Whether you are purchasing your first aircraft or the latest in a succession of aircraft, as an aircraft buyer you need to proceed with caution. If you don't, after the seller has left with your money, you may have unanswered questions: Do I really own the aircraft? Have I missed any skeletons hiding in the closet that threaten my continued ownership and possession of my aircraft? What happens when someone else claims they own or have a prior interest in my aircraft?
To answer these questions, first we need to discuss what the FAA requires for an aircraft purchase transaction. Then we will talk about some of the problems/issues that an unwary buyer could face. Finally, we will address some of the steps an aircraft buyer can take to ensure that he or she will be the legitimate and undisputed owner of the aircraft being purchased.
Recording Purchase Transactions With The FAA. When you purchase an aircraft, you receive an FAA Form 8050-2, Aircraft Bill of Sale showing the transfer/sale of the aircraft from the seller to you, the aircraft buyer. The bill of sale must then be recorded with the FAA along with an FAA Form 8050-1, Aircraft Registration Application. (Unfortunately, Form 8050-1 is not available online, but must be obtained directly from the FAA or your local FSDO). Additionally, for the most part, all interests in aircraft, whether a security interest, lien, mortgage or judgment, must also be recorded with the FAA Registry in Oklahoma City in order to be valid and the first recorded interest usually has priority over interests recorded at a later date.
Failure to timely and properly comply with these filing and recording requirements can result in problems for the aircraft buyer. What types of problems can happen? Although a variety of such problems exist, two specific ways in which an aircraft buyer can find himself or herself in trouble are when a seller fails to convey title to the buyer or when a seller fails to convey "clear" title to the buyer.
Seller Fails To Convey Title. In this situation, the aircraft buyer does not become the actual owner of the aircraft. The seller may not necessarily intend for the aircraft buyer not to take title to the aircraft. Rather, the seller's failure to convey title to the aircraft buyer is inadvertent or unknowing. One such situation occurs when the bill of sale contains errors. Potential errors can include when the person signing the bill of sale does not have authority to sign on behalf of the corporation or limited liability company that owns the aircraft, when the aircraft is incorrectly identified on the bill of sale or when the person signing the bill of sale does not have capacity (e.g. a person signing the bill of sale is a minor, mentally insane or incompetent).
Unfortunately, situations also arise in which the seller's actions are intentional and result in the aircraft buyer not receiving title to the aircraft. This can happen when a seller sells an aircraft twice and the second buyer actually records his or her bill of sale before the first buyer. A similar result occurs if the seller forges the bill of sale or if the aircraft is subject to judicial proceedings (such as bankruptcy, receivership, probate, conservatorship or dissolution of marriage), and the court has not authorized the sale.
Seller Is Unable To Convey Clear Title. In this situation, the bill of sale may be valid and convey title to the aircraft to the aircraft buyer, but that aircraft may be subject to the interests of some other third-party. Such prior interests can include judgment liens, tax liens, mechanic's liens and various other liens and security interests. These prior interests would likely be recorded before the buyer's bill of sale. It is also possible, in some limited circumstances, to have an unrecorded, possessory lien against an aircraft. (Unrecorded, possessory liens make a strong case against purchasing an aircraft sight unseen without confirming the location of the aircraft and lack of claims by the party in possession if other than the aircraft seller).
What To Do? With such potential problems lurking in the shadows, what can/should an aircraft buyer do? Well, one answer is to hire an aviation attorney to assist you with the transaction. An aviation attorney will be familiar with the filing and recording requirements of the FAA and will make sure that the bill of sale and aircraft registration application are completed accurately, properly and filed in a timely manner. An aviation attorney will also be able to perform due diligence on your behalf including a title search and name searches for the seller to discover any judgments, liens, bankruptcies or security interests. He or she can also help you resolve any title defects that may be discovered during due diligence.
An aviation attorney may further help you obtain an affidavit from the seller affirmatively stating that the seller is not aware of any judgments, liens or encumbrances affecting the title to the aircraft. This may assist you in pursuing or asserting a fraud claim against the seller if a title issue arises which you can show the seller was aware of when the affidavit was signed.
Another way to protect yourself is to buy title insurance for your aircraft. The aircraft title insurer will ensure your documentation is accurate and filed in a timely manner and it will also perform the same types of title and name searches an aviation attorney would perform on your behalf. However, the title insurer may or may not be able to assist you in resolving any title defects and won't be able to provide you with any legal advice regarding the purchase transaction.
The bottom line is that you as an aircraft buyer need to proceed with caution and perform due diligence when purchasing an aircraft. Although this may seem like added cost in the short term, in the long run these steps can save you the large expense, and possible loss of your aircraft, that can result from title defects or third-party claims against your aircraft.
As always, fly safe and, when you are purchasing an aircraft, buy smart.
Top Ten Secrets to Saving Big Money in the Airline Flights
Do you know that some people travel around the country and abroad, for both business and pleasure, and save bundles of money in the process?
They do that by using little known ways of really taking advantage of the most popular form of transportation - airline flights.
