AIRCRAFT FINANCING
Contact Neufeld Legal for aviation transaction legal matters at 403-400-4092 / 905-616-8864 or Chris@NeufeldLegal.com
The financing of private aircraft involves a specialized and complex area of legal practice that sits at the intersection of secured transactions, international law, and aviation regulation. Aircraft financing is essential because few buyers possess the capital to acquire an aircraft outright, making secured lending or leasing arrangements the standard path to ownership or use. The primary legal work revolves around structuring the deal to mitigate risk for the financier (typically a bank or a specialized lending institution), establish clear ownership and security interests, and ensure compliance with multi-jurisdictional regulatory frameworks. Key legal documents include loan agreements, security agreements (or mortgages), and various corporate and opinions documents, all tailored to the unique nature of the asset and the regulatory environment.
A significant focus of the legal work is the perfection and priority of the security interest. Because aircraft are mobile assets that can easily cross borders, this cannot be limited to Canadian registration systems, such as the provincial Personal Property Registries under the applicable provincial Personal Property Security Act (PPSA), but needs to be supplemented by extra-national registration, such as the Cape Town Convention (formally, the Convention on International Interests in Mobile Equipment and its Protocol on Matters Specific to Aircraft Equipment), which governs the creation, registration, and enforcement of international interests in airframes, engines, and helicopters. Legal counsel must navigate these parallel registration systems to ensure the security interest is perfected and given priority, which is crucial for repossession and recovery in the event of a borrower default.
Finally, the legal practice extends beyond just the security interest to encompass complex regulatory, tax, and cross-border structuring issues. Lawyers must conduct thorough due diligence on the aircraft's title, registration history, and maintenance records. They also advise on appropriate holding structures, such as special purpose vehicles or trusts, to manage liability and optimize tax treatment, especially for corporate or fractional ownership structures. For international deals, lawyers must address foreign jurisdiction issues, currency risks, and compliance with import/export controls and sanctions laws. The result is a highly tailored transaction, where the legal team integrates financial terms with aviation-specific rules to deliver an enforceable and compliant financing package for an asset that is inherently mobile and high-value.
For knowledgeable and experienced legal representation in business transactions and contracts involving aircrafts and the aviation industry, contact aviation transaction lawyer Christopher Neufeld at 403-400-4092 [Alberta], 905-616-8864 [Ontario] or Chris@NeufeldLegal.com.