft subject to its provisions.

Under the Cape Town Convention, the first party to register an interest with the

International Registry in a subject aircraft, engine, or propeller will have an

interest prior and superior to all other interests,

regardless of whether the first

party has knowledge of a prior unregistered interest.

Fortunately, the Cape Town Convention’s “first to file” priority does not

adversely impact the priority of an aircraft mechanic’s lien. Article 39 of the

Cape Town Convention allows a contracting state to deposit declarations that

declare the rights and priority of non-consensual liens that are not registered

with the International Registry.

The United States filed Article 39 Declara-

tions that preserve the priority of aircraft mechanic’s liens against interests that

are registered with the International Registry, despite the fact that such

mechanic’s liens are not registered.

See Cape Town Convention, supra note 23 at art. 29(1) (stating “[a] registered interest has

priority over any other interest subsequently registered and over an unregistered interest.”).

Id. at 29(2) (“The priority of the first-mentioned interest under the preceding paragraph

applies: (a) even if the first-mentioned interest was acquired or registered with actual knowledge

of the other interest; and (b) even as regards value given by the holder of the first-mentioned

interest with such knowledge.”).

Id. at art. 39 (“1. A Contracting State may at any time, in a declaration deposited with the

Depositary of the Protocol declare, generally or specifically: (a) those categories of non-consen-

sual right or interest (other than a right or interest to which Article 40 applies) which under that

State’s law have priority over an interest in an object equivalent to that of the holder of a regis-

tered international interest and which shall have priority over a registered international interest,

whether in or outside insolvency proceedings . . . .”).

Declarations Lodged by the Government of the United States of America Under the Cape

Town Convention, UNIDROIT.

ORG

, http://www.unidroit.org/english/conventions/mobile-equip-

ment/depositaryfunction/declarations/bycountry/unitedstates.htm (“Pursuant to Article 39 of the

Convention - (A) all categories of non-consensual rights or interests which under United States

law have and will in the future have priority over an interest in an object equivalent to that of the

holder of a registered international interest shall to that extent have priority over a registered

international interest, whether in or outside insolvency proceedings; and (B) nothing in the Con-

vention shall affect the right of the United States or that of any entity thereof, any intergovernmen-

tal organization in which the United States is a member State, or other private provider of public

services in the United States to arrest or detain an aircraft object under United States law for

payment of amounts owed to any such entity, organization, or provider directly relating to the

services provided by it in respect of that object or another object.”) (last visited Jan. 31, 2013).

292 PHOENIX LAW REVIEW [Vol. 6:281

V. E

NFORCING THE

IEN

A. The Wait and See Approach

Once perfected, the aircraft mechanic’s lien encumbers the aircraft and pre-

vents the aircraft owner from conveying clear title to the aircraft without first

obtaining a release from the lien claimant.

After all, in the vast majority of

aircraft transactions, the aircraft owner agrees to sell—and the purchaser

expects to receive—the aircraft with clear title (i.e., having no liens, encum-

brances, etc.).

If a potential purchaser of an aircraft encumbered by a

mechanic’s lien performs a title search and discovers the lien, he or she is not

likely to purchase the aircraft without assurance that the lien has been satisfied

and no longer encumbers the aircraft.

Thus, a lien claimant could wait until

the aircraft is sold, knowing that the lien claimant will receive payment at clos-

ing in exchange for release of the lien claim. However, the “wait for the air-

craft to sell” approach could run afoul of certain states’ laws that require a lien

claimant to foreclose upon the lien within a certain period of time.

B. Foreclosing the Lien Through Judicial Action

Rather than proceeding as though the claimant were a secured creditor and

waiting until an aircraft sells to receive payment,

the lien claimant can initiate

a foreclosure proceeding to foreclose upon its perfected

lien against the air-

craft.

If the lien claimant does not have possession of the aircraft, this

As with the determination of priority, the procedures for enforcing an aircraft mechanic’s

lien will be governed by applicable state laws. For purposes of this Article and a discussion of

procedures that may be available, Minnesota law will be used as a point of reference.

