Creating an Aircraft Purchase Agreement

Note: Want to skip the guide and go straight to the free templates? No problem - scroll to the bottom.
Also note: This is not legal advice.

Introduction

When it comes to purchasing an aircraft, having the right aircraft purchase agreement is essential. Having a well-crafted document in place can help protect the interests of both buyer and seller, ensuring that the transaction runs smoothly. It outlines all of the key details of a sale such as; names and addresses, description of aircraft, purchase price and payment terms, warranties and any other conditions that need to be met for completion - all these make up a legally binding agreement. Furthermore, this agreement helps to clarify the rights and responsibilities of each party involved in the transaction: protecting both buyer and seller alike; with provisions limiting liability or requiring maintenance of good condition commonly seen in many agreements.

At Genie AI we understand just how important having a sound aircraft purchase agreement is – not only do these documents protect all interests involved but they also define what consensus is on any particular topic related to an aircraft purchase. As such our team has developed one of the world’s largest open source legal template libraries - giving anyone access to draft up their own high quality legal documents free from charge! Our library holds millions upon millions of datapoints teaching our AI what a market-standard aircraft purchase agreement should look like – so if you are ever uncertain where to begin or how best to craft your own document, our step-by-step guidance below provides all you need for success. So read on for more information about how you can access Genie AI’s template library today!

Definitions (feel free to skip)

Lien: A legal claim on a property or asset that is used to secure the payment of a debt.
Legal Issues: Problems that involve law or legal matters.
Registration Numbers: Unique identifiers assigned to an object in order to keep track of it.
Maintenance Records: Records that document the servicing, upkeep, and repair of a device or structure.
Logbook: A record that documents the flights, hours, and other data related to an aircraft.
Regulations: Rules imposed by an organization or government that must be followed.
Contingencies: Conditions or events that must occur before an agreement can be enforced.
Market Value: The amount of money that a buyer is willing to pay for a good or service.
Accessories: Additional items or parts intended to improve or enhance a product.
Equipment: Tools, devices, or materials used in a certain activity.
Legal Language: Words and phrases used in a legal context to convey specific meanings.
Details: Small pieces of information that are necessary for a task or process.
Transfer Funds: To move money from one account to another.
Taxes: Money paid to a government in order to fund public services.
Fees: Money paid for a service or privilege.

Contents

• Researching the Aircraft
• Gather information about the aircraft’s past owners
• Review the aircraft’s maintenance records
• Research any potential legal issues
• Negotiating the Price
• Drafting the Purchase Agreement
• Executing the Purchase Agreement
• Financing the Aircraft
• Obtaining the Necessary Funds
• Closing the Deal
• Registering the Aircraft
• Obtaining Insurance
• Post-Purchase Considerations

Get started

Researching the Aircraft

• Contact the Federal Aviation Administration (FAA) to verify the aircraft’s registration number
• Check the aircraft’s logbook for any maintenance or repair records
• Investigate the aircraft’s history by researching the aircraft’s past owners
• Make sure the aircraft has been properly maintained, and that any repairs have been completed to FAA standards
• When satisfied with the results of your research, move on to the next step.

Gather information about the aircraft’s past owners

• Contact the Federal Aviation Administration (FAA) to get a copy of the aircraft’s registration and title records.
• Identify the current and past owners of the aircraft and contact them to obtain information about the aircraft.
• Ask the FAA and past owners for information regarding the use, condition, and any modifications made to the aircraft.
• When you have all the information you need, you can check this step off your list and move on to reviewing the aircraft’s maintenance records.

Review the aircraft’s maintenance records

• Contact the aircraft’s past owners and request the maintenance records
• Get the records from a reliable source such as an aircraft maintenance shop or the Federal Aviation Administration
• Verify that the maintenance records are up-to-date, complete, and accurate
• Check the records to see if there are any potential maintenance issues that need to be addressed
• Once you have verified the maintenance records are accurate and complete, you can move on to the next step of researching any potential legal issues.

Research any potential legal issues

• Identify applicable laws and regulations related to the aircraft purchase
• Contact a lawyer to review the purchase agreement and advise on any potential legal issues
• Research any case law or other relevant legal precedents
• Research the seller’s background and determine if they can legally transfer the aircraft
• Research the aircraft’s registration and identify any prior liens or claims
• Make sure the seller has the right to transfer the aircraft to you
• Check for any applicable warranties
• Make sure you understand all the terms and conditions in the agreement

When you can check this off your list:

• When you have completed all the research and identified any potential legal issues
• When you have contacted a lawyer for advice and have all the relevant information about the aircraft and the seller
• When all the applicable laws, regulations, case law, and other legal precedents have been identified and taken into account
• When any necessary liens or claims have been reviewed and resolved
• When all the terms and conditions in the purchase agreement have been understood and agreed upon.

