If you are in the market for a used aircraft, what steps should you take to protect yourself and your new investment (or in many cases your flying money pit)? All too often, buyers subsequently discover that their ''perfect'' aircraft has some defect that they did not know about when it was purchased. Curing that defect can, in some cases, be impossible. In other cases, it can cost as much (or even more) than the aircraft itself.
Unlike automobile purchases, there are no established protections for aircraft purchasers. The buyer is responsible for inspection and making sure the aircraft is airworthy. Airworthy means:
The aircraft must conform to its type certificate (TC). An aircraft conforms to its TC when its configuration and the components installed are as described in the drawings, specifications, and other data that are part of the TC, which includes any Supplemental Type Certificates (STC), Airworthiness Directives (AD), and field approved alterations incorporated into the aircraft. The aircraft must also be in a condition for safe operation.
A precise and thorough purchase agreement is needed to ensure you are not buying an unairworthy aircraft.
1) Purchase Agreement:
A written agreement that should contain a detailed identification of the parties; description of the aircraft and its installed equipment; total times/cycles; procedures to be utilized by the parties for pre‑purchase inspection and closing and delivery; appropriate warranties and remedies.
2. Title Search:
The purchase agreement should contain a warranty of clear and marketable title. This title search can be performed by an aircraft title company or through your aviation attorney.
a) How it works: The only way to insure that your aircraft has a clean title is through an FAA title search. When dealing with aircraft that have been registered in places other than the United States, searches of the civil aviation registry of the foreign country and the international registry under the Capetown Convention would be appropriate.
b) What is does: A title search will reveal the identity of the registered owner and any chattel mortgages, recorded liens, other encumbrances or unknown owners or any defects in the chain of title. Sometimes, buyers discover that the seller may not be the person lawfully entitled to sell the aircraft. A title report may be the only way to accurately acquire this information.
3. Prepurchase Inspection:
The pre‑purchase inspection may be the most important step in purchasing an aircraft.
a. What to do: If the aircraft is advertised as having a ''fresh annual,'' your instincts should tell you ''beware.'' Oftentimes this is window dressing performed by the seller's 'best friend, "Wally Walkaround.'' A pre‑purchase done correctly should include:
i) A written pre‑purchase inspection agreement;
ii) An inspection protocol, utilizing the buyer's instruction;
iii) The buyer's selected FAA certified A & P; and
iv) A detailed audit of the aircraft logs and historical records.
b. 337 search: Major Repair or Alteration Form
Any alteration that changes the weight and balance of the aircraft must be in compliance with the FAA requirements. Compliance occurs when approved maintenance is reported to the FAA. If this work is not done properly or is not reported, the aircraft is not airworthy.
c) Detailed Records Audit: This is the method of checking any items that did not get reported on the 337 forms.
i) Log book accuracy: Inspection that ensures accurate entries in engine logs, propeller logs and maintenance logs.
ii) This should be done by inspecting any equipment that has been installed, to ensure against unlawful and unreported maintenance.
4. Warranties:
Once the pre‑purchase is completed and you have decided to go ahead with the purchase, warranties will further ensure that your investment is protected.
a. Warranties of Airworthiness: This ensures that the aircraft is airworthy and if it is not, the seller will cure all defects to make the aircraft airworthy;
b. Warranty of Title: This conveys clear and marketable title and impose upon the seller the obligation to correct any and all discrepancies; and
c. Warranty Bill of Sale: Further protects the buyer by ensuring that the person acting as seller is actually legally allowed to sell the aircraft and is conveying clear and marketable title.
If you are thinking of buying an aircraft, protect yourself in the beginning by taking the proper steps, it will be well worth your investment. If you have any questions or wish to set up a consultation, please contact our office.
