Oooooold Lien release.

Discussion in 'Hangar Talk' started by bluesideup, Nov 11, 2017.

  1. bluesideup

    bluesideup Pre-takeoff checklist

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    Hello everyone.

    A lien from 1978 that was started by an individual, who is no longer alive, and it was assigned to a finance company that sold to another finance co., that changed name, but it's the same company, has released it.

    A document with a original / ink signature, from a manager of the present finance co. was sent to FAA but they will not remove it.

    Their reasoning from the FAA is that it must be released by the original individual that filed it.

    Is there any way to clear Title, other than going to court?

    What documents, what is the procedure to get it resolved in court?
    How will the lien affect the sale / buying of the aircraft?

    Thank you.
     
  2. PaulS

    PaulS Final Approach

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    The executor of the guy's estate should be able to release it. You would have to find out who that is and see if they are willing to do it. They might want to collect the money owed first. I'm not a lawyer but that's how I think it would work.
     
  3. patlaw

    patlaw Filing Flight Plan

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    The answer to your question may vary based on which state you're in.
     
  4. bluesideup

    bluesideup Pre-takeoff checklist

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    Hi.
    There is No money owed. The finance co. that owned the lien was paid and they released all interest.
     
  5. bluesideup

    bluesideup Pre-takeoff checklist

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    Hi.
    The Brown state CA.
     
  6. patlaw

    patlaw Filing Flight Plan

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    Some states have quiet title actions for such situations. I have no idea whether California does. That's something you would have to investigate. You may be able to do the work yourself without hiring an attorney. No one in his or her right mind would buy an airplane with a lien against it. Since it has been satisfied, it needs to come off.
     
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  7. denverpilot

    denverpilot Taxi to Parking

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    That’s not reason, that’s stupidity. Only a bureaucracy could possibly think it will get paperwork from a dead person.
     
  8. Lachlan

    Lachlan Cleared for Takeoff

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    "We're from the FAA and we're here to help."
     
  9. midlifeflyer

    midlifeflyer Final Approach

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    Have an aviation lawyer or aircraft title company look at it to determine what is needed. If I understand your predicament correctly, I’ve seen it before. Might be simple. Might not.

    There’s probably just something missing in the chain of ownership between the original lienholder and the company releasing the lien, at least in terms of what the FAA has seen.

    No, the FAA doesn’t need it to be released by the original filer. I can almost guarantee that’s been misunderstood. In this era of bank mergers and acquisitions, it’s very common for the party releasing a lien to be different than the party acquiring it. The FAA needs to see the party issuing the release is the party that has the right to do so, at least in terms of paperwork. Blaming the FAA for doing that is like blaming your state real estate office for not letting me, using my name, record a deed selling your house.
     
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  10. SCCutler

    SCCutler Administrator Management Council Member PoA Supporter

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    Just to make it that extra touch of interesting, there is no FAA lien at all; the lien is controlled by state law, and the FAA merely provides a registry to show liens of record.
     
  11. midlifeflyer

    midlifeflyer Final Approach

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    Correct, depending on your definition of "merely" since recording also, to use the technical term, "perfects" the lien. That protects the lienholder from losing their rights by transfer to third parties without actual knowledge there is a lien, and protects a new lienholder by letting them know who might be ahead of them.
     
  12. SkyDog58

    SkyDog58 Final Approach

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    OP, have you personally called registration in OKC and spoken to a records examiner? If not, that is step one. Ask them what they need.
     
  13. Lindberg

    Lindberg Pattern Altitude

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    This. It's one of those good things, bad things that the FAA won't record the lien release. County clerk will generally record anything if you pay the fee, and it's up to the title searcher to decide what it means, if anything. Yes, I've seen people record deeds conveying real property they didn't own. And the tax office doesn't even look at the chain of title before changing the owner on the tax rolls. o_O
     
  14. bradg33

    bradg33 Cleared for Takeoff

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    My thoughts exactly. I'd guess there's a link missing in the chain of assignment. The FAA needs to see that A filed the lien, and see proof that A transferred his interest to B, who transferred to C, who transferred to D, who transferred to E, and E is the one who released the lien. If there's no papertrail of the lien being transferred from C to D, you've got a potential issue.
     
