Aircraft Mechanic's Liens In
by: Greg Reigel
Aircraft Mechanic Liens In Minnesota
By Gregory J. Reigel
© 2004 Reigel & Associates, Ltd./Aero Legal Services. All rights reserved.
If you provide storage, repair, maintenance or other services to aircraft, you have the ability to assert a lien on that aircraft and retain possession until you have been paid. This is commonly referred to as a mechanic’s lien.
What isn’t as commonly known is that, in Minnesota, you don’t necessarily lose your lien rights if you no longer have possession of the aircraft. The situation arises when an owner pays you with a check and leaves with the aircraft. Later, the bank dishonors the check. Now what?
Under Minnesota Statute § 514.221, you can re-assert your mechanic’s lien against an aircraft by filing a verified statement and description of the aircraft and the work done or material furnished. The Statement must be filed with the “appropriate office under the Uniform Commercial Code.” This would be the FAA’s Aircraft Registry in Oklahoma City, OK.
The verified statement must include N-number, make and model of the aircraft, amount owed for the services and date of last work. The statement must be signed in ink, with title if on behalf of a corporation or limited liability company and must be accompanied by the $5.00 filing fee.
Also, if the owner of the aircraft is located in Minnesota, you may want to file the statement with the Secretary of State. Although it is not necessary to perfect your lien, it will provide notice to anyone who doesn’t know to check with the Aircraft Registry.
This is called “perfecting” your mechanic’s lien and must be done within 90 days after you provide the work, materials or service. Once perfected, you now have a lien on the aircraft.
Perfection secures the amount you are owed with the aircraft. You then have several options. First, in order to sell the aircraft, the owner will need to pay you and obtain a release before the owner can give a buyer clear title to the aircraft.
Second, you also have the ability to repossess and foreclose on the aircraft. This means you can force a sale of the aircraft and then receive payment out of the proceeds of the sale. Any excess money is given to the owner.
Under the first option, you run the risk of having to wait until the owner attempts to sell the aircraft. The second option gives you more control, but is also more costly than simply waiting. However, under either option you are definitely in a better position to get paid than you would be without the lien.
ABOUT THE AUTHOR
Greg is an aviation attorney, author and holds a commercial pilot certificate with instrument rating. His practice concentrates on aviation litigation, including insurance matters and creditor’s rights, FAA certificate actions and aviation related transactional matters. He can be reached via e-mail at greigel@aerolegalservices.com or check out his website at www.aerolegalservices.com.
Thursday, January 24, 2008
Sunday, January 6, 2008
AIRCRAFT OWNERSHIP: IS THE TIME RIGHT?
In the hours and days immediately following the tragic attacks on America of 9/11, there was much speculation about the effects on the general aviation industry. While the events of September 11, 2001 have had a significant impact on the economy as a whole, sales of personal aircraft in Michigan have experienced a surprising boost. Certainly, the convenience of personal transportation has played a major role in this increase as airport lines and security have become more time consuming. The reduction of flights resulting from the airline cost-cutting have limited flexibility for the business person and affected the productivity of companies relying on commercial transportation.
These factors alone can’t explain surge of people joining the flying community for more than just pleasure. Rebates, low and 0% interest rates, training allowances, and yes, even the IRS played a role in creating an environment that has introduced more people to the benefits of aircraft ownership and had an effect similar to that seen after the passage of the General Aviation Revitalization Act of 1995.
The IRS is here to help you? Well, believe it or not, a new tax law passed earlier this year represents a renewed attempt by our nation’s leaders to jumpstart the economic recovery. The bill applies to new airplanes acquired after September 10, 2001, and before September 11, 2004, and provides tax savings from economic stimulus provisions included in the Internal Revenue Code designed to encourage investment in capital assets. Visit your local airport and you’re sure to see plenty of forty and fifty year old aircraft operating for both business and pleasure. Even prior to the new tax law, Congress recognized that capital investment is an important part of our economy, and therefore allowed a five year depreciation of these assets. To further encourage investments, they do not require the depreciation to be spread evenly over the five years, but through a concept know as “double declining balance,” greatly accelerate depreciation during the first two years of ownership. Now with the additional incentives of 30% bonus depreciation on new airplanes, tax deferral opportunities are greatly expanded.
So how might a business person benefit from these new changes? First of all, the impact of these depreciation changes greatly reduce net cash investment for the purchase of a new airplane. Specifically, an operator in the 40% tax bracket who can successfully write off his aircraft ownership expense may have no cash investment in the airplane during the first four years. Additionally, when properly structured, many taxpayers have an opportunity to convert personal use into business use. The Internal revenue code provides an optional method of taxing an individual for personal use of an aircraft which many times amounts to less than 10% of the actual deductions flowing from the investment. Consult your tax professional prior to purchasing your new airplane or ask your Aircraft Dealer for the name of an Aviation Tax Specialist to set up your purchasing entity.