In re TWA Inc. Post Confirmation Estate, 312 B.R. 759, 762 (Bankr. D. Del. 2004) (stating

“[c]learly, liens are ‘defects in title.’”).

J. S

COTT

AMILTON

, P

RACTICAL

VIATION

195 (4th ed. 2005). Both purchasers and

lenders have an interest in making sure their interests are not subject to prior interests of other

lienholders.

Id. at 198.

See id. at 195, 198.

See M

INN

. S

TAT

. § 514.221(3) (2011) (stating that “[t]he lien shall be treated in all respects

as a secured transaction under the Uniform Commercial Code, sections 336.9-501 to 336.9-628.”).

As discussed previously, the lien claim must be perfected. For an example of what happens

if a foreclosure action is initiated without first perfecting a lien claim see S. Horizons Aviation v.

Farmers & Merch. Bank of Lakeland, 497 S.E.2d 637 (Ga. Ct. App. 1998) (affirming judgment

against a lien claimant who filed a mechanic’s lien foreclosure action without filing a lien state-

ment with the FAA Registry).

See M

INN

. S

TAT

. § 336.9-601(a)(1) (allowing a secured party to “reduce a claim to judg-

ment, foreclose, or otherwise enforce the claim, security interest, or agricultural lien by any avail-

able judicial procedure.”). See also id. § 514.221(3) (providing that the aircraft mechanic lien

claimant’s interest “shall be treated in all respects as a secured transaction under the Uniform

Commercial Code, sections 336.9-501 to 336.9-628.”).

2012-2013] AIRCRAFT MECHANIC’S LIEN 293

approach will require suing the aircraft owner or operator to recover the aircraft

for sale.

The time period within which a lien claimant can initiate a foreclosure

proceeding against the aircraft can range anywhere from ninety days to eigh-

teen months from the last day of work, depending upon state law.

The fore-

closure must start within that period of time; if the foreclosure is not initiated

within the required period, the lien claimant may still be owed money for the

services provided to the aircraft, but the aircraft will no longer secure the

amount owed.

If the lien claimant is successful in the foreclosure action, the aircraft will

ultimately be sold at a sale or auction.

This sale is typically conducted by the

local sheriff’s office, and the aircraft is sold to the highest bidder at the sale.

If no one bids at the sale, the aircraft is sold to the lien claimant for the amount

of the lien; conversely, if the lien claimant is the highest bidder, the aircraft is

sold to the lien claimant for the bid amount.

If the aircraft is sold to a bidder

for more than the amount of the lien, part of the proceeds of the sale are dis-

bursed to the lien claimant to pay the lien claim and any excess money is then

paid to the aircraft owner.

To subsequently register the aircraft with the FAA

Registry, the purchaser—the lien claimant or a third party—must file a bill of

sale signed by the party given authority to conduct the sale and reflecting that

the sale was made under applicable law.

See Gen. Elec. Capital Corp. v. Advance Petroleum, Inc., 660 So.2d 1139, 1143 (Fla. Dist.

Ct. App. 1995) (requiring a defendant over whom the court had in personam jurisdiction to locate

and return an aircraft against which a mechanic’s lien was perfected to proceed with the court’s

order of foreclosure of the lien since the court could not “issue any orders which directly act on

the aircraft, since the aircraft is not within the court’s in rem or quasi in rem jurisdictional

domain.”).

See A

. C

ODE

. § 18-45-207 (2012) (requiring commencement of foreclosure within

eighteen months of filing with the FAA Registry); C

OLO

. R

. S

TAT

. § 38-20-107(1) (2012)

(requiring initiation of foreclosure proceedings “within ninety days after charges become due and

payable.”); M

INN

. S

TAT

. § 514.221(3(a)) (2011) (requiring that “any foreclosure proceedings must

be instituted within one year of the date the lien was filed.”); W

. S

TAT

. A

. § 29-7-102 (2011)

(requiring a lien claimant to commence foreclosure proceedings to foreclose the lien within 180

days from the last date of work when the lien is perfected by possession or 180 days from the date

a lien statement is filed with the FAA Registry if possession of the aircraft is relinquished).

