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Cape Town International Registry Protects Aviation Assets

July 13, 2015

While there can be confusion surrounding the Cape Town International Registry (CTIR) established by the Cape Town Convention (CTC), owners and operators should be aware that it exists to facilitate transactions and protect interests in aviation assets – airframes, helicopters or engines – of a certain size.

Currently, nearly 60 countries have ratified the Aviation Protocol to the CTC, and the CTIR allows parties to register interests in applicable "aircraft objects," according to Joel Bulleigh, an attorney with the aviation group of McAfee & Taft. Bulleigh compared the CTIR to a records office where parties to real estate transactions file documents as part of real estate closings.

The CTIR registration may include every party with an interest in the aircraft object: the buyer, secured party or lessor. Should a priority dispute arise, the party that first completes the CTIR registration would likely prevail in any legal proceedings, Bulleigh said.

The CTIR does not replace the FAA registry, noted Scott O’Brien, NBAA's senior manager of finance and tax policy. Rather, for U.S.-registered airframes and helicopters, the FAA registry is the CTIR’s entry point, said Bulleigh. When the parties file the necessary documentation with the FAA, a unique code is received, which the parties enter as part of the registration on the CTIR.

Only approved users may register interests with the CTIR, but becoming an approved user is not an arduous process, said Bulleigh. However, users must renew annually to maintain their access to the CTIR, as well as pay a $200 initial fee and annual renewal fee.

Once a registration is completed against an aviation asset on the CTIR, there is generally no need to renew or modify such registration; however, new registrations in the future may be needed, for example, if the asset is sold.

CTIR searches and registrations of interest are an integral part of aviation transactions involving applicable aircraft objects, said O’Brien. If the parties involved do not properly register interests on the CTIR, their title or other interest in the object may not be protected, potentially causing significant financial issues.

To learn more about the CTIR and FAA registration requirements, attend the NBAA Tax, Regulatory & Risk Management Conference on November 15-16 in Las Vegas. Learn more about the Tax Conference.