NAFA member, Adam Meredith, President of AOPA Aviation Finance Company, shares tips for making sure your aircraft purchase goes smoothly.
You found the right airplane for your mission; you have a lender and now you are days away from your final goal—landing the aircraft of your dreams. Out of nowhere, you get a phone call from the lender. A last-minute mix-up now threatens to stall or upend the deal. What happened? Here are four common trip-ups:
1. Last-minute ideas
Did you change your mind midway through the deal regarding how you wish the airplane to be owned, or how the airplane will be used? One of the biggest delays comes from buyers who suddenly decide their airplane should not be personally owned but instead owned by an LLC.
First, you’ve now altered the financial picture from which the lender is basing the parameters of the loan. Second, you’ve just added complexity to the deal. Complexity adds time. Third, an aviation LLC is different than other LLCs. The nuances are significant enough for us to suggest you contact AOPA Legal, or an aviation attorney before initiating the paperwork.
2. Title issues
Did you forget to order a title search from a reputable title company? Missing logbook signatures, an unqualified person making a logbook signoff, the presence of a heretofore unseen lien are all examples of items that can put a “cloud” on a title. Before the title can be cleared, a title company must do due diligence.
3. Pre-buy inspection
What could possibly go wrong with a pre-buy inspection? How about the aircraft is stuck overseas? How about a dispute between the seller and buyer as to where the pre-buy will occur? How about a pandemic that shuts down business operations and air travel for an unspecified amount of time? From the mundane to the previously unimaginable, myriad things can affect the pre-buy. That’s why a Pre-purchase Agreement is vital. In it, all the parameters of a pre-buy are codified and agreed to prior to, hopefully mitigating as many possible obstructive circumstances as possible.
Even with that, the pre-buy inspection will invariably uncover some addressable item. That item’s resolution will then have to be negotiated into the price if it’s not an airworthy item, or fixed and inspected prior to, if it is an airworthy item.
Illegible logbook documentation, missing paperwork, documents missing a notary’s required imprint— are a partial list of paperwork problems that could slow the closing process. AOPA Aviation Finance can help build a paperwork checklist early that will help prevent this pitfall.
This article was originally published by AOPA Aviation Finance Company on November 23, 2020.