[Federal Register Volume 65, Number 55 (Tuesday, March 21, 2000)]
[Notices]
[Pages 15188-15191]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-6702]
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DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
Notice and Opinion; Certificate of Repossession of Encumbered
Aircraft (AC Form 8050-4)
AGENCY: Federal Aviation Administration, DOT.
SUMMARY: This provides notice of a revised Certificate of Repossession
of Encumbered Aircraft (AC Form 8050-4), and a legal opinion concerning
certificates of repossession and their impact on aircraft registration.
FOR FURTHER INFORMATION CONTACT: Joseph R. Standell, Aeronautical
Center Counsel (AMC-7), Post Office Box 25082, Oklahoma City, OK 73125
or telephone (405) 954-3296.
SUPPLEMENTARY INFORMATION: This is to provide notice of a revised
Certificate of Repossession of Encumbered Aircraft (AC Form 8050-4)
incorporating various changes and revisions to versions of the form
dated 6/99 and earlier. A copy of the new form follows this opinion and
is available to the public at http://registry.faa.gov/ or linked
through http://www.mmac.jccbi.gov/MMAC/
The revised form dated 02-00, supersedes and replaces all
previously dated versions of the form. Prior versions of the form will
be accepted through the end of the regular business day on the 90th day
after the date of publication of this Notice in the Federal Register.
The superseding form and the opinion cotnained herein are in
response to general concerns about specific language contained in
Certificate of Repossession of Encumbered Aircraft (AC Form 8050-4, 6/
99 and earlier) and industry practices involving use of that form.
This opinion addresses the comments expressed by attorney John I.
Karesh in a letter dated January 19, 1998, to Aeronautical Center
Counsel.
This opinion also provides information concerning certificates of
repossession and their impact on aircraft registration.
Although it is recognized that certain rights to repossess on
default may exist in leases and other transactions, this opinion is
limited to repossessions (whether physical or constructive to the
extent permitted by applicable local law) and foreclosures which effect
a change in ownership of an aircraft.
Opinion--Change of Ownership: An aircraft is eligible for
registration only if, among other things, it is owned by a citizen of
the United States (49 U.S.C. 44102(a)(1)(A)). Only the owner of an
aircraft is eligible to make application for registration of that
aircraft (49 U.S.C. 44103(a)).
Each person who submits an Aircraft Registration Application (AC
Form 8050-1) must also submit evidence of ownership as required by
Sec. 47.11 of the Federal Aviation Regulations (14 CFR Part 47) (the
Regulations). Where the applicant relies upon repossession as evidence
of ownership, Sec. 47.11(b) provides:
The repossessor of an aircraft must submit--
(1) A certificate of repossession on FAA Form 8050-4, or its
equivalent, signed by the applicant and stating that the aircraft
was repossessed or otherwise seized under the security agreement
involved and applicable local law:
(2) The security agreement (unless it is already recorded at the
FAA Aircraft Registry), or a copy thereof certified as true under
Sec. 49.21 of this chapter; and
(3) When repossession was through foreclosure proceedings
resulting in sale, a bill of sale signed by the sheriff, auctioneer,
or other authorized person who conducted the sale, and stating that
the sale was made under applicable local law.
Based on information provided by the office of the National
Conference of Commissioners on Uniform State Laws, it appears that all
50 states have adopted Article 9 of the Uniform Commercial Code
(U.C.C.), albeit with some variations. Therefore, for purposes of this
discussion, U.C.C. Article 9, as adopted, is cited as the applicable
local law.
In his letter of January 19, 1998, Mr. Karesh states that ``it is
standard practice for the repossessing Lender to file for recordation
with the FAA the certificate of repossession at the time of
repossession, in order to vest title to the aircraft in the name of the
Lender.'' This practice is referred to in the aviation legal practice
as a ``protective filing.''
Apparently this protective filing practice stems from reliance upon
the following language contained in the earlier versions of the
Certificate of Repossession of Encumbered Aircraft (AC Form 8050-4)
which is typically submitted by a repossessor to the Civil Aviation
Registry:
by virtue of such act of repossession he divested the said debtor,
and any and all persons claiming by, through or under him, of any
and all claims they hand or may have had, and now holds title to the
aforesaid aircraft, free and clear * * *.
This language may be causing some confusion; therefore, FAA has
revised the form. The revisions emphasize that it is repossession and
foreclosure under the applicable local law not the filing of the
Certificate of Repossession of Encumbered Aircraft and the Aircraft
[[Page 15189]]
Registration Application which vests ownership of the aircraft for
purposes of registration.
In that regard, U.C.C. 9-503 provides that ``unless otherwise
agreed a secured party has on default the right to take possession of
the collateral * * *'' This right of repossession refers to the taking
back of an item, not displacement of all legal rights in and to the
collateral (see Official Comment, U.C.C. 9-503).
Section 47.41(a)(4) of the Regulations provides that ``each
Certificate of Aircraft Registration * * * is effective * * * until the
date upon which ownership of the aircraft is transferred * * *.''
Repossession alone does not effect a change in or transfer of
ownership of the aircraft for purposes of Sec. 47.41(a)(4) of the
Regulations. A creditor or secured party who has merely repossessed an
aircraft without effecting foreclosure is not the owner and is not
eligible to make application for registration of the aircraft (see 49
U.S.C. 44103(a)).
On the other hand, foreclosure for aircraft registration purposes
effects a change of ownership.
Foreclosure, the process by which the ownership rights of a debtor
in the collateral are terminated, may generally be accomplished in two
ways:
The first, sometimes referred to as strict foreclosure, U.C.C. 9-
505(2), after due process as required by the applicable local law,
allows retention of the collateral by the creditor as follows:
(i)n any other case involving consumer goods or any other collateral
a secured party in possession may, after default, propose to retain
the collateral in satisfaction of the obligation.
The second, sometimes referred to as statutory foreclosure, U.C.C.
9-504(1), after due process as required by the applicable local law,
allows foreclosure to be accomplished by sale of the collateral as
follows:
A secured party after default may sell, lease or otherwise
dispose of any or all of the collateral in its then condition or
following any commercially reasonable preparation or processing.
Either way, fully divesting the debtor's rights in collateral
requires both repossession and foreclosure, either by retention of the
collateral or by sale to a third party, thereby resulting in a change
of ownership under Sec. 47.41(a)(4) of the Regulations.
In both situations, the repossessor must certify that he or she
``has performed all obligations imposed upon him by the terms of the
financing agreement and all local laws * * *.'' (AC Form 8050-4, 6/92)
Evidence of Change in Ownership: When foreclosure has been
accomplished by the repossessor's retention of the collateral,
submission of a completed certificate of repossession or its
equivalent, and an Aircraft Registration Application by the repossessor
will support registration in the repossessor. FAA presumes that
repossession and retention are in accordance with local law (i.e.,
foreclosure by retention process described in U.C.C. 9-505(2) et seq.).
When foreclosure has been accomplished by sale of the collateral,
submission of a completed certificate of repossession or its
equivalent, a bill of sale stating that ``the sale was made under
applicable local law'' (14 CFR 47.11(b)(3)), and an Aircraft
Registration Application will support registration in the name of the
buyer.
Dated: March 7, 2000.
Joseph R. Standell,
Aeronautical Center Counsel.
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[FR Doc. 00-6702 Filed 3-20-00; 8:45 am]
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