An Aircraft Security Agreement is a legal document that establishes a security interest in an aircraft. This means that the aircraft is used as collateral to secure a loan or other financial obligation.
Key Points
- Collateral: The aircraft itself serves as security for the loan.
- Secured Party: The lender or financial institution that holds the security interest.
- Debtor: The borrower who owns the aircraft.
Purpose
The primary purpose of an Aircraft Security Agreement is to protect the lender’s interest in the aircraft. If the borrower defaults on the loan, the lender has the right to repossess the aircraft and sell it to recover the outstanding debt.
Common Provisions
Typical provisions in an Aircraft Security Agreement include:
- Description of the Aircraft: Detailed information about the aircraft, including make, model, serial number, and registration number.
- Grant of Security Interest: Clearly states that the borrower grants a security interest in the aircraft to the lender.
- Default: Defines the events that constitute a default, such as failure to make loan payments or breach of other agreement terms.
- Remedies: Outlines the lender’s rights upon default, including repossession and sale of the aircraft.
Essentially, an Aircraft Security Agreement is a contract that outlines the rights and responsibilities of both the borrower and the lender in relation to the aircraft.