Aircraft Registration & Transactions

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What’s The Cape Town Registry? NBAA Offers a Refresher

August 30, 2013

A question often fielded by NBAA staff and the forums on the Association’s Air Mail listserve is: “What is the Cape Town International Registry, and why should I care about it?”

“Basically, the registry was designed by an international treaty to protect financial interests in aircraft and engines,” explained Scott O’Brien, NBAA’s senior manager of finance & tax policy. Business aircraft are mobile assets with purchase and sale transactions conducted in many countries around the world. To make consistent sense of different nations’ and territories’ laws and regulations, in 2001, representatives from many countries and international organizations met in Cape Town, South Africa, at the Convention on International Interests in Mobile Equipment.

The resulting treaty, the Cape Town Convention, covers financial interests in aircraft, trains and space assets. As of May 2013, 56 states and the European Union have ratified its Aviation Protocol, which took effect in March 2006. In ratifying it, the contracting states, which include the U.S., amended their commercial code and aviation regulations to conform to standards set by the treaty for aircraft transactions.

The treaty also established the online Cape Town International Registry (CTIR) in Dublin, Ireland, where the specified documents are registered in a searchable database. In legal terms, this registration “perfects,” or validates, an entity’s financial interest in a qualifying asset: a fixed-wing aircraft with at least eight seats (including crew), a helicopter with at least five seats (including crew), turbine engines that produce at least 1,750 pounds of thrust and turboshaft or piston engines of at least 550 horsepower.

Equally important, the treaty standardizes the remedies for everything from liens to default and insolvency. “That when it comes to priority of interests, the entity that properly registers first has priority over all who register their financial interests thereafter,” O’Brien stressed.

FAA Registry and Cape Town Registry Go Hand-in-Hand

The CTIR does not replace the FAA Registry, which is an “exclusive entry point” to the International Registry. In addition to specifying ownership, nationality and operational purposes with the FAA, those with a financial interest in the aircraft must file the pertinent documents, such as security agreements and leases, with FAA Form 8050-135, which describes the relevant parties, the collateral and international interests claimed in the collateral.

Once the FAA accepts the registration filing, it issues a Cape Town Transaction Code. If the registering entity hasn’t already, the code-holder creates a CTIR account, which includes an identity verification process and means of payment ($200 to set up an account and registration fees of $100 per aircraft and $50 per engine). The account’s administrator inputs the FAA-supplied code on the CTIR website, which then imports the FAA data to the International Registry.

Approved registrations are good for a year, and CTIR administrators (individuals appointed by parties who use the registry or “Transacting User Entities”) get a 30-day email renewal notification on each object registered. It includes a link to the free digital renewal certification. According to the CTIR website, failure to download the new certificate is the most common cause of renewal problems.

While the registration process may seem straightforward, the stakes are high when dealing with valuable assets such as business aircraft. Not registering the aircraft can be devastating to the interests of the owner, lender, lessor or lessee for one simple reason: the first party to have registered a searchable interest at the CTIR wins.

With these concerns in mind, aircraft owners and operators are strongly encouraged to seek the advice of qualified aviation legal counsel before attempting to initiate or modify a registration filing.

For more information, NBAA Members may visit: http://www.nbaa.org/member/admin/registration/cape-town/.