Aircraft Purchase Agreements

Written by Greg Reigel

Aircraft Purchase Agreements

© 2004 Reigel & Associates, Ltd./Aero Legal Services. All rights reserved.

Why Use An Aircraft Purchase Agreement?

It always surprises me when a potential aircraft buyer is unsure of whether he or she should use a purchase agreement when buying an aircraft. Most of these individuals have purchased homes and no doubt used a purchase agreement in such transactions. Yet, many of these same individuals would spendrepparttar same amount of money to purchase an aircraft, and often times a great deal more money, withoutrepparttar 119259 protection of a written aircraft purchase agreement.

Aircraft purchase agreements should be used in almost every aircraft sale transaction. First,repparttar 119260 law in most states requires that a contract for an amount greater than $500.00 be in writing in order for it to be enforceable. This is calledrepparttar 119261 statute of frauds. Although exceptions to this legal doctrine exist, complying withrepparttar 119262 law is usually safer than hoping you will be able to take advantage of an exception.

Further, using an aircraft purchase agreement can also help avoid confusion and misunderstandings. Ifrepparttar 119263 agreement clearly explains howrepparttar 119264 transaction will happen, when it will happen and what is included inrepparttar 119265 deal,repparttar 119266 greaterrepparttar 119267 likelihood thatrepparttar 119268 buyer and seller will each knowrepparttar 119269 other party’s expectations andrepparttar 119270 less chance for surprises or misunderstandings.

What Terms Should Be Included?

The number and complexity ofrepparttar 119271 terms that should be included in an aircraft purchase agreement will often times be dictated byrepparttar 119272 type and value ofrepparttar 119273 aircraft being purchased/sold. Although by no means inclusive,repparttar 119274 following terms provide a good place to start.

Identifyrepparttar 119275 Parties. The agreement should identify who is sellingrepparttar 119276 aircraft and who is buyingrepparttar 119277 aircraft. Although this sounds simple to do, it isn’t always clear who isrepparttar 119278 seller and who isrepparttar 119279 buyer. It is very common for aircraft to be registered inrepparttar 119280 name of a corporation or limited liability company. In that case,repparttar 119281 individual with whom you are negotiating is notrepparttar 119282 owner ofrepparttar 119283 aircraft and should not be listed asrepparttar 119284 seller. The registered owner ofrepparttar 119285 aircraft should be identified asrepparttar 119286 seller.

The buyer onrepparttar 119287 other hand, can be an individual or a corporation or limited liability company. If an individual isrepparttar 119288 buyer, that person will be listed and upon registration will berepparttar 119289 record owner ofrepparttar 119290 aircraft. To fully take advantage of release and indemnity language discussed in greater detail below,repparttar 119291 seller may also want to consider having an individual buyer’s spouse executerepparttar 119292 purchase agreement.

If a corporation or limited liability company will be registeringrepparttar 119293 aircraft,repparttar 119294 purchase agreement should identify that entity asrepparttar 119295 buyer. Alternatively, an individual can sign an agreement asrepparttar 119296 buyer and, as long asrepparttar 119297 agreement allowsrepparttar 119298 buyer to assign his or her rights underrepparttar 119299 agreement, that individual may still assignrepparttar 119300 agreement to a corporation or limited liability company prior to closing. The corporation or limited liability company then becomesrepparttar 119301 buyer and can close onrepparttar 119302 transaction withoutrepparttar 119303 individual ever enteringrepparttar 119304 chain of title. From a liability perspective, this can be important.

Identifyrepparttar 119305 Aircraft. The aircraft purchase agreement should identifyrepparttar 119306 aircraft with as much detail as possible. At a minimum, it should includerepparttar 119307 make, model, N-number and serial number forrepparttar 119308 aircraft. Ideally, a list of all avionics, logbooks, handbooks, additional equipment and any accessories should be included. Also, ifrepparttar 119309 seller intends to retain certain items, those items should be specifically identified and excluded fromrepparttar 119310 transaction. By takingrepparttar 119311 time to detail exactly what is and isn’t being sold, you will prevent misunderstandings at delivery.

Purchase/Sale Price. The agreement should specify how much is being paid forrepparttar 119312 aircraft. Ifrepparttar 119313 buyer will be givingrepparttar 119314 seller a deposit or earnest money, that fact should be included. Also, what happens torepparttar 119315 deposit when it is given torepparttar 119316 seller? Willrepparttar 119317 money be placed in escrow or simply held byrepparttar 119318 seller? If an escrow agent is not involved,repparttar 119319 buyer will need to obtain some assurance that his or her deposit will not simply disappear intorepparttar 119320 seller’s pocket makingrepparttar 119321 buyer’s recovery fromrepparttar 119322 seller difficult or impossible ifrepparttar 119323 transaction does not close. The agreement should also state under what conditionsrepparttar 119324 seller must refundrepparttar 119325 deposit torepparttar 119326 buyer.

The buyer’s method of payment should also be stated. Is it a cash transaction or will financing be involved? If financing is involved,repparttar 119327 buyer may want to include language that makesrepparttar 119328 transaction contingent uponrepparttar 119329 buyer obtaining financing on terms acceptable torepparttar 119330 buyer. That way, ifrepparttar 119331 buyer isn’t able to obtain satisfactory financing,repparttar 119332 buyer will not be forced to completerepparttar 119333 purchase on financially unacceptable terms.

Will other consideration be given torepparttar 119334 seller, such as a trade? If so, torepparttar 119335 extent that it is possible,repparttar 119336 item(s) to be traded torepparttar 119337 seller should be identified withrepparttar 119338 same amount of detail used to describerepparttar 119339 aircraft being purchased. This will help avoid later confusion.

Aircraft Mechanic's Liens In

Written by Greg Reigel

Aircraft Mechanic Liens In Minnesota

By Gregory J. Reigel

© 2004 Reigel & Associates, Ltd./Aero Legal Services. All rights reserved.

If you provide storage, repair, maintenance or other services to aircraft, you haverepparttar ability to assert a lien on that aircraft and retain possession until you have been paid. This is commonly referred to as a mechanic’s lien.

What isn’t as commonly known is that, in Minnesota, you don’t necessarily lose your lien rights if you no longer have possession ofrepparttar 119258 aircraft. The situation arises when an owner pays you with a check and leaves withrepparttar 119259 aircraft. Later,repparttar 119260 bank dishonorsrepparttar 119261 check. Now what?

Under Minnesota Statute § 514.221, you can re-assert your mechanic’s lien against an aircraft by filing a verified statement and description ofrepparttar 119262 aircraft andrepparttar 119263 work done or material furnished. The Statement must be filed withrepparttar 119264 “appropriate office underrepparttar 119265 Uniform Commercial Code.” This would berepparttar 119266 FAA’s Aircraft Registry in Oklahoma City, OK.

The verified statement must include N-number, make and model ofrepparttar 119267 aircraft, amount owed forrepparttar 119268 services and date of last work. The statement must be signed in ink, with title if on behalf of a corporation or limited liability company and must be accompanied byrepparttar 119269 $5.00 filing fee.

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