Negotiating the Price

• Research market value of the aircraft to set a price range
• Negotiate with the seller to agree on a fair price
• Make sure all parties are in agreement and agree to the terms of the price
• Take into account any additional costs such as taxes, registration fees, storage fees, etc.
• When all parties agree to the negotiated price and the necessary additional costs, the step of negotiating the price has been completed.

Drafting the Purchase Agreement

• Draft the Aircraft Purchase Agreement using the price, terms and conditions of the sale that were negotiated
• Ensure that all key details such as the aircraft make and model, the purchase price and payment terms, the delivery date, and any other special provisions are included in the agreement
• Have the agreement reviewed by a legal professional to ensure it is enforceable and accurate
• When the agreement is ready, both parties can sign it to make it legally binding
• Once the agreement is signed, check off this step and move on to the next step of Executing the Purchase Agreement

Executing the Purchase Agreement

• Contact an attorney to review the purchase agreement to ensure that all legal requirements are met
• Sign the purchase agreement and have the seller sign it as well
• Obtain a copy of the executed purchase agreement
• Notify all involved parties that the purchase agreement has been signed
• When the purchase agreement has been signed by both parties and a copy obtained, the purchase agreement has been executed and you can move on to the next step.

Financing the Aircraft

• Research various aircraft financing options, including traditional lenders and lease-to-own agreements.
• Compare financing options and select the best one for your purchase.
• Utilize a lawyer to review and finalize the financing agreement.
• Contact the lender to finalize the agreement and get the necessary funds.
• Make sure to have the funds available to make the purchase.
• Once the financing agreement is finalized and the necessary funds obtained, you can move on to the next step.

Obtaining the Necessary Funds

• Decide on the method of obtaining the necessary funds (e.g. loan, cash, etc.)
• Start the application process with the chosen lender or institution
• Submit the required documents, such as bank statements and proof of income
• Wait for the lender or institution to approve the loan
• Make sure all the terms and conditions of the loan are agreed upon
• Once the funds have been disbursed, you will know you have completed this step and can move on to the next one.

Closing the Deal

• Schedule a meeting with the seller and their attorney to sign the aircraft purchase agreement and any other related documents.
• Make sure to have your attorney present or available to answer any legal questions you may have.
• Exchange the agreed-upon purchase price for the aircraft, as well as any other money that may be owed.
• After the documents have been signed and all money exchanged, you should receive a copy of the signed documents for your records.
• You will know the deal is closed when you have the signed documents and the aircraft is in your possession.

Registering the Aircraft

• Obtain the registration form from the Federal Aviation Administration (FAA).
• Ensure the form is filled out completely and accurately.
• Submit the form with the appropriate documentation, such as the bill of sale, to the FAA.
• Pay the registration fees.
• Once the FAA has processed the registration, you will be sent the registration certificate.
• You will know you have completed this step when you receive the registration certificate.

Obtaining Insurance

• Research and compare aircraft insurance companies and policies to ensure that you have the coverage you need in the event of any kind of accident or incident.
• Contact an insurance broker or representative to ensure that you are getting the best coverage for your aircraft purchase.
• Provide all necessary information about the aircraft and your purchase to the insurance broker or representative.
• Obtain a policy that meets all your needs and receive a copy of the policy for your records.
• When you have the policy in place, you can check this step off your list and move on to the next step.

Post-Purchase Considerations

• Gather any necessary documents needed to complete the agreement, including title documents, bills of sale, and lien documents
• Complete an aircraft bill of sale, noting the sales price and any delivery costs
• Have both parties sign the purchase agreement and aircraft bill of sale
• Obtain a certificate of registration from the Federal Aviation Administration (FAA)
• Record the lien with the FAA Aircraft Registry
• Make sure the lien holder has been given a copy of the agreement and bill of sale
• Make sure the buyer has been given title documents, registration and lien documents
• Notify the FAA of the aircraft’s change of ownership
• Notify the relevant state and local authorities of the sale

Once all of the above steps have been completed, you can move on to the next step of obtaining insurance.