And you say you’re not a pilot? Local aircraft dealers like Suburban Aviation, Inc. in Lambertville, Michigan will actually teach you to fly your new airplane and even reimburse your expenses when you purchase a new Cessna airplane from them. Most of today’s pilots learned to fly in a Cessna airplane and the majority of these pilots continue to experience the freedom and flexibility that flight offers in one of Cessna’s many single engine models. For 75 years, Cessna has been the leader in general aviation aircraft providing a safe and reliable alternative to commercial airlines and the automobile.
So if your business can benefit from improved efficiency and tax savings, why not consider a company airplane? There are few tax saving opportunities as effective as fully depreciating an aircraft on a five year accelerated basis, and with today’s interest rate environment, a well-structured transaction often results in little or no after tax cash flow holding costs during the early years of ownership. Of course, arriving at your meeting on time and with all your luggage can also be pretty convincing!
by: Pat Redmond
Pat Redmond, helps business owners who are tired of long lines and baggage claims, fly their way to freedom! Enjoy dinner with your family tonight! To learn more about the General Aviation Business, sign up for more FREE tips like these, visit her site at http://www.airplanenoise.com
These factors alone can’t explain surge of people joining the flying community for more than just pleasure. Rebates, low and 0% interest rates, training allowances, and yes, even the IRS played a role in creating an environment that has introduced more people to the benefits of aircraft ownership and had an effect similar to that seen after the passage of the General Aviation Revitalization Act of 1995.
The IRS is here to help you? Well, believe it or not, a new tax law passed earlier this year represents a renewed attempt by our nation’s leaders to jumpstart the economic recovery. The bill applies to new airplanes acquired after September 10, 2001, and before September 11, 2004, and provides tax savings from economic stimulus provisions included in the Internal Revenue Code designed to encourage investment in capital assets. Visit your local airport and you’re sure to see plenty of forty and fifty year old aircraft operating for both business and pleasure. Even prior to the new tax law, Congress recognized that capital investment is an important part of our economy, and therefore allowed a five year depreciation of these assets. To further encourage investments, they do not require the depreciation to be spread evenly over the five years, but through a concept know as “double declining balance,” greatly accelerate depreciation during the first two years of ownership. Now with the additional incentives of 30% bonus depreciation on new airplanes, tax deferral opportunities are greatly expanded.
So how might a business person benefit from these new changes? First of all, the impact of these depreciation changes greatly reduce net cash investment for the purchase of a new airplane. Specifically, an operator in the 40% tax bracket who can successfully write off his aircraft ownership expense may have no cash investment in the airplane during the first four years. Additionally, when properly structured, many taxpayers have an opportunity to convert personal use into business use. The Internal revenue code provides an optional method of taxing an individual for personal use of an aircraft which many times amounts to less than 10% of the actual deductions flowing from the investment. Consult your tax professional prior to purchasing your new airplane or ask your Aircraft Dealer for the name of an Aviation Tax Specialist to set up your purchasing entity.
And you say you’re not a pilot? Local aircraft dealers like Suburban Aviation, Inc. in Lambertville, Michigan will actually teach you to fly your new airplane and even reimburse your expenses when you purchase a new Cessna airplane from them. Most of today’s pilots learned to fly in a Cessna airplane and the majority of these pilots continue to experience the freedom and flexibility that flight offers in one of Cessna’s many single engine models. For 75 years, Cessna has been the leader in general aviation aircraft providing a safe and reliable alternative to commercial airlines and the automobile.
So if your business can benefit from improved efficiency and tax savings, why not consider a company airplane? There are few tax saving opportunities as effective as fully depreciating an aircraft on a five year accelerated basis, and with today’s interest rate environment, a well-structured transaction often results in little or no after tax cash flow holding costs during the early years of ownership. Of course, arriving at your meeting on time and with all your luggage can also be pretty convincing!
by: Pat Redmond
Pat Redmond, helps business owners who are tired of long lines and baggage claims, fly their way to freedom! Enjoy dinner with your family tonight! To learn more about the General Aviation Business, sign up for more FREE tips like these, visit her site at http://www.airplanenoise.com
Justify Your Airplane Purchase 10 Best Ways
For those of us who've caught the "aviation bug" finding a way to justify the purchase of an airplane becomes an all consuming mental task. Make this task simple by choosing the appropriate reasons from the list below:
1. The airplane will make money for me.
This one actually works! Learn about leasebacks and/or using your airplane in your business by visiting: http://www.airplanenoise.com/answers_to_why.htm
2. My business will benefit from my increased productivity when I fly instead of drive.
Save time and money by flying yourself! You can avoid hours at the security gate and layover time by flying yourself. Most regional trips will be completed in a fraction of the time you'd spend driving or flying commercially. Learn more by clicking the link: http://www.airplanenoise.com/business_justification.htm
3. The airplane will keep my family together.
Many people find their children off to college and their parents staying in the south. A personal aircraft allows you to stay in contact and maintain the relationships that are so important to you. After all. . . is there anything more important than our relationships with our family and friends?
