Drones and loans

Good, bad or otherwise, the Drone Era is upon us, and thus it is imperative that banks (and other businesses) take the appropriate steps now to ensure certain future drone rights and protections are provided for in their loan documentation. As the commercial use of drones continues to expand in the insurance, real estate, surveying, and agricultural industries (among others), it is reasonable to assume that banks and other lending institutions will eventually utilize the same in their day-to-day operations.

In almost all real estate-backed commercial loans the loan documentation expressly allows the lender certain access rights in order to ensure the real estate collateral is adequately maintained and properly utilized. These “access” provisions are typically geared toward and anticipate access via foot or vehicle and do not typically expressly provide for access of the air space above the real estate.  The quality of the photographs and video along with the ease and efficiency of use would appear to point toward an expanded use of drones by banks moving forward.  Failure to properly provide for such airspace access rights in the loan documentation may leave your drones grounded. Further, if banks move forward with drone usage without express rights to do so they may be opening themselves to potential trespassing and/or privacy invasion claims.

As noted in previous drone law blogs, the commercial (and now recreational) use of drones requires certain statutory registration requirements depending on the use and type of drone. Thus, it is important that you comply with such registration requirements, and further ensure that the pertinent officers of the bank conducting the drone inspections be fully educated as to the rules and parameters in which they must operate.

In order to ensure your loan documentation adequately provides for such “drone” access to collateral or for guidance as to the registration and operation parameters applicable to banks or lending institutions, please contact Ben Bruner.

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.