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Why would you use an aircraft lien?

On Behalf of | Feb 20, 2024 | Aviation

In some cases, a lien may need to be put on an aircraft. This is a legal tool that can be used to give someone other than the owner a form of rights over that aircraft. If the owner tries to sell the aircraft or take other steps to get out of their obligation, the lien can be enforced to prevent them from doing so.

For example, a lien may be used by a company that provides materials, maintenance and repair services, fuel or other such services to the owner of the aircraft. If that person uses the services to store, fuel or maintain their aircraft and doesn’t pay for them, the lien can then be used by the parties who are still owed money. They still deserve compensation for those services, and connecting that compensation to the physical asset increases the odds that they will get paid properly.

Setting up a foreclosure auction

But how does a lien actually help these parties get their money back? The answer could lie in a foreclosure auction.

Essentially, the lienholder may have the right to foreclose on the other person‘s property – in this case, the aircraft. When they do so, this asset can then be auctioned off. The money that was still owed can be taken out of the earnings from that auction.

It does take time to get the money in this fashion. But business owners may fear that they are not going to be paid at all otherwise, so using a lien is the only way for them to protect the investment that they have already made.

A situation like this can grow very complex for a multitude of reasons. You certainly need to know exactly what legal steps to take if you find yourself in this position.

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