See supra notes 59-60 and accompanying text.

See M

INN

. S

TAT

. § 336.9-601(f) (providing that a judicially authorized execution sale may

be conducted to foreclose on the security interest).

See E

XAMINATION

UIDELINES

, supra note 4, at § 2.2.5 (o)(1); Heritage Ins. Co. of Am. v.

McElroy, 807 F.2d 741, 742 (8th Cir. 1986).

INN

. S

TAT

. § 336.9-601(f) (providing that “[a] secured party may purchase at the sale and

thereafter hold the collateral free of any other requirements of this article.”).

Id. § 336.9-615.

XAMINATION

UIDELINES

, supra note 4, at § 2.2.5(o)(1).

294 PHOENIX LAW REVIEW [Vol. 6:281

C. The Self-Help Approach

Depending upon a claimant’s status as a secured creditor,

a lien claimant

who has not retained possession of the aircraft may be able to retake possession

of the aircraft if possession was previously relinquished.

Once the lien claim-

ant has possession of the aircraft—whether possession was maintained continu-

ously or recovered after it was lost—the lien claimant may enforce the lien

without seeking a judicial remedy.

For example, state law may allow the lien claimant to lease the aircraft or

to sell it at a public or private sale.

If the aircraft is sold, the proceeds of the

sale are applied to the amount owed—just as if the aircraft was sold pursuant to

a judicial foreclosure.

To then register the aircraft with the FAA Registry,

the purchaser—the lien claimant or a third party—would need to file a bill of

sale reflecting that the sale was made under applicable law and that it met the

FAA Registry requirements for a sale in compliance with all applicable law.

VI. D

EFENSES

GAINST THE

IEN

A common defense to an aircraft mechanic’s lien foreclosure action is that

the lien was not properly perfected. Because courts construe lien statutes

strictly in these situations,

the aircraft owner may assert that the lien state-

ment was not filed within the proper time period after the last day of work, or

that the lien claimant did not follow the proper procedures to perfect the lien.

Similarly, if the foreclosure proceeding was not initiated within the time period

allowed by law, the aircraft owner may also assert failure to timely initiate the

foreclosure proceeding as a defense.

In re TWA Inc. Post Confirmation Estate, 312 B.R. 759, 762 (Bankr. D. Del., 2004).

See M

INN

. S

TAT

. § 336.9-609.

See id. §§ 336.9-609(b), 336.9-610(a). Given the higher costs and longer time periods that

are involved with judicial action, lien claimants prefer to pursue non-judicial remedies unless

judicial assistance is needed to effectuate a foreclosure sale or unless the lien claimant believes the

aircraft owner or operator will seek judicial intervention to stop the lien claimant’s pursuit of a

non-judicial remedy. See also E

DELMAN ET AL

., A

IRCRAFT

EPOSSESSION AND

NFORCEMENT

1038 n.12 (2009).

See M

INN

. S

TAT

. § 336.9-610(b)-(c) (providing for sale at a public or private proceeding;

and section (c) allowing the secured party to purchase at the public or private sale).

Id. § 336.9-609.

XAMINATION

UIDELINES

, supra note 4, at § 2.2.5(o)(2). In addition to the bill of sale, the

FAA Registry may want to review “copies of a notice published in a local newspaper, a copy of a

notice posted in a public place, an affidavit certifying the sale was made pursuant to statutory

procedure, or any other evidence showing compliance with pertinent law.” Id.

See Geo. Sedgwick Heating & Air Conditioning Co. v. Riverwood Co., Inc., 409 N.W.2d

289, 291 (Minn. Ct. App. 1987).

See M

INN

. S

TAT

. § 514.221(2).

See id. § 514.221(3)(a).

