Like land titles, aircraft titles are subject to record errors, unresolved liens and even fraud. There are a large number of reasons an aircraft’s title may be rendered unenforceable, placing the owner at risk of property loss or being sued for previously existing liens or unpaid taxes. As the first step in acquiring title insurance, insurance companies will draft an aircraft “title opinion”, or “abstract” based off a thorough investigation of the aircraft’s chain of ownership. The purpose of the initial title search is to unearth any problems with the aircraft’s ownership rights and, if necessary, resolve them before the sale closes. Although the Federal Aviation Administration requires that all aircrafts be registered and recorded through the FAA, FAA records do not have final legal authority in determining rightful ownership. Similarly, Certificates of Registration and FAA Registration do not have ultimate authority in determining ownership. If there are any reasonable disputes made regarding rightful ownership, only state courts have the final word.

Aircrafts which originated from another country are difficult to trace, and even though a title appears to be legitimate, the aircraft seller may have forged the deregistration notice. Buyers of stolen aircrafts are still entitled to liens attached to the aircraft’s title, even if those liens are international. Records can also be defrauded by being re-sold to another owner before the first buyer has the chance to file a security agreement with the FAA. Clerks and even title lawyers make mistakes from time to time. FAA records can be misinterpreted by the insurance underwriter; document creation, registration and filing mistakes can be made by title agents, aircraft brokers, escrow agents and title attorneys. Inaccurate or improperly filed documentation can lead to inaccurate abstracts.

Although title searches and abstracts are designed to preemptively protect aircraft owners from asset loss or legal attacks on the aircraft’s title, human error and hidden fraud still present a risk to the owner. Purchasing insurance is the only way for airplane owners to know that they are fully protected against legal problems or asset loss. Purchasing title insurance protects airplane owners by providing the cost of legal defense in the event of a lawsuit. Insurance also insures the title owner compensation of any financial or property loss due to title disputes, up to a specified amount. At the cost of less than 1% of the purchase amount, aircraft title insurance is a necessary commodity for aircraft owners.

Leasing has become a common technique to acquire an aircraft, since this asset has become expensive and always subject to a variety of laws and regulations. One of its prime advantages is that it helps to defray cost considerably. Leasing aircraft is most common in military aviation. Further, individuals, pilots, commercial aviations, and government agencies utilize leasing options. Both short term and long term aircraft leasing options are available.

Aircraft leasing transactions are categorized into finance leasing and operating leases. Finance lease is required to meet any of these criteria: a lease term greater than 75% of the aircraft?s estimated life, option to purchase the asset for less than fair market value, or ownership of the asset to be transferred to the lessee when lease expires. It is always enhanced by tax benefits and is shown on the balance sheet of the lessee. Generally, it is for a long term period. On the other hand, an operating lease is usually signed for a short term period. Presently, aircraft leasing is mostly on the basis of this type of lease. According to statistics, there are about 12500 commercial aircrafts in the world, among which about 2500 work on operating lease.

It is always preferable to acquire aircraft leasing services from Commercial Aircraft Sales and Leasing ? a collective term given to organizations engaged in marketing airliners from manufacturers such as Boeing and Airbus. A countless number of other providers, such as commercial banks, financial institutions, and hedge funds, are also in the scenario to make available aircraft leasing services. Of which prominent are GE Commercial Aviation Services (GECAS) and International Lease Finance Corporation (ILFC). As part of full service lease, most render maintenance management including AOG and heavy maintenance functions. Besides, companies like CIT Group Inc. offer leasing as well as financing packages for new and used commercial and corporate aircrafts. Customized aircraft leasing packages that are designed according to the needs of the clients are also available nowadays.