They don't rely on the ever-famous "airfare price-wars". They don't rely on their travel agents to save money while flying.
Certainly, you should not dismiss these two methods. The price-wars can work to your advantage. But depending on them too much is a big mistake.
1. Call the airlines.
Call the airlines between midnight and 1 a.m. Monday through Friday to get cheaper tickets.
Most people never realize that at midnight, airline agents revise and load new fares into their computers. The best fares are just after they have done the updating!
2. Check into other airports other than the main one you use.
Many major cities have two airports. Check into surrounding towns and cities so you can compare airfares. You may save hundreds of dollars on your flights.
3. The early bird catches the plane.
The earlier you book your flight the more you save. Most special fares have restrictions of 7 to 30 day advance purchase. Usually non-refundable but they can offer deep discounts.
On the other hand, there are "last minute" deals too. Visit www.smartliving.com to get emails for last minute deals.
4. Get out of town on Wednesday.
Mid-week travel is usually less expensive. If you leave on Tuesday, Wednesday or Thursday and stay over a Saturday night, you can garner terrific savings compared to Friday through Monday when most people fly.
Start taking your vacations Wednesday-to-Wednesday or Tuesday-to-Tuesday. You'll save a lot by choosing your departure and arrival dates this way!
5. Buying a one way or split ticket.
Let's say you travel from Boston to Dallas. It may be cheaper to get two separate tickets. You could buy one ticket from Boston to Nashville and one from Nashville to Dallas.
It all depends on the connecting cities and your airlines hubs. Just tell your agent you are willing to travel out of other airports and connect using regional airports to save money.
6. Open wide.
You should look into what is called an "Open-Jaw" ticket. These are used when a traveler is arriving and departing from different cities.
One ticket is purchased to cover both cities. Check with your travel agent or airline representative to see if this trick is available instead of two one-way tickets. Compare the price of each.
7. An excellent online service www.sidestep.com
You enter destinations and dates and SideStep quickly searches a couple of dozen affiliated regional and international airlines to find the best rates.
8. "Code share".
Ask your agent if this flight is a "code-share" flight. That means the same flight is offered by two different airlines. Just copy down the name of the other airline and check into what they are charging.
Only one of the airlines is actually operating the flight. The actual operator always offers this flight for less, so book with them.
9. Sign up for the airline newsletters.
From weekend getaways to international flight packages the newsletter saves you money on travel and doesn't require that you constantly visit the airline website for the latest offering.
10. The airlines often slash their fares during sluggish travel times.
Scan your travel sections in the newspapers and talk to your agent about these low fares.
Is Your Travel Experience Limited by Your Credit Card? Alex Fir is providing 250+ pages of insider tips and tricks that teach you how to travel cheap and sometimes free. Visit Cheap Travel
10 Best Ways to Justify Your Airplane Purchase |
by: Pat Redmond |
| For those of us who've caught the "aviation bug" finding a way to justify the purchase of an airplane becomes an all consuming mental task. Make this task simple by choosing the appropriate reasons from the list below: 1. The airplane will make money for me. This one actually works! Learn about leasebacks and/or using your airplane in your business by visiting: http://www.airplanenoise.com/answers_to_why.htm 2. My business will benefit from my increased productivity when I fly instead of drive. Save time and money by flying yourself! You can avoid hours at the security gate and layover time by flying yourself. Most regional trips will be completed in a fraction of the time you'd spend driving or flying commercially. Learn more by clicking the link: http://www.airplanenoise.com/business_justification.htm 3. The airplane will keep my family together. Many people find their children off to college and their parents staying in the south. A personal aircraft allows you to stay in contact and maintain the relationships that are so important to you. After all. . . is there anything more important than our relationships with our family and friends? 4. Learning to fly provides a new challenge. Most of us have dreamed about flying since our childhood. What's preventing us from taking that step? Life's too short to procrastinate! 5. I can vacation every weekend! No doubt, every weekend can be earmarked for a new destination. Start with you own state, and expand to other states. Visit museums, recreation areas, friends . . . the sky's the limit! Start with this list: http://www.airplanenoise.com/great_trips.htm 6. I can make an airplane payment instead of an IRS payment! With minimal business use (30%), your airplane purchase may be a depreciable asset. New tax laws significantly increased the tax benefit to owners. Learn more by downloading a FREE audio TeleClass at: http://www.airplanenoise.com/download_teleclass.htm 7. I can enhance my children's educational experience. Children learn more from an experience rather than sitting in a classroom or reading a book. Trips to Washington D.C., Niagara Falls, Gettysburg, PA, Kitty Hawk are all great reasons to fly the family. Re-live your childhood at the same time. 8. Flying as therapy? Well, believe it or not, some people fly for its therapeutic benefits. Life's problems seem to disintegrate as altitude increases. Try it next time you're feeling overwhelmed by life's challenges! 9. An airplane is a terrific status symbol. If status is what you're looking for. . . you can't beat an airplane. Not only are pilots looked up to, but when it's your own airplane. . . "You've arrived!" No one even needs to know that the airplane is generating a positive cash flow. Thank you for using this blog and have a Nice journey. |
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