Aircraft Maintenance Reserve Clauses That Prevent Costly Redelivery Disputes

Aircraft maintenance reserve clauses and redelivery conditions are the two provisions most likely to trigger multi-million dollar disputes at the end of an aircraft lease agreement. When a maintenance reserve fund is poorly drafted, the ambiguity surfaces precisely when exposure is highest The result is protracted litigation over engine life limited part valuations, deferred defects, incomplete back-to-birth records, and the boundary between fair wear and tear and a reimbursable maintenance event.

Mechanics of Maintenance Reserve Funds (MRFs)

Maintenance Reserve Funds, frequently designated as Supplemental Rent in the operative lease documentation, function as risk-mitigation instruments through which a lessor secures a dedicated funding source for the eventual cost of major maintenance events. Under a dry operating lease, where the lessee assumes full operational, insurance, and maintenance responsibility for the asset, the lessor bears residual value risk should the lessee fail