2012-2013] AIRCRAFT MECHANIC’S LIEN 295

Another defense an aircraft owner may assert is that the lien is invalid

because the lien claimant is knowingly demanding an amount in excess of what

is justly due.

This defense is very common in situations where the aircraft

owner initially disputes the amount being charged by the lien claimant. How-

ever, this defense usually requires that the aircraft owner show bad faith on the

part of the lien claimant, or that the lien claimant knew the lien statement was

overstated.

In defending against a mechanic’s lien foreclosure action, it may be possi-

ble to obtain release of the lien pending resolution of claims in the litigation.

Upon deposit of a stipulated amount with the court, the court may issue an

order discharging the lien and allowing the litigation to proceed with the stipu-

lated amount acting as security for the lien claimant’s claim.

If the aircraft owner is successful in defending against the foreclosure pro-

ceeding, the aircraft owner will also probably succeed in a “slander of title”

claim against the lien claimant.

A slander of title claim alleges that the lien

claimant improperly encumbered the aircraft with an invalid lien and as a result

suffered special damages (e.g., loss of a sale, and attorney’s fees incurred to

remove the invalid lien).

See id. § 514.74 (stating “[i]n no case shall a lien exist for a greater amount than the sum

claimed in the lien statement, nor for any amount, if it be made to appear that the claimant has

knowingly demanded in the statement more than is justly due.”).

See First Bank Southdale v. Kinney, 392 N.W.2d 740, 742 (Minn. Ct. App. 1986) (quoting

Delyea v. Turner, 118 N.W.2d 436, 440-41 (1962)) (“[A] lien will be defeated under section

514.74 on a showing of ‘fraud, bad faith, or an intentional demand for an amount in excess of that

due.’” and “[t]he amount claimed is so excessive as to preclude the likelihood of a mistake made

in good faith.”).

See M

INN

. R. C

. P. 67.01 (providing for deposit of money in court), 67.03 (providing

authority for the court to issue orders with respect to money or property that is the subject of the

litigation). In this author’s experience, using the cited rules, it has been possible to stipulate to the

amount to be deposited with the court vis-a-vis the lien claim and, upon depositing such funds,

have the court issue an order approving the deposit of funds and discharging the lien claim. The

court’s order is then filed with the FAA Registry for removal of the lien as an encumbrance

against the aircraft. See also N

. R

. S

TAT

. § 108.276 (2011) (providing “1. The legal owner

may, for the redelivery of any aircraft, aircraft equipment or parts which are held by the lien

claimant, file with the court a bond for double the amount of the lien[; and] 2. The court upon

approval of such a bond shall issue its order requiring the lien claimant to relinquish possession of

the property to the legal owner.”).

See supra note 78.

“The elements required for a slander of title claim are: (1) That there was a false statement

concerning the real property owned by the plaintiff; (2) That the false statement was published to

others; (3) That the false statement was published maliciously; (4) That the publication of the false

statement concerning title to the property caused the plaintiff pecuniary loss in the form of special

damages.” Paidar v. Hughes, 615 N.W.2d 276, 279-80 (Minn. 2000).

Id. at 277 n.1, 278, 280 (holding that “[s]pecial damages are those [that] are the natural, but

not the necessary and inevitable result of a wrongful act” (citation and quotation omitted), and

296 PHOENIX LAW REVIEW [Vol. 6:281

Finally, absent a foreclosure proceeding, if the lien claim is unenforceable

under the applicable state law, the FAA Registry may not remove the recorded

lien from the aircraft’s records. The FAA Registry will only release the aircraft

from the recorded lien in one of two ways: (1) the lien claimant voluntarily

signs a release of the lien and the release is recorded with the FAA Registry;

or (2) a court order is obtained declaring the lien as either invalid or unenforce-

able, and a certified copy of that order is then recorded with the FAA Regis-

try.

Thus, once recorded, a lien claim, whether enforceable under state law or

not, remains a cloud on an aircraft’s title until the claim is affirmatively

released.