4. Learning to fly provides a new challenge.
Most of us have dreamed about flying since our childhood. What's preventing us from taking that step? Life's too short to procrastinate!
5. I can vacation every weekend!
No doubt, every weekend can be earmarked for a new destination. Start with you own state, and expand to other states. Visit museums, recreation areas, friends . . . the sky's the limit! Start with this list: http://www.airplanenoise.com/great_trips.htm
6. I can make an airplane payment instead of an IRS payment!
With minimal business use (30%), your airplane purchase may be a depreciable asset. New tax laws significantly increased the tax benefit to owners. Learn more by downloading a FREE audio TeleClass at: http://www.airplanenoise.com/download_teleclass.htm
7. I can enhance my children's educational experience.
Children learn more from an experience rather than sitting in a classroom or reading a book. Trips to Washington D.C., Niagara Falls, Gettysburg, PA, Kitty Hawk are all great reasons to fly the family. Re-live your childhood at the same time.
8. Flying as therapy?
Well, believe it or not, some people fly for its therapeutic benefits. Life's problems seem to disintegrate as altitude increases. Try it next time you're feeling overwhelmed by life's challenges!
9. An airplane is a terrific status symbol.
If status is what you're looking for. . . you can't beat an airplane. Not only are pilots looked up to, but when it's your own airplane. . . "You've arrived!" No one even needs to know that the airplane is generating a positive cash flow.
10. I just WANT one!
Sometimes we just need to satisfy our desires!
"I'm worth it."
"I've worked hard and this is my reward."
"I only live once!"
I know you can add to this list!
by: Pat Redmond
--------------------------------------------------------------------------------
About the Author
Pat Redmond, helps business owners who are tired of long lines and baggage claims, fly their way to freedom! Enjoy dinner with your family tonight! To learn more about the General Aviation Business, sign up for FREE aircraft purchase tips and tools, visit her site at http://www.airplanenoise.com
1. The airplane will make money for me.
This one actually works! Learn about leasebacks and/or using your airplane in your business by visiting: http://www.airplanenoise.com/answers_to_why.htm
2. My business will benefit from my increased productivity when I fly instead of drive.
Save time and money by flying yourself! You can avoid hours at the security gate and layover time by flying yourself. Most regional trips will be completed in a fraction of the time you'd spend driving or flying commercially. Learn more by clicking the link: http://www.airplanenoise.com/business_justification.htm
3. The airplane will keep my family together.
Many people find their children off to college and their parents staying in the south. A personal aircraft allows you to stay in contact and maintain the relationships that are so important to you. After all. . . is there anything more important than our relationships with our family and friends?
4. Learning to fly provides a new challenge.
Most of us have dreamed about flying since our childhood. What's preventing us from taking that step? Life's too short to procrastinate!
5. I can vacation every weekend!
No doubt, every weekend can be earmarked for a new destination. Start with you own state, and expand to other states. Visit museums, recreation areas, friends . . . the sky's the limit! Start with this list: http://www.airplanenoise.com/great_trips.htm
6. I can make an airplane payment instead of an IRS payment!
With minimal business use (30%), your airplane purchase may be a depreciable asset. New tax laws significantly increased the tax benefit to owners. Learn more by downloading a FREE audio TeleClass at: http://www.airplanenoise.com/download_teleclass.htm
7. I can enhance my children's educational experience.
Children learn more from an experience rather than sitting in a classroom or reading a book. Trips to Washington D.C., Niagara Falls, Gettysburg, PA, Kitty Hawk are all great reasons to fly the family. Re-live your childhood at the same time.
8. Flying as therapy?
Well, believe it or not, some people fly for its therapeutic benefits. Life's problems seem to disintegrate as altitude increases. Try it next time you're feeling overwhelmed by life's challenges!
9. An airplane is a terrific status symbol.
If status is what you're looking for. . . you can't beat an airplane. Not only are pilots looked up to, but when it's your own airplane. . . "You've arrived!" No one even needs to know that the airplane is generating a positive cash flow.
10. I just WANT one!
Sometimes we just need to satisfy our desires!
"I'm worth it."
"I've worked hard and this is my reward."
"I only live once!"
I know you can add to this list!
by: Pat Redmond
--------------------------------------------------------------------------------
About the Author
Pat Redmond, helps business owners who are tired of long lines and baggage claims, fly their way to freedom! Enjoy dinner with your family tonight! To learn more about the General Aviation Business, sign up for FREE aircraft purchase tips and tools, visit her site at http://www.airplanenoise.com
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