An aircraft security agreement is a written contract that pledges a specific airplane, helicopter, engine, or propeller as collateral for a loan, giving the lender the right to pursue that asset if the borrower defaults. It only reaches beyond the two parties who signed it once the FAA Civil Aviation Registry in Oklahoma City records it. Recording turns a private promise into a public lien that binds subsequent buyers, other lenders, and judgment creditors, and it fixes the lender’s place in line if more than one creditor claims the same aircraft.
What the Agreement Must Contain
Under 14 CFR 49.33, a document is eligible for FAA recording only if it identifies the aircraft by make and model, manufacturer’s serial number, and U.S. registration number (the N-Number).1eCFR. 14 CFR 49.33 – Eligibility for Recording General Requirements Federal law also allows security interests in engines and propellers separately from the airframe, but only above certain size thresholds: engines of at least 550 rated takeoff horsepower (or equivalent) and propellers capable of absorbing at least 750 rated takeoff shaft horsepower.2Office of the Law Revision Counsel. 49 USC 44107 – Recordation of Conveyances, Leases, and Security Instruments Qualifying engines and propellers get their own serial numbers recorded, so the lender’s interest stays attached even if a component is swapped during maintenance.
The agreement must state the amount of debt being secured, or the maximum credit limit for a revolving line. Many parties use AC Form 8050-98, a template the FAA publishes specifically for aircraft security agreements.3Federal Aviation Administration. Record a Security Agreement/Chattel Mortgage The FAA calls it a sample the parties may use if it fits their needs and the state law governing the transaction, and it can be downloaded directly from the agency.4Federal Aviation Administration. AC Form 8050-98 – Aircraft Security Agreement
Who Signs and How
The debtor — the person or entity borrowing against the aircraft — must sign.5eCFR. 14 CFR 49.17 – Conveyance Recording Requirements If the debtor is not already the registered owner, the filing must include an application for registration and evidence of ownership. Every signature should include the signer’s typed or printed name in or next to the signature block.6Federal Aviation Administration. Aircraft Registration When a corporation or LLC signs, the individual signing must show a capacity such as “President” or “Managing Member” that establishes authority to bind the entity. A cosigner who is not the owner must be labeled that way; the FAA will not accept a cosigner whose name appears as if they were the debtor or owner.
Recording the Agreement at the FAA
Until it reaches the FAA Civil Aviation Registry in Oklahoma City, the signed agreement is only enforceable between the parties. The Registry is the single federal clearinghouse for civil aircraft ownership and lien records in the United States. Documents can be submitted by mail to the Registry’s physical address or as an email attachment to the FAA’s electronic-submittals address. The recording fee is $5.00 per aircraft, $5.00 per specifically identified engine, and $5.00 per propeller.7eCFR. 14 CFR 49.15 – Fees for Recording Air carriers recording security interests in spare parts at a designated location pay $5.00 per location.
Registry staff review each submission to confirm the asset description matches the federal database, that signatures are present in ink, and that the aircraft is identified with enough specificity. If everything checks out, the FAA assigns a conveyance number and stamps the exact date and time of recording. That timestamp determines priority.
Why First to File Wins
Under 49 U.S.C. § 44108, a security agreement that has not been filed for recording is valid only against the person who signed it, that person’s heirs, and anyone who already had actual knowledge of the agreement.8Office of the Law Revision Counsel. 49 USC 44108 – Validity of Conveyances, Leases, and Security Instruments Everyone else can ignore it. Once it is recorded, it becomes valid against all persons from the date of filing, and no additional state or local recording is needed for the airframe.
Priority generally follows a first-to-file rule. The lender whose agreement reaches the FAA registry first holds the senior position, and a later filer takes a subordinate interest. If the aircraft is sold to satisfy debts, the first-recorded lender is paid before the others. The federal system deliberately preempts state-level UCC filings for the airframe, because an aircraft based in Texas one month may be hangared in Montana the next, and a single federal registry removes the need to guess which state’s records to search.