But what happens if the lien claimant is no longer in business? Unfortu-

nately, that does not change the options; it just makes clearing the lien from the

aircraft’s title more difficult. The party seeking the release will need to locate

someone who has authority to execute a release on behalf of the lien claimant,

or the party must obtain a certified copy of a court order describing the aircraft

and lien and stating that the lien either is no longer valid or has been

cancelled.

also holding that reasonable attorney fees are recoverable as special damages when they are a

direct consequence of an action to quiet title that results from slander of title, in addition to

damages for loss of a sale, etc.). But see Clark v. Lewis, 684 S.W.2d 161, 164 (Tex. App. 1984)

(holding attorney fees not recoverable as special damages in slander of title action because attor-

ney fees are not a pecuniary loss).

14 C.F.R. § 49.17(d)(5) (2012). See generally E

XAMINATION

UIDELINES

, supra note 4, at

ch. 6. The lien claimant may sign FAA Form 8050-41 below the release statement and return the

form to the FAA Registry. 14 C.F.R. § 49.17(d)(5). The FAA Registry will also accept a docu-

ment that describes the affected aircraft or other collateral, specifically identifies the lien, and

contains a statement releasing all of the lien claimant’s rights and interests in the described collat-

eral from the terms of the identified lien. E

XAMINATION

UIDELINES

, supra note 4, at § 6.18-6.20.

The lien claimant must sign the release document in ink and show the signer’s title, as appropriate.

Id. at App. 26.

See E

XAMINATION

UIDELINES

, supra note 4, at § 6.24.

Id. at § 6.15. To obtain a signed release the FAA Registry suggests that, “[i]n the case of a

corporate holder, check with the Secretary of State, State Banking Authority, FDIC, or other

authority under which the defunct corporation or association was organized, to determine its

disposition.

(1) If bankruptcy was involved, a receiver, liquidator, [sic] trustee would have been

appointed to settle up the affairs. A release may be executed by such a party, or if the

lien had not been paid off, the lien conveyance may have been assigned to another

institution.

(2) If the corporation or association was voluntarily dissolved, one of the officers or

stockholders may have been designated to wind up the affairs and may have knowledge

of the lien involved. Any former officer or manager who has knowledge as to whether

liens were satisfied prior to the dissolution may sign a release in their former capacity,

when the release is dated prior to the dissolution.”

Id. at § 6.15(a)(1)-(2) (emphasis removed).

2012-2013] AIRCRAFT MECHANIC’S LIEN 297

VII. C

ONCLUSION

Perfecting and enforcing an aircraft mechanic’s lien can be tricky. In addi-

tion to the federal filing requirement, each state has its own specific require-

ments governing aircraft mechanic’s liens. Attorneys and legal practitioners, as

well as lien claimants, should understand how aircraft mechanic’s liens are per-

fected and enforced under particular state laws in order to successfully assert an

aircraft mechanic’s lien.

In the case of an individual, partnership, or co-owner lien claimant, the FAA Registry sug-

gests that the party seeking the release “check the telephone directories and other addresses in the

locale of the lienholder. A check with the county courthouse may reflect the appointment of an

executor or administrator who may execute a release with evidence of the appointment.” Id. at

§ 6.15(b).

298 PHOENIX LAW REVIEW [Vol. 6:281

VIII. A

PPENDIX

A: A

IRCRAFT

ECHANIC

’

IEN

AWS

Statutory Authority Possession Required

State for Filing to Perfect? Method of Perfection

Alabama 1. A

. C

ODE

Statutory lien only Possession, or by attachment through

§ 35-11-110 (2011) when NOT in court action. FAA Registry will not

used when mechanic possession.

accept mechanic’s lien statement for

not in possession. recording.

2. Common law

mechanic’s lien used

when mechanic still

in possession.

Alaska A

LASKA

TAT

. Yes. Lien Notice must be filed with the FAA

§ 34.35.185 (2012). Registry before possession is relinquished.

