Security document (mortgage) form and content

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

The mortgage on an aircraft is established on the basis of a legal transaction or a court decision. A legal transaction, which must be concluded in writing, can already be a loan agreement, if it contains a clause on the pledge of the aircraft, but the most common is that a special mortgage agreement is concluded between the mortgager and the mortgagee.

The mortgage agreement shall contain the details on the parties, namely the mortgager and the mortgagee, the details of the claim for which the security is given (amount, maturity and other eventual conditions), the identification details and description of the aircraft subject to the mortgage, security interest and its legal basis, and the consent of the mortgager that he or she agrees with the establishment of the mortgage on the aircraft and with the repayment of the insured claim by its maturity from the pledged aircraft.

The language of the security document depends on the clients. However, the CAA requests that all documents required for registration on the Register must be in Slovenian. Therefore, if the security document is not in Slovenian, it must be submitted to the CAA in a certified translation into Slovenian.

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 law provides that the legal transaction regarding the mortgage must be concluded in writing, otherwise it has no legal effect. Furthermore, the CAA requests that the application for registering the mortgage must be accompanied by a copy of the notarial record on the establishment of the mortgage and the (final) decision of the competent court on the entry in the load sheet.

The documentary costs depend on the amount of the claim secured by the mortgage.

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 mortgage on an aircraft is obtained on the basis of a legal transaction with the entry into the Register. For third parties the mortgage shall have effect from the moment of entry into the Register.

In order to enter the mortgage into the Register the applicant must submit to the CAA the relevant application for the entry into the load sheet of the Register and pay an administrative fee of €144.

Registration of security

How is registration of a security interest certified?

Information on the mortgages is entered in the load sheet. The mortgages and the order of entries of the mortgages are evident from the extract from the load sheet issued by the CAA.

Effect of registration of a security interest

What is the effect of registration as to third parties?

The security interest (mortgage) shall have effect from the moment of registration in the Register. The legal effect of the entry in the Register in relation to third parties depends on the order of entry. The moment when the proposal for entry has arrived at CAA determines the order of entry on the Register. Registration therefore confers priority over subsequent security interests and 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?

Information on the rights entered in the aircraft register enjoys the same trust as the information entered into the land register, namely on the basis of the principles of trust in the register and of good faith. According to these principles, the information entered in the Register enjoys public trust (see also question 9).

According to ZOSRL, the security - mortgage - over an aircraft is a right in rem. Given the fact that the principle of trust protects the confidence of bona fide persons that the entries in the land (aircraft) register are correct and that the register is complete, every change to the security or its beneficiaries must be entered on the Register in order to take effect. Furthermore, the mortgage on an aircraft does not cease on a change of owner of the aircraft.

Any change in the mortgage must be communicated immediately by the previous and new owner to the CAA and all documents proving the new ownership must be provided.

Security over spare engines

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

According to the respective legislation, the Register does not enable an autonomous entry of the aircraft engine on the Register. The engine is entered in the Register in the certificate of registry as part of the aircraft. Therefore, it is not possible to create a legally effective independent security interest over an aircraft engine. The security interest can only be entered in respect of an aircraft.