How escrow benefits aircraft buyers and sellers
In our fast-paced world, aircraft purchases are expected to happen quickly and efficiently. Ensuring a closing goes according to plan is our goal.
Hiring an escrow agent to facilitate an aircraft sale transaction provides benefits for both buyers and sellers. Escrow agents provide a level of professionalism and attention to detail, and have the best interests of all parties in mind.
An aircraft escrow transaction can involve many parties, including, but not limited to the buyer, seller, lender, lienholder, and any brokers or dealers who might be involved. An escrow agent acts as a neutral third-party holding funds and documents related to the transaction until all parties have authorized closing the sale.
Aircraft escrow assists with the details of ownership transfer. This includes verifying the ownership of the aircraft, ensuring there are no outstanding liens or encumbrances, and conducting the necessary due diligence to confirm all documents received are correct and signed by the appropriate parties.
For sellers, escrow offers a layer of protection by ensuring they receive payment via wire transfer when closing has been authorized by all parties as opposed to waiting for a check to clear. Additionally, the bill of sale and funds are released simultaneously through escrow.
Similarly, buyers can proceed with confidence, knowing that their funds are held in a secure, insured account until they have provided their registration documents and authorized closing and disbursement of funds.
An aircraft escrow typically begins when either party contacts the title company or escrow agent to set up the transaction. Details to provide include: N number of the aircraft, purchase price, buyer and seller contact information, and any other known specifics. Once escrow is set up, the escrow agent will order the title search and records. Furthermore, the escrow agent will contact the seller once the title search results are received to request the necessary bill of sale or additional documents needed to provide clear title and obtain disbursement instructions.
The escrow agent conducts a thorough review of all documents, wires received and disbursement instructions to verify that everything is correct. This may involve, but is not limited to, reviewing the FAA records, verbally confirming wiring instructions and double-checking financial institutions to confirm we have the correct information. Any discrepancies or issues uncovered during this process are addressed promptly to prevent delays or complications.
To initiate closing, the parties will provide the authorization to disburse and close to the escrow agent. The escrow agent releases funds to the seller and any lienholders and title documents are dated and submitted to the FAA. This marks the closing of the transaction, with the escrow agent playing a crucial role in facilitating a smooth transfer of ownership.
Despite the benefits of escrow, aircraft transactions are not without challenges. The title might have an old lien that needed to be released 20 years ago, the owner might be deceased, the transaction may be an import, an export, or qualify for the International Registry. You need an escrow agent well-versed in these complex issues to navigate them with the parties.
By using the expertise of a trusted escrow agent, buyers and sellers can navigate the complexities of aircraft transactions with confidence, ensuring successful outcomes and safeguarding interests for all parties.