Arizona A

RIZ

. R

. S

TAT

. No. Filing within thirty days of relinquishing

. § 33-1022 possession: (1) with the county recorder

(2012). in the county in which the work was

completed, and (2) with the FAA

Registry.

Arkansas A

. C

ODE

. No. Possession or filing within 120 days of

§ 18-45-206 (2012). completion of work with the FAA

Registry.

California C

. C

ODE

No. Filing Notice of Lien with FAA Registry

§ 9798.2 (West within 180 days of completion of work,

2011). but only for work on general aviation

aircraft. Lien claimant must also provide

customer with a written estimate prior to

commencement of work and an invoice

detailing work performed when work is

completed.

Colorado C

OLO

. R

. S

TAT

. Yes.

FAA Registry will not accept mechanic’s

§ 38-20-106 (2012). lien statement for recording. Foreclosure

proceedings must be taken within ninety

days after charges become due and

payable. See § 38-20-107.

Connecticut C

ONN

. G

. S

TAT

. No. Filing a verified statement with the FAA

§ 49-92g, 49-92h Registry within ninety days after

(2011). completion of work. Lien claimant must

also send notice of the lien to the aircraft

owner and all other lienholders within

seven days of filing with the FAA

Registry.

Delaware D

. C

ODE

. tit. No. FAA Registry will not accept mechanic’s

25, § 3901-10 See § 3902 lien statement for recording.

(2012). (requiring lien holder

to file application for

lien sale within ten

days of loss of

possession).

See Peavy’s Serv. Ctr., Inc. v. Assocs. Fin. Servs. Co., 335 So. 2d 169 (Ala Civ. App.

1976).

See E

XAMINATION

UIDELINES

, supra note 4.

See Wenz v. McBride, 36 P. 1105 (1894); Hillsburg v. Harrison, 30 P. 355 (1892).

2012-2013] AIRCRAFT MECHANIC’S LIEN 299

District of Columbia D.C. C

ODE

Yes. Possession only. FAA Registry will not

§ 40-102 (2012). accept mechanic’s lien statement for

recording. Notice is required to enforce

the lien.

Florida F

. S

TAT

. Yes.

Filing lien notice with FAA Registry and

§§ 329.01, 329.51, with county clerk in county where work

713.58 (2012). was done within ninety days of the last

day of work.

Georgia G

. C

ODE

. No. Possession, or filing with FAA Registry

§ 44-14-363, 550 within 90 days of last date of work.

(2011).

Hawaii H

. R

. S

TAT

. Yes. Possession only. FAA Registry will not

§§ 261-75, 507-18 accept mechanic’s lien statement for

(2011). recording. But, to sell under § 261-75,

must give thirty days notice to registered

owner and anyone with an interest

recorded with the FAA Registry.

Idaho I

DAHO

ODE

. No. Use § 45-1102- Possession or filing mechanic’s lien

§ 45-1101 03. statement with FAA Registry within 180

(possession); days of completion of the work.

§ 45-1102-03 (non-

possessory) (2012).

Illinois 82 I

. C

OMP

. S

TAT

. No. Filing Lien Notice with FAA Registry

41 (2011); 770 I

. within sixty days of surrendering

OMP

. S

TAT

. 45/1, possession.

45/2, (2011).

Indiana I

. C

ODE

No. Filing with FAA Registry and at

§ 32-33-10-6 (2012). recorder’s office in the county where

work performed within sixty days of the

last date of work.

Iowa I

OWA

ODE

Yes. Possession and filing with FAA Registry

§ 577.1 (2011). within ninety days from completion of

work, or longer if still in possession, but

“possession” is deemed to continue

automatically for ninety days after work,

and indefinitely if filing with FAA

registry.

Kansas K

. S

TAT

. A

. No. Filing with the FAA Registry within

§ 58-201 (2011). ninety days if the lien claimant was in

possession of the aircraft and relinquished

possession. Otherwise, filing within

ninety days from date work was provided

if not in possession.

