How Aircraft Title, Liens and Escrow Work at Closing

The short answer

At an aircraft closing, a title search confirms who owns the aircraft and what liens are recorded against it, an escrow agent holds funds and signed documents until every condition is met, and the final documents are filed with the FAA Aircraft Registry. Under 49 U.S.C. 44108, an instrument recorded with the FAA is valid against all persons from the date of filing, while an unrecorded one is valid only against the signer and anyone with actual notice. That is why lenders insist on a clean title search and on recording their security agreement.

Key takeaways

Order the title search early: AOPA advises searching the FAA Registry, the International Registry where it applies, and local courts for mechanics' liens and financing statements.
Recording matters: under 49 U.S.C. 44108, a recorded instrument is valid against all persons from the date of filing, while an unrecorded one binds only the signer and those with actual notice.
A seller's bill of sale must fit the chain of ownership, and the buyer's name on the registration application must match the buyer on the bill of sale.
An escrow agent or aviation counsel holds funds and documents until conditions are met, so money moves only when title is clean and the lender's lien is ready to file.
After payoff or closing, confirm that old liens are released and that releases are actually recorded, not just promised.

What happens to title and liens at an aircraft closing?

Three things have to line up at closing: the seller must be able to prove ownership, any existing liens must be cleared or released, and your own ownership and your lender's security interest must be documented and filed. An escrow agent usually coordinates all three, holding the money and the signed documents until the conditions are satisfied.

Title work comes after the physical inspection and the valuation. Our guides on pre-buy inspections and what an appraisal covers explain how those steps shape price and loan amount. This guide covers what happens once price and condition are agreed.

Where is aircraft title recorded?

For U.S.-registered aircraft, the FAA Aircraft Registry in Oklahoma City is the repository. Under 49 U.S.C. 44107, the FAA maintains a recording system for conveyances that affect an interest in civil aircraft of the United States, for leases and instruments executed for security purposes covering certain engines, propellers and spare parts, and for releases and satisfactions of those documents. The FAA's implementing rules are in 14 CFR Part 49, which applies to aircraft, to specifically identified engines rated at 550 or more takeoff horsepower, and to specifically identified propellers able to absorb 750 or more rated takeoff shaft horsepower (14 CFR 49.1).

Recording is not a formality. Under 49 U.S.C. 44108, a conveyance, lease or security instrument that is not recorded is valid only against the person who made it, that person's heirs and devisees, and anyone with actual notice of it. Once recorded, it is valid from the date of filing against all persons. For a lender, that is the reason to file the security agreement promptly. For a buyer, it is the reason to search the record first.

What does a title search cover?

AOPA advises buyers to run a comprehensive title search at the FAA Registry and, if the aircraft is subject to the Cape Town Convention, at the International Registry of Mobile Assets. It also advises searching local courts for mechanics' liens and financing statements before closing. A search can turn up unreleased chattel mortgages, leases or errors in the proof of ownership.

Where to look for claims against an aircraft
Source	What it can show	Why it matters at closing
FAA Aircraft Registry	Registered owner, recorded conveyances, recorded security agreements and releases	Confirms the seller's chain of ownership and any lender whose lien must be released
International Registry	International interests registered against airframes and engines within the Cape Town framework	Priority among those interests is determined first-to-file, per the registry's own FAQ
Local courts and filing offices	Mechanics' liens and financing statements, per AOPA	Catches claims that may not appear at the FAA
Maintenance records	Major alterations, repairs and component history	Supports the ownership and condition story the lender relies on

Do not assume the search is clean because the seller says there is no loan. Ask for a written payoff letter for every lien the search finds, and make release a closing condition.

What documents transfer ownership?

A buyer registering an aircraft in the U.S. sends the FAA an Aircraft Registration Application (AC Form 8050-1), evidence of ownership such as the Aircraft Bill of Sale (AC Form 8050-2), and the fee, under 14 CFR 47.31. The FAA can reject an application if forms are incomplete or names and signatures are inconsistent. The evidence of ownership rules in 14 CFR 47.11 add detail for unusual cases, such as repossessions, judicial sales, estates and trusts, where different documents are required.

In practice, check these points before signing:

The seller named on the bill of sale is the last registered owner, or the chain from that owner to the seller is documented.
The buyer's name on the bill of sale matches the buyer's name on the registration application exactly.
If the buyer is a company, LLC or trust, the signer has authority and the trust or entity documents meet the FAA's requirements.
Engines and propellers listed in the sale match the serial numbers in the records.

Ownership structure affects who is on the title, so decide it before closing. Our pages on acquisition loans explain how lenders usually underwrite purchases.

What does an escrow agent do?