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  15. bluesideup

    bluesideup Pre-takeoff checklist

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    Hello everyone.

    Thank you for the feedback.

    The Lien and the acft. are in CA. The FAA requested an original document from the Manager of the present / current institution that was involved in the process, to affirm that they released it. That process was completed but that was not sufficient.

    Attorneys want at least $5,000.00 to get started, and did not promise they would be successful.

    There in No good information about the original other than it was controlled by a finance co.

    The question comes up where can one find out about the original Lien? City , County, State?

    As others have mentioned, there is likely a missing link that is needed, some want to see in order to remove / release it, but the question is where / how to get the link resolved?

    What is the worst possible outcome of have a lien that is that old?
     
  16. moonshine

    moonshine Line Up and Wait

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    Had a similar situation years ago
    Original owner of the airplane had a loan from the financial institution A.
    Bank A turned into bank B throughout the duration of the loan, the loan was repaid and the lien was released by bank B.
    By the time the plane got to me, the original owner was long gone and the bank B was restructured into bank C. Found a company bearing the original owners last name as the name of the corporation, found someone old enough in there to remember the founding father and the fact that he had an airplane, moreover remember what happened to the bank A. Found someone in bank C willing to help establish the paper trace of the changes from A to B to C.
    All of that due to the missing link of "A was bought out by B" back in 1989 or so, and/or lack of FAA's feedback on the lien release back then.
    Get a name in Registration to work with and good luck. In retrospect it was an unplanned but interesting adventure into the plane's past and getting the glimpse of the respect the gentleman that ordered the airplane into creation received, even posthumously
     
  17. midlifeflyer

    midlifeflyer Final Approach

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    That's too bad. That seems high unless they file a lawsuit, which might not be necessary. Have you tried one of the folks on the AOPA referral list? Even if you are not a panel subscriber, you can usually find out who in your area is on it. Jointing the list doesn't cover a "preexisting condition), but will typically get you an hour consult and some of us will even charge you the AOPA rate if you join up.

    No. The point of FAA registration is a one-stop location for recording aircraft liens. There is no state, county, city filing you can look up. The original lien and all of the assignments @bradg33 mentioned are just paperwork. The most likely person to have the paperwork, or at least a copy of it, is the current finance company. Unfortunately, if this is that old and paid off years ago, they might not have a complete set of documents.

    Assuming (big assumption) that the finance company which provided the release is the right finance company, the worst possible outcome is a buyer who refuses to buy it. I wouldn't, but others might.

    Solution? I mentioned talking to a title company as an alternative to an attorney. They probably see this all the time and may offer a solution. For example, they may say,
    oh, this is so old if a buyer came to us, we'd just insure the title."

    BTW, have you spent the $10 to get an FAA registration CD? It sounds like you have but if not, it's the first thing someone would look at to even have a clue if they can help.
     
  18. midlifeflyer

    midlifeflyer Final Approach

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    I was involved in one that was a bit weird. Banks sales, mergers and name changes are usually easy because they are all matters of Federal public record. But in mine, the original lender bank made a mistake. It was planning to change its name and started using it on loan documents. But it never actually adopted the new name or filed it with the Feds. So there was this huge break in the lien ownership chain. Fortunately my client had a patient buyer who really wanted the airplane and we were able to resolve it relatively quickly.
     
  19. bluesideup

    bluesideup Pre-takeoff checklist

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    Hi everyone.
    Yes, a CD was obtained but the only reference listed was the Lien nr., and that it was still active / listed.
    A Title co. was approached, but the result, again, was inconclusive, no guaranties that it can be resolved.
    I am not sure what the worst case scenario would be, but like some have said, a lien is a huge deterrent, and I would assume most buyers would not purchase an acft. with a lien?
    It may be best to direct the efforts in another direction, the most difficult stage will likely be, if, and when, you try to sell it.
    Thanks again everyone.
     
  20. midlifeflyer

    midlifeflyer Final Approach

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    On the bold: professionals trying to resolve a problem - lawyers, title companies, doctors, accountants - almost never guarantee results. They can’t. They’d be lying if they did. That doesn’t mean the chances of a resolution are poor, just that, especially going in, they don’t know the extent of the problem or what it will take to fix it.
     