Kentucky K

. R

. S

TAT

. No. Possession, or filing with the FAA

. § 376.270 Registry within six months after

(West 2011). possession is relinquished.

Louisiana L

. R

. S

TAT

. No. Filing with FAA Registry within ninety

. § 9:4511-12 days of work and filing with parish where

(2011). work was completed.

Maine M

. R

. S

TAT

. No. Filing with FAA Registry and in office of

tit.10, § 625-3801-02 the Secretary of State within ninety days

(2011). after work completed.

See Commercial Jet, Inc. v. U.S. Bank, N.A., 45 So. 3d 887, 888 (Fla. Dist. Ct. App. 2010).

300 PHOENIX LAW REVIEW [Vol. 6:281

Maryland M

. C

ODE

., No. Possession or notice by registered/certified

. L

But surrender of mail to all holders of perfected security

§ 16-203 possession interests within thirty days of creation of

(LexisNexis 2012). discharges lien the lien. See §16-203(b). FAA Registry

against third person will not accept mechanic’s lien statement

without notice. for recording.

See §16-204.

Massachusetts M

ASS

. G

. L

AWS

No. Filing with FAA Registry within sixty

ch. 255, days of last date of work.

§ 31E (2012).

Michigan M

ICH

. C

OMP

. L

AWS

No. Filing with FAA Registry and also

§ 259.205, 259.205b Lien claimant can delivering by personal service or

(2012). detain aircraft any registered mail to the last known address

time it is in his of the aircraft’s registered owner the

possession within claim of lien and itemized statement of

ninety days after last the account within sixty days of the date

work. work was completed.

Minnesota M

INN

. S

TAT

. No. Filing verified statement with FAA

§§ 336.9-311, Registry within ninety days of last day of

514.221 (2011). work.

Mississippi M

ISS

. C

ODE

. No. FAA Registry will not accept mechanic’s

§ 85-7-101 (2012). See § 85-7-105. lien statement for recording.

Missouri M

. R

. S

TAT

. No. Possession or filing with FAA Registry

§ 430.020 (2011). and county recorder where the owner

resides, AND where the work was done,

within 180 days of relinquishing

possession.

Montana M

ONT

. C

ODE

. Yes. Possession only. FAA Registry will not

§ 71-3-1201 (2011). accept mechanic’s lien statement for

recording.

Nebraska N

. R

. S

TAT

. No. Filing with FAA Registry within sixty

§ 52-202 (2011). days of last day of work.

Nevada N

. R

. S

TAT

. No. Filing with the FAA Registry within 120

§ 108.272 (2011). See § 108.280. days after supplies or services are

furnished and within 120 days after date

of service or within seven days after the

lien claimant receives an order to release

the property, whichever time is less;

serving the legal owner by mailing a copy

of the notice of the lien to his last known

address; or if no address is known, by

leaving a copy with the clerk of the court

in the county where the work was

performed.

New Hampshire N.H. R

. S

TAT

. Yes. Possession only. FAA Registry will not

. § 450:2 (2011). accept mechanic’s lien statement for

recording. Notice of sale must be made

pursuant to §§ 444:3, 4, and 6.

New Jersey N.J. S

TAT

. A

. No. Filing with the FAA Registry within

§ 2A:44-2 (West See § 2A:44-3. ninety days of the last date of work.

2012).

New Mexico N.M. S

TAT

. A

. No. Filing with the FAA Registry within

§ 48-3-29 (2011). ninety days of the last date of work.

2012-2013] AIRCRAFT MECHANIC’S LIEN 301

New York N.Y. L

IEN

No. However, FAA Registry will not accept mechanic’s

§ 184 (McKinney possession must be lien statement for recording.

2012). maintained to avoid

lien becoming void

as against all

security interests,

whether or not

perfected.

North Carolina N.C. G

. S

TAT

. No. Filing with FAA Registry within 120 days

§ 44A-60 (2011). See § 44A-55. from date possession is relinquished.

