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The General Aviation Law Firm, P.C. | Aircraft Purchase, Co-Ownership, and Lease Agreements
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Aircraft Purchase,
Co-Ownership,
and Lease Agreements

Buying and Selling a Used Aircraft: Not as Simple as it Seems

As a buyer, your goal is simple: make sure you get what you think you are paying for.  The only way to know for sure is with a proper pre-purchase inspection.  Does your purchase agreement really give you the critical inspection rights you need?  Ours do.  As a bare minimum, your purchase agreement should provide for:

  1. A pre-purchase inspection by the mechanic of the buyer’s choice, within a reasonable distance to the aircraft’s current home base.  The mechanic chosen by the buyer should not have worked on the aircraft before, as they would have an inherent conflict of interest to glance over their own prior work.
  2. The unconditional right to walk away if the inspection is not to the buyer’s satisfaction.  Too many broker agreements only require the seller to fix the “airworthy” items, leaving the buyer to accept all other discrepancies.
  3. Certain representations and warranties by the Seller as to title, taxes, and FAA certification.

As a seller, your goal is also simple:

  1. Get paid, and
  2. Minimize future liabilities. 

Getting paid is more than just requiring the buyer to deposit funds into escrow.  There must be specific deadlines for the pre-purchase inspection, how soon the buyer must identify any discrepancies, and how they are to be resolved. 

 

With regard to liabilities, beware of the seller’s cardinal sin in a purchase agreement: representing that your aircraft is “airworthy”.  You really don’t know!  That’s what the buyer’s mechanic is for.

 

For more information on buying and selling a used aircraft, see our principal attorney’s Legal Zone column HERE.  

Co-Ownership: Marriage without the Wedding Ring

Owning an aircraft is challenging even as a sole owner.  Bring in one or more co-owners, and things get significantly more complex.  Questions as to flight and scheduling limitations, maintenance funding, and what to do when an owner wants to sell are always hot topics of discussion.  What about death, divorce, and dispute resolution?  Without a professionally drafted aircraft co-ownership agreement, too much is left to chance.  Our agreements are customized for each co-ownership’s unique situations. 

 

For more information on aircraft co-ownership, see our principal attorney’s Legal Zone column HERE.

 

For more information how to hold title to an aircraft, see our principal attorney’s Legal Zone column HERE.

Aircraft Leases: Risk and Reward

If your aircraft is personally owned by you as an individual, and only flown by you for personal flights, skip along.  For those with a business use component, it’s important to have a solid written lease between your business (which usually owns the aircraft) and the business owners who will occasionally fly for personal use.   Questions need to be asked, such as “wet” or “dry”?  These are perhaps two of the most ambiguous words in general aviation.  In the piston rental world, they often mean “with” or “without” fuel and oil.  In the regulatory world, they mean “with” (or “without”) pilot services.  If your lease is not structured properly, and if the FAA thinks that the owner is leasing out a plane with pilot services, you could end up inadvertently flying into FAR Part 135 (with all the penalties that come with it).   Is it your intention of the lease to be more like a rental, where the owner maintains operational control, or more like a temporary transfer of ownership, where the lessee has operational control?  No matter what the objective, we have the experience to ask the right questions to make sure the language is right.

 

For more on LLCs and FAR compliance, see HERE.