An escrow agent is a neutral third party that holds the purchase funds and the signed documents until both sides have met their obligations. AOPA recommends using an experienced title company or attorney for the title search, escrow and closing services. The agent typically does the following:

Runs or reviews the FAA and International Registry searches and reports any liens.
Collects the buyer's funds, any lender funds and the seller's executed documents.
Obtains payoff letters and lien releases from existing lenders.
Releases funds to the seller only when the agreed conditions are satisfied.
Files the bill of sale, registration application, and the lender's security documents with the FAA, and makes the corresponding International Registry entries where they apply.

The FAA does not require escrow, but a lender will normally require some controlled closing process, because it must have a first-priority lien in place the moment it funds. Escrow fees are set in the purchase agreement, so confirm in writing who pays them.

How does a lender secure its lien?

A lender lending against the aircraft takes a security agreement and records it with the FAA, which then shows the lender's interest on the record. The FAA publishes instructions for recording a security agreement, and the 14 CFR Part 49 rules govern what must be filed. Where the International Registry applies, the lender also registers its international interest, and the registry says priority is first-to-file. The FAA's page on registering interests explains its role in obtaining the authorization needed to make those entries.

The lender will usually require, as conditions to funding: a clean title search, release of prior liens, evidence of insurance naming the lender, and a recordable bill of sale into the borrower. If you are a Part 135 or Part 141 operator, expect additional conditions about the operating certificate and about maintenance, since the aircraft's records support the loan. See our guide on financing a used aircraft for how age and time affect those requirements.

What does a closing sequence look like?

The following is a hypothetical timeline to show the order of steps. Timing and fees vary, and the figures are illustrative only.

Hypothetical exampleIllustrative only, not market data

Day 1: purchase agreement signed, escrow openedDeposit goes to escrow

Days 2 to 5: pre-buy and title searchSearch shows one unreleased lien

Days 5 to 8: payoff letter obtainedSeller's lender agrees to release at payoff

Closing day: funds and documents releasedLien paid from seller proceeds

After closing: filings and release recordedBuyer confirms the record is clean

The point of the sequence is that the lien is paid from the seller's proceeds at closing, in the same transaction, so the buyer never owns an aircraft with a live claim against it.

What should you confirm after closing?

Closing is not the end of the title work. After the funds move, confirm that:

The FAA has received the registration application and bill of sale, and you carry the second copy of the application as temporary authority only as 14 CFR 47.31 allows, until the Certificate of Aircraft Registration arrives.
Each old lien has a recorded release, and the lender has filed its own security documents.
Any International Registry discharge of a prior interest has actually been entered. Do not rely on a promise to do it later.
You hold a closing binder with the bill of sale, payoff letters, releases, search reports and insurance certificates.

Keep the binder with your records; a future buyer or lender will want to trace the same chain.

Closing checklist for operators

Choose an escrow agent or aviation counsel before you sign the purchase agreement.
Order FAA, International Registry (where applicable) and local lien searches as soon as the contract is signed.
Get a payoff letter for each lien and make its release a closing condition.
Match the buyer's name across the bill of sale, registration application and loan documents.
Confirm in writing who files what, and when, and who pays each fee.
Send the title results to your lender early, since they can affect the loan amount and closing date. The aircraft loan calculator helps you test payments if the price or loan amount changes.

If you are preparing an acquisition and want the title, valuation and lender requirements organized in one place, you can start a deal file with JetFinex. Confirm title, lien and registration questions with aviation counsel or a qualified title company, because requirements depend on the aircraft, the parties and the transaction.

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Frequently asked questions

What is an aircraft title search?

It is a search of FAA Registry records for the aircraft, and of the International Registry where the Cape Town Convention applies, to find recorded ownership and security interests. AOPA also advises searching local courts for mechanics' liens and financing statements before closing.

Do I need an escrow agent to buy an aircraft?

The FAA does not require one. AOPA recommends using an experienced title company or attorney for the title search, escrow and closing, because they coordinate the searches, hold funds and file the documents.

Can I fly the aircraft right after closing?

Under 14 CFR 47.31, an applicant for an aircraft last registered in the United States may use the second copy of the registration application as temporary authority to operate within the U.S., once the application, ownership evidence and fee have been sent and the other conditions in that section are met. Confirm the details with your title agent.

What happens if a lien is not released at closing?

A lien that remains recorded can still cloud title and can affect your lender's priority. Make release of each known lien a condition of closing and confirm that the release is recorded.

Does every aircraft need an International Registry search?

No. The International Registry covers airframes, aircraft engines and helicopters within the Cape Town framework. Whether a particular aircraft falls within it depends on its type and size, so ask your counsel or title agent.

Sources

This guide is educational and is not tax, legal or investment advice. See our editorial standards and disclosures. Spot an error? Tell us.