When buying or selling a business aircraft, the transaction isn’t limited to a domestic registry like the FAA. For many eligible jets, a second, equally critical step is required: registration with the International Registry of Mobile Assets (IR). Created under the legal framework of the Cape Town Convention, the IR is a critical electronic database that ensures the security and priority of international interests in high-value aircraft equipment across ratifying countries. Ignoring the IR can be a costly mistake. For buyers, it can mean unwittingly purchasing an aircraft with an unregistered lien, leaving your title vulnerable. For sellers, it can complicate or even stall a sale, especially if the transaction involves international financing.

WHAT IS THE CAPE TOWN CONVENTION?

The IR was established by the Convention on International Interests in Mobile Equipment, better known as the Cape Town Convention (CTC). The primary goal of this international treaty is to create a standardized system for recognizing and protecting security interests in mobile equipment, including aircraft. By doing so, it reduces risk for lenders, which in turn can lead to more favorable financing for aircraft buyers. The CTC applies to specific, high-value “aircraft objects”, including:

• Airframes certified to carry at least eight people or goods weighing over 2,750 kilograms (approximately 6,062 pounds).

• Helicopters certified to carry at least five people or goods weighing over 450 kilograms (approximately 992 pounds).

• Aircraft engines with specific thrust or horsepower ratings.

THE “FIRST-TO-FILE” RULE AND PRIORITY SEARCHES

At the heart of the IR is the “first-to-file” rule. This means that the party who is first to register their financial interest—such as a security interest or a contract of sale—on the IR gains priority over all later-registered and all unregistered interests.

This rule makes a title search on the IR a non-negotiable part of due diligence in a business aircraft sale, alongside a search of the domestic registry (like the FAA in the US). A Priority Search Certificate from the IR will reveal any existing registrations against the aircraft, giving you a clear picture of its title history and any potential claims.

HOW DOES THE IR IMPACT BUSINESS AIRCRAFT SALES?

For the buyer:

• Secure your investment: A priority search confirms that your future ownership interest will be protected.

• Satisfy lenders: Institutional lenders almost always require that a financed aircraft’s interest be properly registered with the IR to secure their loan.

• Protect title: The dual registration process (domestic and international) ensures a robust, internationally recognized title for the aircraft.

For the seller:

• Ensure a smooth closing: An aircraft with a clear IR record is far more attractive to a buyer and their lender, preventing last-minute complications that could jeopardize the sale.

• Maximize asset value: A transparent title history and proper registration can positively impact the resale value and marketability of your business jet.

• Facilitate finance: By having all interests properly registered, you streamline the process for the buyer’s financing, leading to a faster and more predictable closing.

NAVIGATING THE IR PROCESS

The IR is an online database, but its intricacies require expert handling. It is common for business aircraft transactions to use professional user entities (PUEs), such as specialized escrow companies or legal counsel, to manage the IR registration process.

These professionals act on behalf of both the buyer and seller to ensure all required filings are completed correctly and on time.

KEY TAKEAWAY

For business aircraft sales involving qualifying jets and sellers or buyers in a ratifying country, the International Registry isn’t optional—it’s essential. Whether you’re a buyer seeking to secure your investment or a seller looking for a smooth transaction, a thorough understanding of the IR and the Cape Town Convention is non-negotiable.

At Holstein Aviation, our IADA certified professionals bring decades of transaction experience, real-time market intelligence and global reach. We guide our clients through every step of the process, ensuring confidence and clarity in today’s dynamic environment. We work with escrow companies who facilitate the IR process regularly and can help you navigate it smoothly. Regardless of whether you’re preparing to buy an aircraft or sell your aircraft, Holstein Aviation is your trusted partner in business aviation.