Finance: Your purchase and delivery checklist
Aircraft acquisition series, part 2
Escrow, letter of intent, and purchase agreement. Move money into an escrow account that you set up through your escrow agent. Plan on a deposit of 5 to 10 percent of the aircraft’s asking price. AOPA has a strategic partnership with Aerospace Reports—as a member you’ll get discounted pricing.
The letter of intent puts a clock on the deal, enables you to withdraw from it without penalty under certain conditions, and establishes the parameters for the final price.
This is also time to have your aviation attorney draw up a detailed purchase agreement. AOPA’s Pilot Protection Services includes consultation with an attorney regarding your purchase of an aircraft.
Notify lender. Your lender will conduct background checks, damage history queries, and more. If the aircraft is missing logbooks, that may affect the stipulations of the pre-approval. Ask before you commit to a lender.
Prepurchase inspection. In most instances, it’s best that a mechanic other than the regular mechanic for that airplane perform the prepurchase inspection. Even before you go to the airplane, have the logbooks sent to you. Nowadays, most sellers have their airframe and engine logbooks scanned into PDF format. Get your mechanic started perusing those logs. An incomplete set can affect the final price, and it also may affect the airplane’s insurability.
International registry (if applicable). If your airplane is subject to the Cape Town Treaty, you should begin the international registry process simultaneously with contacting your escrow agent.
Insurance. Typically, lenders will require you to maintain full ground and flight insurance, as well as breach of warranty coverage for the amount of the loan with a carrier acceptable to the lender. The lender must be named as loss payee and be protected by a lien holder’s endorsement.
Title search and background checks. Usually, this is a straightforward process. If an airplane has been in an incident, involved in an estate dispute, or part of a bankruptcy, things could get complicated. We’ve heard many stories of airplane deals falling through at the last minute because of lack of due diligence by the buyer, so be thorough.
Now, it’s time to take delivery:
Punch list. Here’s where the due diligence of your title, escrow, or insurance representatives pays off. They’ll work with you to clear up any liens or estate claims. The list of deficiencies and discrepancies your mechanic delivered will have been either rectified or negotiated into a lower price.
Technical acceptance. A technical acceptance certificate says the buyer accepts the condition of the aircraft, subject to “no material damage and/or total loss affecting the aircraft upon or prior to arrival of the aircraft at the delivery location.”
Escrow. The remaining purchase price is deposited into the escrow account, and the seller is paid.
Closing and delivery. The title is transferred and the aircraft is registered to the new owner, once the new owner insures it. Finally, the aircraft is turned over or delivered to you. Congratulations.
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800-62-PLANE (75263).
