Taking security over aircraft
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What is the typical form of a security document over the aircraft and what must it contain?
The typical form of security over an aircraft is a mortgage. The mortgagor maintains the use and possession of the aircraft while mortgaged. It is possible to constitute several mortgages over an aircraft, provided that written notice is given to all prior mortgagees. There is no specific form. The mortgage must be translated into Spanish if executed in another language, and must include the following:
the full names and details of the parties and their representatives;
the economic terms including the maximum amount secured;
the interest agreed;
the manner in which payments will be made;
a complete description of the mortgaged aircraft indicating its value;
the place where the aircraft will be located; and
any other lawful conditions agreed to by the parties.
What are the documentary formalities for creation of an enforceable security over an aircraft? What are the documentary costs?
The mortgage, evidence of the existence of mortgagor and mortgagee, and the corresponding corporate authorities must be translated into Spanish if executed in another language, and processed and registered with the Public Registry.
Documents executed abroad must be certified by a notary public. The notary must state that the signature is authentic and that, pursuant to sufficient evidence provided to him or her, the party signing is duly authorised to sign on behalf of the company. Thereafter, the signature of the notary must be certified according to the 1961 Hague Convention on the apostille or by a Panamanian consul in the place of issuance.
Registration fees are US$100 for review by the Public Registry, plus US$2.50 for each US$1,000 or fraction thereof with a cap of US$51,250. Additionally, notarial fees in the amount of US$14 per page and translation fees based on the length of the document apply.
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An extract of the Aviation Finance & Leasing Guide 2021, originally published by Getting the Deal Through / Lexology