  21. bflynn

    bflynn En-Route

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    So what are they not satisfied with? You say that you have a document from the company which says they held the lien, but it's not the same name as the company that filed the lien in the first place. Would it be sufficient to trace the transformations of the company from A to B to C?

    Remember, you're proving this to the FAA - they are the ones that you need to satisfy, not anyone here, not a clerk of the court and no lawyer. So what more does the FAA want?
     
  22. Lindberg

    Lindberg Pattern Altitude

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    The worst possible outcome is that the lien wasn't actually satisfied, and someone comes along and repossess it after you buy it.

    If it were me, and I was personally convinced the lien wasn't an issue, I might offer a discounted price for the hassle and then worry about getting it released. Or the seller gets it taken care of and I pay full price. No way as a buyer would I do anything with the lien until it was my plane. The title insurance policies I've seen exclude recorded liens, so that likely wouldn't help you.
     
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  23. charheep

    charheep Pre-takeoff checklist

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    Mine was from 1959. And the title company found the company, which was sold off to a place in Ireland, and found a person to sign the lien release. I had zero faith, but here I am, a plane owner.
    The title company offered lien insurance, I think thats what they called it, but it wasnt needed so I cant give more information.
     
  24. bluesideup

    bluesideup Pre-takeoff checklist

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    Hi.
    Do you recall the name of the Title co.?
    Thank you.
     
  25. comanchepilot

    comanchepilot En-Route

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    This is a complex issue.

    Legally - the person who currently owns the right to payment must sign off on the lien to clear it legally so they have no future cause of action.

    The person who owns the lien on the FAA record must sign it off to clear title to the airplane. This person is dead, but - there is an estate - whether it has been started or not.

    The seller has a problem with title to the aircraft. The seller needs to fix it. Even if it is the greatest airplane at the best price ever. Otherwise you're buying the risk.

    I have several ideas, involving lawyering that does not involve suing anyone - and gets the lien released from the current owner of the lien. But thats why I get paid . . .
     
  26. midlifeflyer

    midlifeflyer Final Approach

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    Which, of course, is the whole idea, isn't it? I forget some folks think successful lawyering is about suing people.
     
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  27. Norman

    Norman En-Route

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    Not sure how it works regarding airplanes but with automobiles in Michigan after six years our SOS (DMV) does not worry about unreleased liens.
     
  28. midlifeflyer

    midlifeflyer Final Approach

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    Many states have limits of that type for all sorts of things. Just for clarification, there are two different types of enforceability and I'm simplifying a bit by talking about borrowers and lenders.

    One is enforcement against the borrower. That's subject to a whole bunch of rules and events that can vary a lot and, for the most part, doesn't have that much to do with recording the lien.

    Recording deals primarily with the second type - enforcement against people who have nothing to do with the loan - "third parties". A recorded lien - whether car, business inventory, your house - is designed to make it enforceable against strangers.

    What many states, apparently including yours, do, is limit the enforceability of those recorded liens unless the lender takes some action like filing a renewal. It's very common. The enforceability against third parties of typical lien on most business goods (as opposed to real estate), for example expires 5 years after filing unless renewed. Many states do the same with motor vehicles.

    States do it for exactly the reason of getting rid of the effect of liens just like the one being discussed. Unfortunately, the FAA has not taken that extra step. It would not be a particularly bad idea if they did.
     
  29. SCCutler

    SCCutler Administrator Management Council Member PoA Supporter

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    Not at all correct.

    The FAA lien registry is purely informational; the underlying lien (if there is one) is created by operation of state law, and you'd have to look to the state in which the lien was created to determine the means of perfection.

    https://www.faa.gov/licenses_certificates/aircraft_certification/aircraft_registry/clear_titles/
     
  30. midlifeflyer

    midlifeflyer Final Approach

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    Sorry, you are misreading or misunderstanding. Actually reading into what you linked - the word "perfect" does not appear.

