Aircraft Acquisition Process
The acquisition process will begin with the identification of the aircraft. Identifying the aircraft that best fits the needs of the client typically begins with engaging someone with extensive knowledge and experience with many types of aircraft and market asking prices. There are a variety of aircraft consultants and aircraft brokers in the industry but the quality and experience of the consultants and brokers varies drastically. We have extensive industry contacts and can provide referrals to full-time professionals.
After the aircraft is selected, a Letter of Intent or “Offer to Purchase” will be drafted, and the buyer’s agent will arrange for a visual inspection and demonstration flight of the aircraft. If the client decides that they would like to purchase the aircraft after the visual inspection, a comprehensive Aircraft Purchase Agreement will be drafted to memorialize the terms of the purchase. The duration of negotiations of an Aircraft Purchase Agreement is dependent upon the sophistication of the parties and whether counsel to the parties is experienced with aircraft transactions.
After the Aircraft Purchase Agreement is finalized, the aircraft will typically enter a pre-purchase inspection at an authorized inspection facility for the type of aircraft. After the completion of the inspection, the inspection facility will generate a report detailing the items that are not airworthy or “discrepancies.” The buyer will then issue its “technical acceptance” subject to the repair of discrepancies by the seller, or, in some instances, reject the aircraft.
After the confirmation of the correction of the discrepancies the transaction will be ready to close. All legal, registration, and other applicable documents should be placed with the escrow agent several days prior to the prospective closing date.
The failure to properly structure an aircraft acquisition, negotiate purchase documentation, and/or register the aircraft can have an adverse effect upon the success of the transaction. However, experienced aviation professionals will have the ability to foresee potential issues and address them early in the process, thereby facilitating a smooth transaction.
At Stewart H. Lapayowker, P.A. we have the experience to guide clients through the issues necessary to establish an efficient acquisition structure, draft necessary legal documents, counsel on federal and state tax planning, and any unique pre-closing and post-closing issues.
About Stewart H. Lapayowker, P.A.:
Based in Fort Lauderdale, Fla., the law firm of Stewart H. Lapayowker, P.A. focuses its practice on private and corporate aviation transactions worldwide, including throughout the United States, South America, the European Union, Asia and the Middle East. The firm regularly assists clients with a variety of issues related to aviation, including the sale, purchase, regulatory analyses, financing and management of corporate aircraft.