The Cape Town Convention Layer
For larger aircraft and qualifying engines, there is a second registration to worry about. The United States ratified the Cape Town Treaty, formally the Convention on International Interests in Mobile Equipment, which created an International Registry for aircraft objects. Under 49 U.S.C. § 44113, the FAA Civil Aviation Registry serves as the U.S. Entry Point to that International Registry.2Office of the Law Revision Counsel. 49 USC 44107 – Recordation of Conveyances, Leases, and Security Instruments
A lender who files only at the FAA and skips the International Registry leaves a gap. A competing creditor could register at the International Registry and potentially claim priority even if the FAA filing came first. The process runs through the FAA: recordable documents are filed with the Registry, and the FAA then authorizes transmission of information to the International Registry.9Federal Register. Cape Town Treaty Implementation A 60-day deadline applies: if a notice of prospective interest is filed but not followed by recordable documents within 60 days, the registration becomes invalid. For any transaction involving engines of at least 550 rated takeoff horsepower, the Cape Town layer is where international priority is established.
Insurance the Lender Will Require
A recorded lien means little if the aircraft is destroyed and the collateral value evaporates. Nearly every aircraft security agreement requires the borrower to maintain hull insurance naming the lender as loss payee or lienholder, so an insurance payout goes to the lender first, up to the outstanding loan balance.
Most lenders also require a breach of warranty endorsement, sometimes called lienholder extended coverage. Standard hull insurance can be voided if the borrower violates a policy term, such as allowing an unapproved pilot to fly the aircraft. The endorsement protects the lender in that scenario. It typically covers around 90 percent of the aircraft’s declared insured value, based on the common assumption of a 10 percent down payment. Lenders wanting full loan coverage require the aircraft to be insured at a hull value calculated by dividing the loan balance by 0.9. Letting the policy lapse or losing the required endorsement is normally treated as a default.
Default and Repossession
The agreement itself defines what counts as a default: missed payments, failure to maintain insurance, unauthorized transfer, or letting the airworthiness certificate lapse. What happens after that depends on the agreement and the state law governing the transaction, because the FAA recording system sets lien priority but does not control repossession procedure.
A lender who repossesses or forecloses must file AC Form 8050-4, the Certificate of Repossession, with the FAA Aircraft Registration Branch to transfer title.10Federal Aviation Administration. Certificate of Repossession of Encumbered Aircraft, AC 8050-4 Two paths are common:
- In a self-help repossession (strict foreclosure), the lender keeps the collateral and submits an Application for Aircraft Registration in its own name along with the Certificate of Repossession.
- In a foreclosure sale, the buyer submits a bill of sale signed by the sheriff or authorized party conducting the sale, a certified copy of the court order of foreclosure, and an Application for Aircraft Registration.
If the original security agreement was never recorded, the lender must include the original or a certified true copy with the repossession filing.10Federal Aviation Administration. Certificate of Repossession of Encumbered Aircraft, AC 8050-4 The repossession and any sale must also comply with local law, so federal forms alone are not enough. A $5.00 fee applies to issue the new certificate of aircraft registration.
Releasing the Lien After Payoff
When the loan is paid, the lender must execute a release and send it to the FAA Aircraft Registry for recording.5eCFR. 14 CFR 49.17 – Conveyance Recording Requirements The standard method uses AC Form 8050-41, the Conveyance Recordation Notice. The FAA sends this form to the lender when the security agreement is first recorded. To release the lien, the lender signs below the release statement on Part II and returns it to the Aircraft Registration Branch.11Federal Aviation Administration. Clear Title
The FAA will also accept an equivalent document: any writing that describes the collateral, identifies the original lien by its recording date and conveyance number, and contains a release statement signed in ink with the signer’s title shown where appropriate.11Federal Aviation Administration. Clear Title A stale lien left on file after payoff can delay a later sale by weeks while the owner tracks down the original lender or its successor.
What the FAA System Does Not Cover
The federal recording system has real limits. Under 49 U.S.C. § 44107, it reaches civil aircraft, engines meeting the 550-horsepower threshold, propellers meeting the 750-horsepower threshold, and, for certificated air carriers only, appliances and spare parts at designated locations.2Office of the Law Revision Counsel. 49 USC 44107 – Recordation of Conveyances, Leases, and Security Instruments That leaves a lot outside: avionics, auxiliary equipment, technical records, engines below 550 horsepower, and spare parts held by operators who are not certificated air carriers.
To perfect an interest in those components, lenders file a UCC-1 financing statement under state law in the debtor’s jurisdiction. It is common to file a precautionary UCC-1 even for assets covered by FAA recording, since there are edge cases such as an engine temporarily removed from the aircraft where state law may fill a gap. Insurance proceeds and receivables related to the aircraft also fall outside the FAA registry and require state-law perfection. For most aircraft financing beyond a simple owner-flown single-engine, the paperwork will include both FAA filings and at least one UCC-1.