As with real estate or any other large investment, aircraft sales are a complex business that many buyers and sellers prefer to place in the hands of professionals—such as legal counsel, tax advisors, and aircraft brokers. Aircraft brokers assess the property for sale, analyze the market, and handle promotions and negotiations, much as real estate agents do, and they are paid with a percentage commission or an agreed flat commission fee.

But when you’re in the market to purchase an aircraft, it’s not always easy to know if you are dealing with an upright broker. Some prospective purchasers have lost thousands by trusting the wrong aircraft brokerages. How do you know what to expect, and how can you protect yourself as you engage an aircraft broker to look for an aircraft?

Requirements for Aircraft Brokers

It’s best to start by ensuring the broker is reputable and legally compliant. There are private associations and accrediting bodies for aircraft brokers, such as the International Aircraft Dealers Association (IADA) and the Global Licensed Aircraft Dealers Association (GLADA).

However, unlike real estate agents, state governments do not generally require aircraft brokers to have a license, and generally, the FAA and DOT do not currently regulate the activities and business of aircraft brokers. It’s possible for aircraft brokers to set up shop with a business card and a few connections. Nonetheless, depending on their state and municipality, they may need an aircraft dealer’s license or otherwise register under local laws.

In Florida, aircraft brokers must register as aircraft dealers with the Florida Department of Revenue in order to collect sales and use tax. (A nonresident buyer may not owe the state tax if the aircraft is timely removed.)

What Should the Sale Involve?

Brokers should understand the steps involved in an aircraft purchase, including:

  • Analyzing your personal aircraft operation needs in order to offer appropriate deals
  • Ensure that an appropriate mechanic or repair station is retained and scheduled in order to inspect the technical condition of the aircraft and it’s logbooks and documents prior to the closing of the sale
  • Compliance with any state laws, such as sales tax, for delivery of the aircraft to its ultimate destination
  • Compliance with FAA regulations for the sale and delivery of the aircraft, including any necessary ferry permits
  • Identifying any conditions that the parties need to fulfill before making the sale, such as clearing liens or mortgages, or dealing with export/import issues
  • Considering non-performance situations—what do the parties do if the sale cannot go through as planned?

Working with a trusted aviation attorney will help both you and your broker understand how to protect your rights from some of the most common transactional difficulties.

When a Sale Goes Awry

Your aircraft purchase could be a disappointment, or even a disaster, for several reasons:

  • Your financing falls through at the last moment
  • A delay in delivery sets back your plans and costs you money
  • You discover serious maintenance or compliance issues with the aircraft
  • The aircraft is damaged or destroyed before you can accept delivery
  • The seller backs out or demands further concessions to go forward

When these things happen, your broker should be on your side. But your contract with the broker might not be. Will you still have to pay the commission? Is the deposit nonrefundable? 

If you work with an aviation attorney from the beginning, you can avoid unfair contractual clauses in both the broker agreement as well as the aircraft purchase agreement. Even so, when problems arise after signing the contract, an attorney can still defend your rights. Common transactional issues include:

A Seller’s Breach of Contract

If a seller refuses to go through with the sale as agreed, and that refusal substantially impacts you, that is a material breach, and you may have grounds to seek legal or equitable remedies against the seller, including without limitation, requiring the seller to go through with the sale by obtaining a court order for “specific performance.”

Hidden Maintenance Issues

You want a successful pre-purchase inspection, a logbook audit, and assurance that the aircraft complies with current ADs and conforms to the aircraft manufacturer’s specifications before you are committed to your purchase. What happens if the inspection missed a crucial problem—or the seller misrepresented it? Do you want the seller to pay to fix this issue, or do you want to cancel the sale? An aviation attorney can determine the best course of action to get you what you need.

Title Difficulties

No one wants to “buy a lawsuit,” as the saying goes, by purchasing an aircraft with liens or other encumbrances. You should expect clear title of your aircraft; if not, you should understand the encumbrances and how they will be cleared. An aviation attorney can help design a purchase process that protects your interest as a buyer by ensuring the title is clear at closing.

Let Us Guide You

Our aviation attorneys are ready to help you through the complicated aircraft sale and purchase process—starting from the beginning through closing. Once the purchase is underway, we can manage the compliance and paperwork that the FAA requires for a smooth transfer of ownership.

Contact us today at 954-400-4643 about your aviation sales or business matters, and we can schedule a free initial consultation.