Spencer Fane LLP Logo

Aircraft Repair Lien Takes Priority Over Lender’s Security Interest

A recent decision of the Oklahoma Court of Civil Appeals reinforced the priority of statutory liens protecting aircraft repair facilities.  In Blue Sky Telluride, L.L.C. v. Intercontinental Jet Service Corporation, the court found that an aircraft repair lien takes priority over all other claims against an aircraft.  Even the interest of a lender that financed the acquisition of the aircraft, with a prior security interest on file, is inferior to an aircraft repair lien under Section 9-333 of the Uniform Commercial Code.  The court noted, however, that the aircraft repair lien is a possessory lien, signifying that the special priority will only apply when the repair facility has retained possession of the aircraft.  Thus, once the repair facility releases the aircraft, it loses its priority over the purchase money lender.  The decision also notes that the aircraft repair lien must be recorded with the FAA before its priority will be recognized.