North Dakota N.D. C

ENT

. C

ODE

No. Filing with FAA Registry within ninety

§ 35-13-02 (2011). days of last date of work and serving

notice upon all owners/lienholders via

registered mail within thirty days after

filing verified lien statement with FAA

Registry.

Ohio O

HIO

. C

ODE

No. Filing with FAA Registry within ninety

. § 1311.73 days from last day of work if the aircraft

(LexisNexis 2012). is in the lien claimant’s possession, or

within ninety days of relinquishment of

possession of the aircraft.

Oklahoma O

KLA

. S

TAT

. No. Possession and filing with FAA Registry

tit. 42, § 97-98 within 120 days from last day of work.

(2011).

Oregon O

. R

. S

TAT

. No. Possession for twenty days unpaid or

§§ 87.152 (2012) when the owner tries to remove without

(possessory); payment. See § 87.166. Non-possessory

87.216; 87.242 (non- liens: filing with FAA Registry no later

possessory). than sixty days after the close of the

furnishing of the labor, services, or

materials. See § 87.242. Lien claimant

must also send a copy of the lien

statement to the aircraft owner “forthwith”

and to be perfected within thirty days

after the date of filing. § 87.252.

Pennsylvania 6 P

. S

TAT

. A

. Yes. Possession only. FAA Registry will not

§ 11 (West 2012). accept mechanic’s lien statement for

recording.

Rhode Island R.I. G

. L

AWS

No. Filing with FAA Registry within sixty

§ 34-47-3 (2011). days after last date of work.

South Carolina S.C. C

ODE

. No. Filing with the FAA Registry within

§ 29-15-100 (2011). ninety days after last date of work.

South Dakota S.D. C

ODIFIED

AWS

No. Possession or filing with FAA Registry

§ 44-11-3, 3.1 within 120 days after loss of possession.

(2012).

Tennessee T

ENN

. C

ODE

. No. Filing with FAA Registry within ninety

§ 66-19-301 (2011). days of the last date of work. Notice

must also be given to secured interests

and to owner/person for whom work was

done.

302 PHOENIX LAW REVIEW [Vol. 6:281

Texas T

. P

ROP

. C

ODE

No. If aircraft is registered in U.S.: filing

. §§ 70.303-304, with FAA Registry within 180 days after

3031 (West 2011). completion of work. If aircraft is not

registered in U.S.: filing with Secretary

of State within 180 days. If possession of

aircraft is maintained, lien claimant must

notify owner and other lienholders shown

on FAA Registry within sixty days of the

date the work was completed (via

certified or registered mail, return receipt

requested).

Utah U

TAH

ODE

. No. Filing with FAA Registry within ninety

§ 38-13-201 (West days of completion of work and Notice of

2012). Lien sent to person against whom it is

recorded within thirty days of filing with

the FAA Registry.

Vermont V

. S

TAT

. A

. tit. Yes. Possession only. FAA Registry will not

9, § 1951 (2011). accept mechanic’s lien statement for

recording.

Virginia V

. C

ODE

. No. Filing with FAA Registry within 120 days

§§ 43-32, 34.1 of the last date of work.

(2012).

Washington W

ASH

. R

. C

ODE

No. Filing with the FAA Registry within

§ 60.08.020 (2012). ninety days from date of delivery to

owner.

West Virginia W. V

. C

ODE

Yes. Possession only. FAA Registry will not

§ 38-11-3 (2011). accept mechanic’s lien statement for

recording.

Wisconsin W

. S

TAT

. Yes. Possession only. FAA Registry will not

§ 779.43(3) (2011). accept mechanic’s lien statement for

recording.

Wyoming W

. S

TAT

. A

. No. Possession and filing with the FAA

§ 29-7-102 (2011). But must perfect by Registry while still in possession. If

filing before possession is lost involuntarily, filing with

releasing possession. the FAA Registry within thirty days of

losing possession.