AircraftOwner Online

  OK, so you want to buy an airplane. How are you going to title it? Particularly, how are you going to title it if more than one person is involved in the ownership of the airplane? These are questions that confuse most people.

    Of course, the easiest way to title the aircraft is to put it in one, individual name: “John Q. Pilot”, for example. Alternatively, an existing business might want to title its aircraft in company name: “Widget Manufacturers, Inc.” would be an example of “corporate ownership”. If Widget Manufacturers, Inc. is incorporated in one of the states of the United States, and if the President, 2/3rds of the other members of the Board of Directors, and 75% of the shareholders are all United States Citizens, then the Widget Manufacturers, Inc. would qualify as a “Corporation” on the Application for Registration. If the corporation does not meet these requirements, then the corporation would not be eligible to register the aircraft in the United States unless the ownership structure met three other specific criteria, and the box on the Application for Registration would have to be checked as a “Non-citizen corporation”.

    Many people, including a lot of lawyers, tend to shy away from titling assets in the name of an individual or a company that has other business, preferring instead to create a “single purpose entity” for the purpose of holding title to the aircraft. This method is generally used to “compartmentalize potential liability” such that an uninsured loss attributable to the aircraft does not affect the assets of the main corporation. As I pointed out in one of my first articles, aviation is one area where this tactic can become a trap for the unwary. The FAA does not favor single purpose entities. In fact, when you register an aircraft to a corporation or an LLC that has no other business purpose except the ownership of the aircraft, the FAA considers the aircraft to be commercially used because the only purpose of the single purpose entity is to provide transportation by air. In order for an artificial entity to own and register an aircraft, the ownership of the aircraft must be “incidental” to the business of the corporation. A real estate company can own an aircraft in its name and use the aircraft to show properties or to transport is agents around the state to take listings and make sales. But XYZ Company, Inc. cannot take real estate agents around the state for these purposes without being considered a commercial operation, which would require XYZ Company, Inc. to have a 135 certificate. It doesn’t make a lot of sense, but that’s the way it is. 

The Application for Registration form does not contain a section for Limited Liability Companies. In general, these are treated like Partnerships, and you may check that box. You will be required to provide an LLC statement to the FAA showing that all the members of the LLC are United States citizens and providing some additional information. Obviously, a formal partnership would check the “Partnership” box as well.

When more than one person or entity owns an aircraft, the FAA considers the aircraft to be “co-owned”. So Jack and Jill Pilot, husband and wife would register their aircraft as “co-owner” on the Application for Registration. “Fractional Ownership” is a specific type of co-ownership. Fractional Ownership, as used by Subpart K of Part 91 of the FARs, requires at least two aircraft to be involved in an FAA-approved program which blends parts of the requirements of Part 135 with the requirements for Part 91. It involves a lot of paperwork.

    Where a bunch of friends simply want to share the ownership of one aircraft, the proper name for the type of ownership to be placed on the Application for Registration is co-owner”. Different types of individuals and entities can co-own an aircraft. For instance, John Q. Pilot and XYZ Pilots, Inc. could co-own an aircraft. Technically, you may have as many co-owners of one aircraft as you want, but the FAA starts to look a little askance at the transaction when there are more than five co-owners of a particular aircraft. Under such circumstances, you may find that the ownership is more likely a flying club or a fractional ownership program, each of which has different paperwork and compliance requirements.

    There are specific requirements for documentation that must be submitted to the FAA when an entity other than an individual wants to register an aircraft on the US Civil Aircraft Registry. Make sure that you follow the instructions on the forms for the Bill of Sale and the Application for Registration. If you have questions, or if the FAA kicks back your attempt to register your aircraft, call an aviation attorney for assistance. Remember, it is both a crime and a violation of the FARs to fly an unregistered aircraft. If you own an aircraft, and you are not completely sure of how that aircraft is titled, you may wish to look on the FAAs website and do an N-number search to see what the FAA records reflect. If the information doesn’t look like what you think it is supposed to look like, that is a big clue that you need to call somebody to get the situation fixed.