FAQ:

Q: Is it legally required to have an aircraft purchase agreement?

Asked by Jacob on January 7th, 2022.
A: It depends on the jurisdiction in which you are operating. Generally speaking, it is not a legal requirement to have an aircraft purchase agreement in place. However, it is always highly recommended to document the purchase in writing to protect both parties involved. This is especially important when purchasing an aircraft as the risk of disputes is higher than with other purchases and the consequences of such a dispute can be significant. Moreover, certain jurisdictions may require that certain terms be included in the agreement in order for it to be legally enforceable. It is therefore important to check local laws and regulations before entering into an aircraft purchase agreement.

Q: What information should be included in an aircraft purchase agreement?

Asked by Sofia on February 25th, 2022.
A: An aircraft purchase agreement should typically include the following information: details about the buyer and seller; details about the aircraft being purchased; a description of inspections and pre-purchase tests that have taken place; a statement of payment terms; warranties and/or guarantees; any restrictions or conditions imposed by either party; and a statement of who will be responsible for registration, taxes, and insurance. Depending on the jurisdiction, other clauses may need to be included, such as clauses regarding safety standards or environmental protection requirements.

Q: What are some additional clauses I should include in my aircraft purchase agreement?

Asked by Madison on June 3rd, 2022.
A: In addition to the standard clauses mentioned above, it is also recommended to include clauses regarding ownership rights and responsibilities; maintenance requirements; indemnity provisions; dispute resolution clauses (such as arbitration); confidentiality agreements; and any other special arrangements that may apply in certain jurisdictions or specific circumstances. Additionally, if the buyer or seller has any special requests or needs (such as restrictions on use or transfer of ownership), these should also be included in the agreement.

Q: Are there any differences between US, UK and EU laws regarding aircraft purchase agreements?

Asked by Noah on August 15th, 2022.
A: Yes, there are some differences between US, UK and EU laws regarding aircraft purchase agreements. In the US, for example, there are specific FAA regulations that must be addressed when entering into an aircraft purchase agreement. In the UK, aviation law falls under different legislation than other commercial contracts (such as the Civil Aviation Act 1982). Similarly, EU aviation law is governed by several directives which must be taken into account when creating an aircraft purchase agreement within the EU.

Q: Who is responsible for maintenance of an aircraft after purchase?

Asked by Mia on October 5th, 2022.
A: Generally speaking, it is the responsibility of the buyer to maintain the aircraft after purchase. The terms of the agreement will typically specify who is responsible for maintenance and what type of maintenance must be carried out (e.g., regular inspections). If maintenance requirements are not met, this could result in legal consequences for either party depending on their jurisdiction’s laws.

Q: What are some common warranties included in aircraft purchase agreements?

Asked by Elijah on December 16th, 2022.
A: Common warranties included in aircraft purchase agreements include warranties against defects in materials or workmanship; warranties against mechanical failure; warranties against faulty design; warranties against any previous damage to the aircraft; warranties against liens or encumbrances; and warranties that all parts used in repairs are genuine parts from approved sources. Depending on local laws and regulations, additional warranties may also need to be included in order for the agreement to be legally enforceable.

Q: What if I need help understanding my obligations under an aircraft purchase agreement?

Asked by Emma on April 12th, 2022.
A: If you need help understanding your obligations under an aircraft purchase agreement, it is highly recommended that you seek professional legal advice from a qualified lawyer who specializes in aviation law. A specialized lawyer will be able to provide advice tailored to your particular situation and jurisdiction so that you can understand your rights and obligations under an aircraft purchase agreement before entering into one.

Example dispute

Aircraft Purchase Agreement Lawsuit

• Plaintiff may raise a lawsuit based on a breach of terms and conditions of the aircraft purchase agreement.
• Plaintiff may allege that the defendant failed to perform certain promises or obligations as outlined in the aircraft purchase agreement.
• Relevant legal documents may include the aircraft purchase agreement, local and federal regulations, and civil law.
• The information or actions which resulted in the suit being raised may include a failure to deliver on time, failure to provide the specified performance, payment not made as agreed, or other issues related to the aircraft purchase agreement.
• Settlement may involve the defendant making a payment to the plaintiff, rescinding the purchase agreement, or other potential remedies.
• If there are damages, they may be calculated based on the actual damage incurred, the portion of the purchase agreement that was not executed, or other relevant factors.

Templates available (free to use)

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