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How long does a business have to foreclose on an aviation lien?

On Behalf of | Jul 5, 2024 | Aviation

Some financial obligations are secured debts. There is collateral property directly attached to the financial instrument. Car loans and mortgages are examples of secured financial instruments that treat financed property as collateral. If a borrower falls behind on their mortgage or vehicle payments, they are at risk of foreclosure or repossession. The lender can ask the courts to transfer ownership of the collateral property as a means of recovering what the business invested in the acquisition of that asset.

Other companies that provide goods or services without payment in full may rely on unsecured financial obligations initially. They can potentially secure those obligations through legal action in certain cases. Repair professionals, parts suppliers, hanger owners and fuel companies are among the parties that might provide materials or services to airplane owners.

They can potentially go to court in Texas to request a lien against the plane if the owner does not pay what they owe in full. That lien gives them an interest in the plane, but it is only enforceable for a fixed amount of time.

How long does an aviation lien last?

The timeline for aviation liens is relatively tight. A business or professional seeking to use a plane as collateral is subject to laws that limit their right to take legal action. Typically, they have to request a lien within 180 days of providing materials or service.

The lien itself is only a record unless the lienholder enforces it. They can potentially seek to sell the plane to recoup unpaid invoices secured by a lien. The failure to do so leaves them without any leverage to push the owner into financial compliance. Technically, the lien may remain on the title indefinitely unless the lienholder or plane owner takes action to remove it.

Many lien holders do not relish the idea of forcing the sale of a plane. However, initiating that process does not necessarily mean that the plane transfers to new owners. Often, owners facing the potential loss of valuable resources due to lien enforcement may refinance any loans attached to the asset in the hopes of paying what they owe. They might also liquidate other assets in an attempt to protect an airplane subject to the lien.

Given how little time businesses and professionals have to obtain aviation liens and enforce them, getting professional assistance with the process is often beneficial. A legal professional can handle the paperwork and court proceedings so that businesses can focus on providing the services or materials that plane owners come to them to acquire.

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