The Oklahoma Bar Journal October 2024

The only original signature required on an FAA mortgage is that of the debtor, though in practice, both the mortgagor and mortgagee usually sign. 7 However, a contract of conditional sale or a lease used for security purposes must be signed by all parties. 8 The original signatures may include signature blocks containing “wet ink” signatures or approved forms of a digital signature 9 and must contain the title of the signatory, who must be an officer, director, manager or attorney-in-fact. 10 11 “Authorized representative” or similarly described generalized titles are not accepted by the FAA and will cause the mortgage to be rejected from recording and returned to the submitting party with instructions to revise the sig nature and resubmit for acceptance and recordation of the instrument in the FAA records. Though seem ingly an easy fix, lenders or their legal counsel should be mindful to proactively avoid such rejections from the FAA Aircraft Registry. Although the error may seem small and, in a vacuum, easily fixed, such simple remedies for document defects are disproportionate to the increased legal risk and transac tional costs they cause in delays of time, excesses of resources and potential gaps in perfection. Aviation lenders are wise to follow the carpenter’s rule of caution: measure twice, cut once. Contents, Definitions of Terms and Attachments The FAA mortgage should contain words of conveyance of the security interests covering the aircraft equipment. 12 All defined terms should be either contained in the text of the mortgage or included as an attachment. 13

Furthermore, any instrument upon which the mortgage relies for definitions must be attached to the mortgage when filed or filed separately for recording by the FAA. 14 Accordingly, it’s good practice, where appropriate, to use an appendix containing the full set of definitions, thereby making it unnecessary to attach full loan agreements or other instruments containing definitions. Using an appendix of definitions provides an acceptable approach to keeping out of the FAA (public) record any con fidential or proprietary information that may be described in the terms of the underlying loan documents; importantly, the FAA allows the redaction of information contained in an appendix or attachment. As such, the appendix of definitions should be reviewed closely to determine if particular terms war rant such redactions. Finally, the mortgage must be accompanied by an appropriate FAA filing fee. 15 Assignments, Amendments and Supplements to Mortgages or Leases Assignments, amendments and supplements must either be attached to the mortgage or lease when filed with the FAA or, if the initial mort gage has been previously recorded by the FAA, the newly submitted assignment, amendment and/or supplement must recite the instru ment being assigned, amended or supplemented by expressly describ- ing the original document by 1) date, 2) parties, 3) FAA recording date and 4) FAA conveyance number. 16 In the instance where parties desire to effectuate an assignment of interests, the assignment must be signed at least by the assignor. 17 Furthermore, an amendment of or a supplement to an instrument previously recorded by the FAA

Who Can Be a Mortgagee? It should be noted that although U.S. citizenship is required for air craft ownership and registration with the FAA, there is no similar requirement for aircraft lenders, lessors or lessees. There is no United States citizenship require ment or other limitation as to who may obtain the security interest in the aircraft equipment/collateral as a mortgagee (usually a lender but hereafter “mortgagee”) under an FAA aircraft security agree ment; 3 however, in the event of the repossession of an aircraft, a mort gagee must meet the registered owner requirements under the Transportation Code, including U.S. citizenship, if it takes action to register an aircraft in its name as owner after foreclosure. 4 ests of a mortgagee in an aircraft, aircraft engines or propellers, the mortgage or security agreement creating the security interest must first be filed for recording with the FAA. In order for the FAA to record a mortgage relating to aircraft registered in the United States, the bank or other lender should make certain the mortgage instrument meets regulatory requirements to ensure its recordability by the FAA registry, including, but not lim ited to, the complete and accurate description of the aircraft by the 1) manufacturer’s name, 2) model number, 3) manufacturer’s serial number and 4) U.S. registration number (if issued). 5 Fundamentals of a Recordable Aircraft Mortgage To perfect the security inter

Authority and Signatures As referenced earlier, the

grantor or mortgagor must be the registered owner of the aircraft. 6

Statements or opinions expressed in the Oklahoma Bar Journal are those of the authors and do not necessarily reflect those of the Oklahoma Bar Association, its officers, Board of Governors, Board of Editors or staff.

8 | OCTOBER 2024

THE OKLAHOMA BAR JOURNAL