AircraftOwner Online

The Complexities of Buying and Selling Aircraft

    In many transactions, a broker, an attorney, or one of the parties, handles all of the details of transferring title from the Seller to the Buyer, and having the Buyer register the aircraft. In those transactions, the parties who did not participate directly are relying strictly upon the competence and integrity of the people they have chosen to close the transaction for them. In most cases, since it is a relatively straightforward process, there is not a problem. But, for those of you who haven’t actually taken the time to understand what is happening, it is my hope that, by reading this article, you will avoid being one of the unlucky ones who runs into a problem when you sell or buy your aircraft.

    There are at least two basic aspects to every sale: transferring title to the aircraft, and registering the aircraft. Further refinements, particularly a discussion of the International Registry, are beyond the scope of
this article.

    All that is required to transfer title is an FAA Form Bill of Sale, properly executed by the Seller, and a $5.00 fee for recording the Bill of Sale. Assuming  that everything is proper with the Bill of Sale, once it has been recorded in Oklahoma City, the world will know that the Seller no longer owns the aircraft and the Buyer now owns it.
    All that is required to register an aircraft on the Civil Aircraft Registry is a properly-completed FAA Application for Registration signed by the Buyer. Assuming everything is proper, the Aircraft will be able to fly within the United States for the first 90 days after the sale (until the permanent registration card arrives), and the Buyer will appear on the official record as the Registrant of the Aircraft.

    In general, the Bill of Sale is exchanged for the purchase price for the aircraft. The Buyer gives the Seller the money, and the Seller gives the Buyer the Bill of Sale. The Buyer then applies for registration of the new aircraft, usually by sending in his brand new Bill of Sale and his Application for Registration, along with the check for $5.00. Simple, right? What could possibly go wrong?

    Suppose the Seller tells the Buyer that the Seller has sent, or will send, the Bill of Sale to the FAA to save the Buyer the trouble, but never really does? If that happens, the Buyer has lost his money, but never gets good title to the aircraft. He also doesn’t get his registration to the aircraft within 90 days, as he expected to. Theoretically, the Seller could continue to sell the aircraft again and again to multiple buyers using the same scheme.

    Suppose the Buyer tells the Seller that he will send in the Bill of Sale, but doesn’t do it? As far as the FAA, the rest of the World, and every Plaintiff’s lawyer in the world knows, the Seller still owns the aircraft and is still the registrant. If the Buyer is not eligible to register the aircraft in the United States, he can fly the aircraft all over the world using the Seller’s registration. If the Buyer commits a crime with the aircraft, or violates an FAA Regulation using the aircraft, or hurts someone with the aircraft, the FAA, the Police, the FBI, Customs, Interpol and all of those Plaintiff’s attorneys will be knocking on the Seller’s door – not the Buyers’.

    In a prior article, I mentioned using an escrow agent in
Oklahoma City. This is one way to make sure that the documents actually get recorded properly and that the money does not get distributed until the documents are where they are supposed to be. But, if you decide not to use an escrow agent, there are still some things you can do to avoid problems.

     First, insist that you see all the documents being sent to Oklahoma City. Verify the address to which the documents are being sent and get the tracking number or certified mail number of the delivery service being used.

    Second, check the FAA Aircraft Registry web site: registry.faa.gov/aircraftinquiry. It takes the FAA about two to three weeks in most cases to have the change of ownership show up on the web site, so don’t panic if the transfer doesn’t show up right away. But, if it has been more than a month, you need to start making inquiries as to what has happened. If there are problems with the documents that have been submitted, the FAA will send them back to the individual that sent the document to them. If the problem is not with a document that YOU submitted, you will not know about the problem unless the other party tells you about it. Particularly if there were any hard feelings between the parties at the time of the closing, the other party may not be anxious to tell you what is happening.

         If you are the Buyer and you haven’t received your hard card registration within two months, you should definitely be asking questions of the Civil Registry in Oklahoma City.

          If all else fails, you can hire a title company in Oklahoma City that will search the records, including the “suspense file” for the aircraft, and can get you copies of all of the correspondence relating to the transaction – for a fee.

      A little diligence, and a basic understanding of the importance of the closing documents can save a lot of heartache and expense down the road.