Title and Registration
Q: Can a company organized outside the U.S. register a corporate jet in the U.S. in its name?
A: No. Generally, a corporate jet may be registered in the U.S. only when the corporate jet is owned by a U.S. citizen. Per U.S. Federal Aviation Regulation (FAR) 47.2, with respect to an entity, a U.S. citizen is defined as “a corporation or association created or organized under the laws of the United States or of any State, Territory, or possession of the United States, of which the president and two-thirds or more of the board of directors and other managing officers thereof are such individuals and in which at least 75 percent of the voting interest is owned or controlled by persons who are citizens of the United States or of one of its possessions.” See the following Owner Trust FAQ for an alternative if the entity does not meet this definition.
Q: Is there a way to register a corporate jet in the U.S. if the company does not meet the FAA’s definition of U.S. citizen, such as utilizing an owner trust?
A: If an entity does not fit the FAA’s definition of U.S. citizen eligible to register a corporate jet in the U.S., the owner may place the corporate jet in a trust (commonly known as an owner trust) and have the corporate jet registered with the FAA in the name of the trustee (commonly called the owner trustee). The owner trustee holds legal title to the corporate jet. There are several institutions that routinely act as owner trustee for aircraft in the U.S. The aircraft owner will need to select and engage a trustee. The tax department will need to confirm that the trust will be treated as a grantor trust for federal tax purposes. We strongly recommend using a trustee with experience in aircraft owner trusts.
Q: What is the International Aircraft Registry?
A: This is also referred to as the Cape Town Registry. It refers to the Convention on International Interests in Mobile Equipment and its Protocol on Matters Specific to Aircraft Equipment – November 16, 2001. The U.S. ratified this treaty and it became effective March 1, 2006. It recognizes the International Registry as an additional place for the filing of interest, including prospective interests, in certain airframes, helicopters, and aircraft engines. When researching the title to a U.S. registered aircraft, at a minimum, have the records checked at both the FAA Registry in Oklahoma City and the International Aircraft Registry (which is based in Ireland).
Q: I would like to have the confidentiality afforded by an off-shore registration. Can you assist with this?
A: Yes. The security and confidentiality that some owners desire may be possible with registration in Bermuda, the Cayman Islands, the Bahamas, Aruba or Isle of Man. A non-U.S. registration may also allow owners to take advantage of tax exemptions, relaxed noise restrictions and flexible citizenship requirements.
Q: We are closing on the purchase of our new corporate jet on Thursday and our CEO wants to leave for Europe on Friday. Since the aircraft is now ours we can fly wherever we want, can’t we?
A: Not yet. At the time of the closing, you need to file a Declaration of International Operations with the FAA. This should expedite the registration of your aircraft so that the FAA will issue you a “flywire.” The aircraft cannot leave the continental 48 states without either the “flywire” or its permanent registration. The “pink slip” that you placed on the aircraft at closing as temporary registration allows operations only in the continental 48 states. Although not a legal point, you need to check with your pilots and management company as this timing is generally too soon for a new owner to stock an aircraft, obtain all of the authorizations and obtain the aircraft’s Reduced Vertical Separation Minimum (RVSM) certification.
Q: Does the aircraft title report prepared by the escrow agent reflect a search of all locations where liens could be filed?
A: The title report from an escrow agent located in Oklahoma City will generally cover the FAA Registry and may cover the International Aircraft Registry filings. Most title reports do not cover any UCC filings or federal tax liens and may not cover other types of encumbrances (e.g., judgments) that were not filed with the FAA. That said, title insurance is available for aircraft. Historically, it has not been purchased by most aircraft purchasers. If the aircraft being purchased has had a long history, or has questionable prior owners who may have encountered legal or financial problems, the purchaser will want to investigate obtaining title insurance. There are two primary underwriters for aircraft title insurance and several agents in Oklahoma City who offer aircraft title insurance.
Q: Does the aircraft title report prepared by the escrow agent reflect a search of all locations where liens could be filed?
A: The title report from an escrow agent located in Oklahoma City will generally cover the FAA Registry and may cover the International Aircraft Registry filings. Most title reports do not cover any UCC filings or federal tax liens and may not cover other types of encumbrances (e.g., judgments) that were not filed with the FAA. That said, title insurance is available for aircraft. Historically, it has not been purchased by most aircraft purchasers. If the aircraft being purchased has had a long history, or has questionable prior owners who may have encountered legal or financial problems, the purchaser will want to investigate obtaining title insurance. There are two primary underwriters for aircraft title insurance and several agents in Oklahoma City who offer aircraft title insurance..