Paying after receiving goods or services is a common practice in most industries. Individual consumers and businesses alike often use credit to make purchases or take advantage of delayed payment arrangements. By offering credit and post-service payment options, businesses can potentially attract more customers, but they also open themselves up to unique financial risks.
Those that provide services to businesses and individuals in the aviation sector sometimes need to take action to collect the funds owed for services or materials provided if they don’t receive payment in full, in advance. Companies and professionals that work on planes or that provide fuel can sometimes request a mechanic’s lien as a means of collecting what an individual owes for repairs, maintenance or fuel.
Mechanic’s liens aren’t an instant solution
Those who have proven reticent to pay will often follow through on their obligations if failing to do so would potentially endanger their ownership interest in the plane subject to the lien. Often, the repayment process will take a long time, but owners are often eager to remove a lien from the title for a plane. However, some people will go to great lengths to avoid financial responsibility to others. Someone subject to a lien might try to sell the plane, thereby securing money while depriving the lienholder of compensation. Is it possible for someone to sell a plane after a service provider or fuel company secures a lien?
Liens only help after someone records them
A lien won’t do anything until the lienholder sends the appropriate paperwork to the Federal Aviation Administration (FAA). Only after the FAA records the lien can the lienholder theoretically enforce their rights and prevent the sale of a plane until after they recover what is owed to them. If a plane has a recorded lien on its title, a transfer of ownership typically isn’t possible until after the repayment of the debt that led to the lien. Sometimes, lienholders will need to go to court to enforce their lien and prevent a sale. They also need to make sure they take appropriate steps after securing a lien or could end up deprived of the compensation they deserve by going to court to obtain a lien.
Seeking legal guidance to better understand the rules that govern the enforcement of a lien and how a mechanic’s lien protects a lienholder may benefit those that provide services within the aviation industry and need to engage in collection efforts.