Is the Aircraft You’re Flying Owned by an LLC or Corporation?  

If you fly an aircraft that is owned by a business entity such as an LLC or corporation, be aware that an issue with the “legal status” of the entity could raise compliance issues with registration and airworthiness requirementsand possibly impact coverage of the aircraft’s insurance policy 

In a recent interpretationthe FAA’s Office of Chief Counsel stated that “a business entity that does not have or has lost legal status in the State in which it has been incorporated is neither eligible to register an aircraft nor operate that aircraft.”  As to what constitutes a loss of “legal status,” the FAA only stated that this was a state-specific determination, but some likely examples are suspension, forfeiture, or administrative dissolution.  

The FAA’s position is based upon requirements for a registration to be “valid” and “effective” as described in 14 CFR Part 47: Aircraft Registration.  Under FAR 47.43, one circumstance that invalidates a registration is if, at the time the registration application was made, the applicant was not qualified to submit the application.  For an entity meeting U.S. citizenship requirements to be qualified, it must be organized under the laws of the United States.  If the entity was qualified at the time of application but then later loses this status, the registration would then be rendered ineffective pursuant to FAR 47.41.   

Operating an aircraft with an invalid or ineffective registration not only violates registration requirements, but can also result in airworthiness violations and impact insurance coverage.  Under FAR 21.181, aairworthiness certificate is effective only as long as certain maintenance requirements are met, and the aircraft is registered in the United States.  For some insurance policies, an effective airworthiness certificate is explicitly required for coverage. 

As a preventive measure, consider routinely checking the entity’s legal status online, as many states have websites that provide such information free of charge. While unintentional registration violations may be resolved under the FAA’s Compliance Philosophy, legal enforcement action such as a pilot certificate suspension or civil penalty is still possible.  For knowingly and willfully operating an unregistered aircraftfederal law provides for imprisonment up to three years and/or a fine.   

Jared Allen
Mr. Allen is AOPA’s Legal Services Plan (LSP) senior staff attorney and is an instrument-rated private pilot. He provides initial consultations to pilots through the LSP when the FAA has contacted them about potential FAR violations. Jared has helped numerous pilots successfully navigate through compliance actions.

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