Airport Business

MAY 2014

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LEGAL MATTERS May 2014 airportbusiness 31 corporate owners, have complex ownership structures. It is not uncommon for one entity to own an aircraft and dry lease said aircraft to a second entity for purposes of operation. If you're an FBO operator, however, the ability to enforce a lien against an aircraft is directly tied to whether your subtenant has the authority to encumber the aircraft. To this end, always check the available aircraft registry databases to confirm who or what entity is the actual registered owner of the aircraft. By way of example, with respect to U.S. registered aircraft, your first step should always be to check the FAA Aircraft Registry (http://registry.faa.gov/aircraftinquiry/). If the aircraft owner identified thereon is not iden- tical to your prospective or actual tenant, you have a potential gap in authority to encumber an aircraft and may not be able to assert a valid lien. If you identify any such gap, request any missing documents (a dry lease for the aircraft will be most common) to close the chain and be sure that the dry lease or other comparable document (1) explicitly allows your subtenant to enter into a lease and, most importantly, (2) explicitly allows your subtenant to encumber the aircraft. 2. S TAT E Y O U R F E E S A N D COLLECTION PROCESSES ACCURATELY In many states, absent a contract with respect to same, FBO operators are lim- ited in regard to what they can claim for fees and costs due and owing in the event of a lien upon an aircraft. To this end, a hangar and/ or tie-down agreement should include a very clear statement of monthly (or other applicable periodic) fees for same and, equally important, FBO operators must abide by their own stated billing practices. If your agreement indicates that you bill on a monthly basis, you must bill on a monthly basis. Failure to do so can result in a waiver of otherwise collectable fees. These collection practices should also out- line events of default, termination rights, and lien rights with respect to subtenant aircraft. Further, and because many states are possessory lien states (i.e., the FBO operator must retain physical possession of an aircraft in order to enforce a lien), these agreements should also specifically provide for continued accrual of monthly (or other) fees in the event of any such lien proceeding to ensure recovery by the FBO operator for the entire duration of an aircraft's presence upon an FBO operator's premises. 3. I N S U R A N C E R E Q U I R E - MENTS SHOULD BE CLEARLY STATED Most FBO operators are, them- selves, tenants of airport operators/owners and are subject to independent contractual obligations. Frequently included in such leasehold contracts is a requirement that FBO operators obtain proof of insurance from their own subtenants. Even if not explicitly required by any such lease, doing same is good practice because it ensures sources of recovery between subtenants for losses other than an FBO oper- ator's own hangar keeper's and/or commercial general liability policies. In doing so, make sure that the insurance requirements included in your sub- lease meet or exceed the insurance requirements set forth in the mini- mum standards and/or required by your lease with the airport operator/ owner to ensure compliance with your own lease requirements. In conjunction with clearly identifying insurance requirements, indemnity and hold harmless provisions also should be included. 4. CLEARLY IDENTI- FY ANY GOVERN- I N G R U L E S A N D REGULATIONS As a practical matter, the airport operator, rather than the FBO operator, promulgates the rules and regulations governing airport matters. To this end, it is good practice to incorporate same by reference into any hangar and/or tie-down contracts and, if possible, to either post same in a public place or provide same directly to subtenants. Likewise, and to avoid any unnec- essary losses, provide and enforce procedures (whether established by the airport operator or the FBO oper- ator) pertaining to securing aircraft in anticipation of natural disasters (e.g., hurricanes, tornadoes, etc.). These provisions should also clearly identify the FBO operator's versus the subtenant's maintenance obligations, including issues of disposal of hazardous materials. While our next article will focus on enforcing these contracts, paying particular attention to these issues in drafting and executing sub- tenant agreements will aid FBO operators in creating enforceable documents that will assist FBO operators in perfecting liens against sub- tenant aircraft if and when necessary. Not just a... It's a... 1190 S.E. Flightline Drive Warrenton, Oregon 97146 USA 503-861-2288 www.lektro.com • sales@lektro.com tug LEKTRO The ultimate aircraft tug... LEKTRO Since 1945 800-535-8767 www.aviationpros.com/10017532 Alison Squiccimarro and Megan Bryson ABOUT THE AUTHORS Squiccimarro and Bryson focus their practice on employment, litigation and insurance. Squiccimarro recently litigated a successful defense in U.S. District court of an airport FBO from Rehabilitation Act claims. Bryson represents clients in employment, aviation, commercial, product liability and general negligence matters. airb_30-31_LegalMatters.indd 31 5/2/14 9:53 AM

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