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Thread: Selling an experimental/liability

  1. #1
    supercrow's Avatar
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    Selling an experimental/liability

    I have to start thinking about selling the Crow in the not too distant future. I have tried to research liability issues short of hiring a lawyer to do so. The EAA has a basic form to start with but warns that there is really no protection for suit from 3rd parties. What are others doing in this regard? If any of you have thoughts or suggestions I would like to here them. I am wondering if the sale were to wait until after I am gone does that delete that threat for the seller then or is that still a danger to that party? I hate like hell to tear it apart or de-certify it, it's a great airplane. Any thoughts appreciated. Thanks, Reid
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    What is this crow you speak of? Im in the market and close to ME.

    On the liability front, I think you just need to invest in a really well written release. In the USA, you can sue for anything, which is pretty insane. It might not be successful but someone can waste your money in the pursuit.

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    stewartb's Avatar
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    I have neighbor who’s selling an exp Cub her husband had built. My advice to her was to get a professional mechanic to do a condition inspection prior to selling. Not to pin anything on the mechanic, just to have a qualified second set of eyes to establish the condition. The EXP placard we’re all required to display spells out what the buyer is buying.

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    supercrow's Avatar
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    Selling it won't be a problem. Plenty of buyers. The Supercrow is an experimental s. cub I built in the mid nineties and recovered and refreshed in the last 3 yrs in preparation for eventually selling it. The airplane is well known in Maine and through out much of new england as a serious competitor at the Greenville float flyin takeoff contests. I am an A&P/IA and have specialized in repairing and rebuilding tube and fabric machines. The plane is as good as those seen anywhere. My concern is not with a buyer but in what I understand to be an issue with 3rd parties (relatives etc. of the buyer). I was wondering what others are doing as there is a very good market for exper. cubs and many are being sold.
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    I'd say it all boils down to your risk tolerance level. Despite EAA's cute little form, anyone can sue you - or your estate - at any time. If any non pilot is injured in an accident or incident in that aircraft, it's reasonable to expect a suit. Pilots at least usually have the good sense to realize they brought this upon themselves, but "civilians" not so much. FOR ME -and this is just for me - to my way of thinking - selling an experimental presents far too much risk to ever entertain the idea.

    That being said, I have seen very few suits of this type in my 43 years flying. I'm thinking it's on the order of 4 or 5. If that's not the exact number it's in the ballpark. Of course if you're one of those it doesn't matter how rare the instance is. I should also mention that it doesn't matter the validity of the claim. Getting sued is no fun and a giant expense. If the claim is frivolous and stupid, it's just as unpleasant, heck maybe even more.

    My recommendation is you're worried at all - and you are because you asked the question - part it out. I bet you can recover more capital from it that way. If any of your friends give you grief over it, offer to help them build their own.
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  6. #6

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    Fear of liability might be the biggest threat small GA is facing.
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  7. #7
    Bill Rusk's Avatar
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    There has never been a successful lawsuit against an experimental aircraft. Even all the money and top lawyers in the John Denver case resulted in NADA.

    If anyone knows of a successful lawsuit against an experimental aircraft please correct me.

    Bill
    Very Blessed. "It's not an obsession, it's a passion"
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    My hangar partner (A&P) rebuilt a Beech Duke from two wrecked airframes. He has significant assets from his other career as an eye surgeon. When it came time to sell, he decided to donate the airframe to the local community college A&P program. He felt like too big of a target. Also, Dukes just aren't worth very much right now.

    I don't know what the right answer is for selling an experimental that you built. Maybe selling in an intentionally un-airworthy condition-i.e. out of annual so the buyer has to insure airworthiness prior to use coupled with appropriate releases and disclosures (and maybe even an indemnity signed by the buyer.) All of these actions would reduce liability somewhat at the expense of reducing the sale value.

  9. #9

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    Bill,

    I read your post after I posted mine. Your point is well taken.

    Ed
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  10. #10
    supercrow's Avatar
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    Any thoughts on my statement about selling it after I am gone. If I leave it to someone I wonder if they are free of liability because they are not the builder? Or are they still in the same boat as I would be. Would hate to put that on someone. It can surely be parted out if I have to do that. Nothing has to be done today so trying to get a feel for the best way to handle it. Thanks for the replies.

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    Another thing worth mentioning, if the airplane is held in a corporation that would also shield you more personally. I dont own my 182 under my name personally. So if it isnt, you could transfer the registration into an LLC and then sell it (to me) from there. Just an idea.
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  12. #12
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    In the early '80s a guy killed himself in a UL I sold him, tried to teach himself, got into PIO's, end of story. His son-in-law called me the next day to tell me the family did not hold me responsible at all, and that was the end of it. They were wealthy, I wasn't, that may have had something to do with it, or not. I sold over 30 UL's, before that a few dozen hang gliders, ( and people got banged up flying them, none killed far as I know) more recently 5 experimentals plus a T-Craft, with zero issues. Which doesn't mean squat to the right shyster I realize. If you are even asking the question....you should probably part it out to REDUCE, not eliminate, your exposure, so you can sleep nights.
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  13. #13
    mvivion's Avatar
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    The above are good recommendations, and I’d do what Stewart says. That said, recall the John Denver accident.

    MTV

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    stewartb's Avatar
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    Quote Originally Posted by Ington6 View Post
    Another thing worth mentioning, if the airplane is held in a corporation that would also shield you more personally. I dont own my 182 under my name personally. So if it isnt, you could transfer the registration into an LLC and then sell it (to me) from there. Just an idea.
    A new attorney won’t have a hard time piercing the corporate veil. And an LLC won’t help you as much as other members. So says my wise old attorney, anyway.
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    RVBottomly's Avatar
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    I have no idea what’s available regarding insurance. Might be worthwhile to ask if there some kind if “tail” insurance for an experimental. It’s available for professionals who retire, might be something analogous for airplanes.


