A common misunderstanding that arises in Brazilian aircraft finance transactions relates to post-closure requirements, sometimes referred to as 'conditions subsequent' or 'post-closure covenants'. Despite common usage of the expression 'conditions subsequent', these matters are usually treated as post-closure covenants that may trigger defaults, not as conditions that might fully unwind a financial transaction. Regardless of whether these transactions are treated as conditions subsequent or covenants, the documents, approvals and registrations that must be completed after aircraft delivery are virtually the same. Since most Brazilian aircraft finance transactions are structured as leases, this update analyses these documents as they would arise in a lease agreement.

Six registrations or approvals for aircraft leases must be obtained after delivery. These relate to import authorisations, foreign exchange registrations and confirmations of title and liens (eg, mortgages).

Import approvals

Under the existing regulations, import approvals will not be issued until the aircraft has been physically imported into Brazil and has cleared Customs. Import licences were previously issued and routinely required as conditions precedent. However, for more than five years, import licences have not been required; nor has it been possible to obtain them for leased aircraft. After import, a customs inspector inspects the aircraft and issues two authorisations – an import declaration and a proof of import (sometimes called an 'import certificate'). These authorisations include confirmation that the aircraft has been properly imported into Brazil and that all applicable import and import-related taxes have been paid or are not due based on exemptions or court injunctions.

Brazilian operators typically challenge two or three of the taxes imposed on cross-border aircraft leases – in particular, the contribution to the financing of social security (COFINS) tax (for further details please see "Changes to applicability of COFINS tax on aircraft"). In most cases, operators obtain injunctions to avoid paying taxes. However, until the injunctions are granted (or the taxes are paid), an import declaration or proof of import cannot be obtained. For commercial aircraft transactions, it typically takes 30 calendar days for Brazilian lessees to obtain the two authorisations, assuming that they are granted court injunctions during the first few weeks of the lease term. For business aircraft, this 30-day period may be extended.

Foreign exchange authorisation

Brazil maintains strict foreign exchange controls. All cross-border leases are subject to Central Bank approval. Approval comes in the form of a financial transaction registration (known as a 'ROF'), which lessees must complete electronically on the Central Bank's website. For leased aircraft, lessees must typically obtain a ROF. However, a ROF – although it appears to approve payments due throughout the lease term – is valid for the remittance of security deposits only. For a lessee to remit other payments required under the lease, it must obtain the second part of the ROF – a schedule of payments. To obtain a schedule of payments – which is also available electronically on the Central Bank's website – the lessee must provide its importation declaration number and proof of importation. Lessees typically need 30 calendar days after delivery to obtain a schedule of payments.

Aeronautical Registry documents

The Chicago Convention requires two standard documents to operate aircraft in most jurisdictions: a certificate of registration and a certificate of airworthiness. In Brazilian cross-border leases, these documents are rarely available at the time of delivery, particularly when the delivery location is outside Brazil. In the past, Brazilian civil aviation authorities commonly sent inspectors to locations outside Brazil to inspect and certify aircraft to be leased to Brazilian operators. That practice ceased some time ago; inspections now occur mainly in Brazil. Thus, to obtain a standard certificate of registration and certificate of airworthiness, the aircraft must be physically present in Brazil. If it is impossible to ferry aircraft to Brazil on a different register, a special Brazilian international ferry flight authorisation can usually be obtained, which will allow a lessee to ferry an aircraft to Brazil on the Brazilian register. Ferry authorisations serve as temporary certificates of airworthiness and registration. However, on arrival in Brazil, a leased aircraft cannot commence commercial or other services until it has been inspected and approved. Thus, copies of certificates of registration and airworthiness must be submitted to a lessor on a post-delivery basis. Lessees can typically obtain these in 30 days.

Registration, title and lien certificates

Before delivery of a leased aircraft, lessees will usually file a lease agreement with the Aeronautical Registry. If an aircraft has financing, the applicable financing documents (eg, a mortgage or security assignment) are usually filed on or close to the delivery date. However, the Aeronautical Registry does not issue a final certificate confirming registration of the filed documents simultaneously alongside the filing. At the time of filing, the registry issues a receipt that establishes priority over documents filed after the receipt. Before the issuance of a certificate confirming registration of all filed documents, a registry analyst will review the documents to ensure that they comply with required formalities (eg, notarisation or, where applicable, consultation requirements). The analyst also reviews supporting incumbency documents. If the analyst believes that any document has been improperly executed or that the filing is incomplete, he or she will issue a document requirement letter to the relevant party, giving it time (usually 30 days) to submit the missing or corrected document to the registry. If the party complies within the stipulated period, the priority established by the filing receipt will be preserved.

The registry issues document requirement letters for a variety of reasons. Sometimes they are triggered by a party's failure to submit a valid power of attorney demonstrating the authority of the party's signatories. Sometimes analysts make minor clerical errors and ask for documents that have already been filed. Occasionally, when filings are made on different days, they may be assigned to different analysts and thus no single analyst is aware of all filed documents. Regardless of the reason, whenever registry document demands are issued, there is a delay in the issuance of final ownership and lien certificates. It typically takes 60 days after delivery to obtain a title and lien certificate; however, this period is frequently longer.


In many jurisdictions, when parties sell or deliver aircraft, they expect the legal and administrative work to be completed within a few days. In Brazilian transactions, due to the delays mentioned above, a significant amount of the legal work on a transaction occurs after the closure date – on average, between 25% and 33%. Further, the post-delivery phase of a typical transaction usually lasts 60 days, but longer periods are also common. This can cause misunderstandings with parties that expect to close their files and distribute 'document bibles' shortly after the closure. Registry document demands can also cause variations in legal fee estimates. It is not always possible to predict when the registry will issue a document demand letter and, in some cases, the demand may be incorrect. Nevertheless, demands must be addressed and dealing with them always requires time and usually results in additional legal expenses. No magic solutions exist to avoid post-closure issues completely. Lessors and financiers dealing with Brazilian operators must understand and accept that Brazilian transactions may take longer compared with those in other jurisdictions.

For further information on this topic please contact Kenneth D Basch at Basch & Rameh by telephone (+55 11 3064 8599) or email ( The Basch & Rameh website can be accessed at

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