A security interest in an aircraft engine can be perfected only in the manner required by federal law. Federal law excludes by preemption the recording of title to or liens against aircraft, so that a transfer that is not recorded under the federal system is not effective. Security Interests in Engines less than 550 horsepower are not eligible for recording. A security interest in an aircraft is perfected by filing with the Aircraft Registration Branch of the Federal Aviation Administration.
A Kentucky Security Agreement Granting Security Interest in Aircraft Engine is a legal document that establishes a lien or security interest on an aircraft engine located in Kentucky. This agreement is designed to protect the interests of lenders or creditors who provide financial assistance or loans for the purchase, repair, or maintenance of aircraft engines. By executing a Kentucky Security Agreement, the aircraft engine owner grants the lender or creditor a security interest in the engine. This means that if the borrower defaults on their loan or fails to fulfill their financial obligations, the lender has the right to seize and sell the aircraft engine to recover the outstanding debt. There are different types of Kentucky Security Agreements that can be used to grant security interest in an aircraft engine. These agreements may vary slightly depending on the specific terms and conditions agreed upon by the parties involved. Some common types include: 1. Purchase Money Security Agreement: This type of agreement is used when the lender provides financing for the acquisition of the aircraft engine. The lender's security interest will typically attach to the engine from the moment of purchase. 2. Repair and Maintenance Security Agreement: In situations where the engine owner needs financial assistance to repair or maintain their aircraft engine, this agreement is used to grant security interest to the lender. The lender has the right to take possession of the engine if the borrower defaults on their loan. 3. Lease Security Agreement: If the borrower is leasing the aircraft engine from a lessor, they may be required to enter into a lease security agreement granting the lessor a security interest in the engine. This provides protection to the lessor in case of default or non-payment by the lessee. 4. Subordination Agreement: In some cases, a lender may require a subordination agreement to establish priority in their security interest. This agreement ensures that their claim on the aircraft engine takes precedence over any other existing or subsequently created liens or security interests. It is essential to consult with legal professionals experienced in aviation law when drafting or executing a Kentucky Security Agreement, as it ensures compliance with state and federal regulations. The agreement should be comprehensive, outlining the obligations and rights of each party, the conditions of default, and the remedies available in case of default. Properly executed security agreements protect both lenders and borrowers, providing a framework for secure transactions involving aircraft engines in Kentucky.
