Client Alert
Update re FAA Civil Aviation Registry Filing Procedures During COVID-19 Crisis
March 31, 2020
By:
FAA Rescinds 72-Hour Quarantine Policy
Shortly after publishing the below client alert, the FAA rescinded its policy to quarantine all documents submitted to the Registry for 72 hours. The Registry is once again accepting paper documents without quarantine, but has implemented new procedures that result in 1-3 hour delays in receipt of filing times. The Registry may implement further changes to its procedures as circumstances surrounding the COVID-19 crisis develop. The Registry’s new policy of accepting documents signed electronically by email remains in place and provides a viable option for closings going forward.
FAA Civil Aviation Registry Filing Procedures During COVID-19 Crisis
The FAA Civil Aviation Registry has implemented a policy to quarantine for 72 hours all documents submitted to the Registry for filing. Until the COVID-19 crisis passes, escrow agents can no longer hand documents directly to Registry personnel and immediately receive stamped copies with filing times. Rather, escrow agents must place documents that they wish to file in a bin where the documents will be quarantined for 72 hours before Registry personnel will physically handle the documents and stamp them as received for filing.
This 72-hour quarantine requirement can complicate closings on aircraft transactions since sellers often won’t release possession of an aircraft to a buyer and allow filing of a bill of sale until purchase funds have been released from escrow, and buyers won’t allow a release of funds without confirmation of filing of the bill of sale and receipt delivery of possession of the aircraft. Simultaneous release of funds and filing of bills of sale and other documents is standard in aircraft closings, but the 72-hour quarantine period makes it much more difficult to perform such actions simultaneously; it creates a chicken-and-egg conundrum, which becomes even more complicated when lenders or other third-parties are involved.
Fortunately, recent changes in FAA procedures that pre-date the COVID-19 crisis give us tools that can help structure closings in a way that will circumvent the 72-hour quarantine. Historically, all documents that were filed at the FAA had to be hard copies. However, a new FAA policy implemented shortly before the COVID-19 crisis allows filings to be made by email provided that the documents have been signed electronically using Docusign or another similar service. The option to file bills of sale and other closing documents at the FAA Civil Aviation Registry by email is very new, so escrow agents and attorneys involved in aircraft closings have little or no experience structuring closings by email as of yet, but structuring a closing by email utilizing electronically signed documents should, in theory, bypass the 72-hour quarantine requirement, and therefore should be considered when planning closings during the COVID-19 crisis.
Please do not hesitate to contact a member of our Business Aviation team with questions regarding a closing or any filings with the FAA Civil Aviation Registry during the COVID-19 crisis.