    State law covers the "creation" and the "validity" of the lien - those are the rules that govern the relationship between the lender and the borrower. "Perfection," notice to everyone else in order to protect the lien from others, is the function of FAA recording. It's federal preemption - the same thing that prevents states from revoking your pilot certificate or controlling airspace. The result is states uniformly defer to FAA recording for perfection. Even yours. This is the Texas provision, virtually identical in every state.:

    Sec. 9.311. PERFECTION OF SECURITY INTERESTS IN PROPERTY SUBJECT TO CERTAIN STATUTES, REGULATIONS, AND TREATIES. (a) Except as otherwise provided in Subsection (d), the filing of a financing statement is not necessary or effective to perfect a security interest in property subject to:
    (1) a statute, regulation, or treaty of the United States whose requirements for a security interest's obtaining priority over the rights of a lien creditor with respect to the property preempt Section 9.310(a);​

    The reason is federal law, specifically 49 U.S. Code § 44108 - Validity of conveyances, leases, and security instruments, which more than one court has said "preempt State law insofar as they relate to the priority of liens." IOW, recording and priority are matters of federal law while questions of the validity of the lien (was it fraud? was the loan usurious? was the loan paperwork proper? was it a mechanic lien that doesn't exist unless certain requirements are met?) belong to the state where the transaction took place.
     
    Last edited: Nov 14, 2017
  31. denverpilot

    denverpilot Taxi to Parking

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    Successful life seems to be well-served by avoiding a need for successful lawyering whenever possible.

    No offense to y’all lawyers here, and I’d certainly pay the going rate for one of you if needed...

    And do appreciate some kind but “non-legal advice” from one who’s posted on this thread done out of the kindness of his heart (no, really..) who I probably still believe I owe a nice dinner to for that...

    But if it’s all the same to you guys, I’m going to keep doing my damnedest to never have to hire any of you. I see your taste in airplanes and they’re headier than mine. And you can afford them. :)

    But I’m also not crazy. There’s times when it’s a lot cheaper to just pay the retainer and get on with it. You guys know all the rules on the playground and the rest of us don’t. Ha.
     
  32. midlifeflyer

    midlifeflyer Final Approach

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    Agreed. But the problem is recognizing a need.

    Kind of like when I took "Business Law" in college and then taught a semester at the MBA level. I eventually came to the conclusion that college or MBA level Business Law was not about learning how to represent your business, but rather how to recognize when your business might need to consult with a lawyer.
     
  33. comanchepilot

    comanchepilot En-Route

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    And they'd be a helluva lot more effective in the short term!
     
  34. denverpilot

    denverpilot Taxi to Parking

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    Makes sense. Of course they’ll tell you, too... they say things like, “I have ideas... but that’s how I get paid...” :) Rather big hint... haha.

    I’ve said similar to people with no clue about their IT or telephony systems... some say “what would it cost to draw up a plan for this?”... other keep flailing around until the blind squirrel finds a nut and their stuff kinda works. ;)

    It’s the post-expert era in America these days. People will spend days and days wasting time to avoid paying an expert. And I was definitely not recommending doing that. But some people don’t value their time, or just don’t have the capital to engage the correct experts.

    In law, my opinion is, you usually get as much justice as you can afford. Write the check. ;)
     
  35. wsuffa

    wsuffa Touchdown! Greaser!

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    The trick is in knowing when you need the expert. Sometimes it's clear, sometimes it's a fine line.

    You pay the good doctor for his/her expertise, but that expertise is probably not needed each time you take an aspirin (unless you're allergic or have a medical issue that would be a problem). It is needed when dealing with a potentially sticky problem with the FAA's medical certification. A man (woman) needs to know their limits.

    Same with other experts: you need to know when you need them and when you don't need them.
     
  36. charheep

    charheep Pre-takeoff checklist

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    I used Aero Space reports. Cant recommend them enough.
     
  37. denverpilot

    denverpilot Taxi to Parking

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    Price of expert < Price of risk. Done.
    Price of risk < Price of expert. Maybe not.

    Not that hard.

    Sometimes it’s not knowing the price of the risk that’s the difficult part.
     
  38. wsuffa

    wsuffa Touchdown! Greaser!

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    And sometimes knowing the price of the expert is the difficult part. YMMV.

    Occupational licensing is important with respect to some professions (legal, professional engineering, accounting, etc), but in today's world folks from every profession want licensing to "demonstrate their expertise" - and lawmakers are often willing to go along: https://www.washingtonpost.com/opin...abb0f1e9ffb_story.html?utm_term=.039db5816371