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.
Title: Understanding the Indiana Security Agreement Granting Security Interest in Aircraft Engine Keywords: Indiana, security agreement, aircraft engine, granting security interest, types, secured transactions, collateral, perfection, priority. Introduction: An Indiana Security Agreement Granting Security Interest in Aircraft Engine is a legally binding document that establishes a security interest over an aircraft engine in Indiana. This agreement serves as a crucial tool in securing collateral for loans or credit transactions related to aviation assets. This article aims to provide a comprehensive understanding of this agreement, highlighting its types, significance, and the necessary steps for its execution. Types of Indiana Security Agreements Granting Security Interest in Aircraft Engines: 1. Purchase-Money Security Interest (PSI) Agreement: A PSI agreement exists when the creditor provides financing for the acquisition of an aircraft engine, allowing them to claim priority over other creditors as far as the engine is concerned. 2. Non-Purchase-Money Security Interest (Noncoms) Agreement: Unlike PSI, noncoms agreements involve the creditor providing funds for purposes other than the initial acquisition of the aircraft engine. In such agreements, the creditor's security interest might not receive priority over PSI creditors. 3. Floating Lien Agreement: This type of security agreement grants the creditor a security interest in an aircraft engine without specifically identifying the engine, allowing for flexibility when dealing with future aviation transactions. Key Elements of an Indiana Security Agreement: 1. Collateral Description: A detailed description of the aircraft engine, including its make, model, identification number, and any additional identifications necessary to ensure accurate identification of the engine. 2. Granting Clause: A provision explicitly stating that the debtor grants the creditor a security interest in the aircraft engine and all related parts, equipment, and components, including any after-acquired additions or replacements. 3. Perfection Clause: Specifies the actions required to establish a perfected security interest, which often involves filing a Uniform Commercial Code-1 financial statement with the appropriate authorities. 4. Default and Remedies: Outlines the events or actions considered default, such as failure to make timely payments, and defines the creditor's remedies, including repossession and sale of the engine in case of default. 5. Priority Clause: This provision establishes the creditor's priority over other potential claimants, indicating the circumstances under which their interest will have precedence. Significance and Execution: An Indiana Security Agreement is crucial as it ensures that the creditor has a legally enforceable security interest in the aircraft engine. It offers protection by allowing the creditor to repossess and sell the engine in case of default, ensuring repayment of their loan. To execute an Indiana Security Agreement granting security interest in an aircraft engine, both parties (creditor and debtor) must sign the document. Subsequently, the agreement should be properly filed and recorded with the appropriate authorities to establish a perfected security interest and gain priority over other claimants. Conclusion: An Indiana Security Agreement Granting Security Interest in Aircraft Engine is a pivotal legal tool in securing aviation assets. It provides creditors with a legal claim to an aircraft engine, ensuring protection and repayment in the event of default. By understanding the various types and essential elements of this agreement, stakeholders can safeguard their interests and navigate secured transactions concerning aircraft engines in Indiana effectively.
