Security

Security document (mortgage) form and content

What is the typical form of a security document over the aircraft and what must it contain?

The usual language of a security document (mortgage) is Greek; English is also acceptable. A security document in any other language must be accompanied by its official, certified and accurate translation in Greek. The right to establish a mortgage on an aircraft is granted via a written unilateral statement of its owner or a contract between the owner and the mortgagee, in the form of either a private or notarial document, which is then registered with the relevant mortgage registry kept with the Greek Aircraft Registry of the GCAA.

For the registration of a security document drawn up abroad, the document must be certified by the competent consular authority.

The security document must comprise:

  • the name, surname, nationality, residence or domicile and profession of both the person or legal entity granting the right to mortgage and the mortgagee;
  • details of the secured claim, the end time and the contractual interest;
  • the title of acquisition of ownership over the aircraft that is mortgaged, description of the aircraft and its engines, its nationality and registry marks; and
  • the appointment of an attorney residing in the place where the mortgage registry is kept.
Security documentary requirements and costs

What are the documentary formalities for creation of an enforceable security over an aircraft? What are the documentary costs?

The documentary formalities for the creation of an enforceable security over an aircraft consist of certification and the notarisation and legalisation of the signatures of the signing parties by following the formalities provided by domestic Greek law for documents executed in Greece or by the Hague Convention 1961. Documentary costs, mainly in the form of notarial dues, vary, depending on the amount of the secured claim, and are in the region of 2 per cent of the claim.

Security registration requirements

Must the security document be filed with the aviation authority or any other registry as a condition to its effective creation or perfection against the debtor and third parties? Summarise the process to register a mortgagee interest.

The security document must be entered with the aircraft registry as a condition of the security’s effectiveness and validity against the debtor and third parties.

The person applying for the registration of a mortgage must produce the relevant title (declaration for the granting of the mortgage title in the form of private or notarial document), together with a summary of the title in duplicate and the supporting documentation required. Other than this, the same formalities as described in questions 8 and 9 apply. The cost for the filing of a petition with the registry claiming the inscription of a mortgage on an aircraft or engine is €500.

Registration of security

How is registration of a security interest certified?

Registration of a security interest is confirmed via an appropriate certificate issued by the Aircraft Registry. This certificate states the rank (priority) of the security interest. The certificate can be immediately available against an extra charge.

Effect of registration of a security interest

What is the effect of registration as to third parties?

The effects of registration are (i) priority ranking over subsequent security interests; (ii) prohibition of sale of a mortgaged aircraft in the case that its transfer would lead to the loss of its Greek nationality; and (iii) interruption of the time-bar. Crucial for the priority of the registered security interest over other subsequently registered securities is the day of registration. There is no priority notice system in place. Third parties can rely on the accuracy of the public registration of the security interest.

Security structure and alteration

How is security over aircraft and leases typically structured? What are the consequences of changes to the security or its beneficiaries?

The concept of trust is not recognised in Greek jurisdiction. The security (mortgage) under Greek law is a right in rem. In the case of a loan transfer, the new lender may be substituted for the original lender and the existing securities are transferred to the former by agreement between them without the need for new security registrations.

Security over spare engines

What form does security over spare engines typically take and how does it operate?

Article 53 of GALC specifically provides for the possibility to register a mortgage on spare engines (ie, engines that are not installed or are installed on a host aircraft), on the condition that they are independently registered with the (spare) Engines Registry kept by the Greek Aircraft Registry. In the case of a security interest (mortgage) over a financed aircraft, the latter and its engines are treated as a single item of property (ie, when an engine is integrated in an aircraft, it is considered as its component). For a security interest to be effectively created over an engine that is also in the jurisdiction but is not installed on the aircraft, the non-installed engine must be already registered with the relevant Engines Registry kept by the GCAA. The owner of such an engine burdened with a mortgage has the right, unless there is a contrary agreement, to place the engine on an aircraft of his or her ownership, also burdened with a mortgage, as security of the same claim. In this case, (i) the engine’s mortgage is extinguished upon the engine’s installation on the aircraft and revives upon the engine’s detachment from the aircraft; and (ii) the engine’s installation on an aircraft is not a ground for deregistration of the separate engine mortgage from the relevant book of engine mortgages. If the mortgage on the aircraft is extinguished while the engine is installed, thus being its component, the mortgage on the engine is extinguished as well.