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  16. #16
    supercrow's Avatar
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    Thanks for your thoughts, guys. I am not running particularly scared of the law suit thing. After all, I continue to to repairs and alterations and annual inspections and sign my name in the book. I was mostly wondering what some of you thought of this sale issue and how others might be handling it. I don't know yet what I will do regarding a sale, but am interested in learning what I can about the best way for me to do it as safely as possible.

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    Just a question here! But if someone other than yourself performed the conditional inspection, would that not somewhat relieve your liability? You don’t see aircraft manufacturers getting sued often ……or ??

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    The risk is too great, i'll come and take it off your hands, as is. Myself, and every living relative i can find will sign whatever it takes to ensure you ate not liable for any dumbass thing i'll fo with it in the future. Just the peace of mind that you get will be more than worth it, i promise!
    All kidding aside, get a reputable mechanic or two to look it over, fix any issues they find, and sell it. The buyer will probably have a pre-buy done, and theres a 99.999999% chance that they'll have the time of their life flying it. Don't lose sleep over that .000001%!
    Experimentals are bought and sold daily, i think it would be a huge waste to part it out.
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  19. #19

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    Our liability insurance as pilots is around $300/year. Mechanic liability insurance is around four grand a year to start. Might be more risk to the guy who maintains and signs . . .

  20. #20
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    Quote Originally Posted by Kid Durango View Post
    Just a question here! But if someone other than yourself performed the conditional inspection, would that not somewhat relieve your liability? You don’t see aircraft manufacturers getting sued often ……or ??
    Back in the 80's Cessna shut down single engine production for a few years for this very reason. Supercrow is the manufacturer, no matter who worked on it after being built they always go back to the manufacturer. Now if Supercrow inc. was the official manufacturer perhaps he would be off the hook? I'm no legal person, just thinking out loud.
    N1PA
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    Aeronut's Avatar
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    I agree that the LLC is not likely to offer any real coverage. Piercing the LLC veil thereby exposing the member to liability is a pretty standard event in law from what I understand. With the amount of money we spend on aviation anyway, why not just spend an hour or two with a lawyer to draw up the paperwork and minimize your exposure? Since it's a seller's market you may even be able to bring the buyer into that process also. I would imagine that's about as bullet proof as you're going to get liability-wise.
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    Quote Originally Posted by Aeronut View Post
    I agree that the LLC is not likely to offer any real coverage. Piercing the LLC veil thereby exposing the member to liability is a pretty standard event in law from what I understand. With the amount of money we spend on aviation anyway, why not just spend an hour or two with a lawyer to draw up the paperwork and minimize your exposure? Since it's a seller's market you may even be able to bring the buyer into that process also. I would imagine that's about as bullet proof as you're going to get liability-wise.
    ^^^^ Agree. For $250 and the address to the courthouse, anyone can sue anyone for anything.....nature of the beast. An LLC (properly documented and properly maintained for a period of time) won't hurt...personal opinion is that LLC's might be a tad stronger defense than seems to be the common consensus, but they're certainly "pierceable". A good release / disclaimer / covenant not to sue won't hurt...If one has assets worth protecting, moving those assets wouldn't hurt either.

    Even to do 2-3 different transactions, for asset and liability issues, I'd opine that several hundred or a few thousand spent with an attorney is a good bargain...but just opinion.

  23. #23

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    Only sell the plane to someone willing to give you an undated suicide letter. Problem solved. <- Because of the limits of internet communication I must point out that this is a joke.
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  24. #24

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    Sell it disassembled with appropriate log book entry. Let new owner reassemble and take airworthiness resposibility. Just a thought.

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    soyAnarchisto's Avatar
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    Quote Originally Posted by don d View Post
    Sell it disassembled with appropriate log book entry. Let new owner reassemble and take airworthiness resposibility. Just a thought.
    I've heard this mentioned before wrt selling experimental aircraft. Is this really practical, meaning to remove a pretty important bolt and sell the thing as "parts" to which a new owner would have to re-install that important bolt and have someone (an IA) put the bolt back and update the logs that it's approved for return to service? That also seems like something the most junior of lawyers could argue around pretty easily.
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  26. #26

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    My plane is a cub clone I built for $15k. I have very shallow pockets so don't worry much about being sued! Feal sorry for you rich guys. Ha!

  27. #27
    Grant's Avatar
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    Quote Originally Posted by Bill Rusk View Post
    There has never been a successful lawsuit against an experimental aircraft. Even all the money and top lawyers in the John Denver case resulted in NADA.

    If anyone knows of a successful lawsuit against an experimental aircraft please correct me.

    Bill
    I have heard the same thing...

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    I wonder if it would be legal to somehow back out of the certification process. Then after its not an airplane, rather an assembly of parts, the new owner could have it re-certified with the all the data that shows it was fabricated by amateur builders via photos, a builders log, receipts, etc. I know those who will argue that the builder (new owner) must be the primary builder or build 51% of the aircraft, but that is not what the FAA says. They merely say that the aircraft must be built by amateurs for the purpose of recreation and education. Which it was. Only it was done in the 1990's and flown. Irregardless of that history, it seems to me like it may still meet the standard today if its not a certificate aircraft and it has all the data and evidence that shows it complies. I'd want to run this idea past the FAA FISDO, or the EAA and get their blessing before proceeding.
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    Quote Originally Posted by bcone1381 View Post
    I wonder if it would be legal to somehow back out of the certification process. Then after its not an airplane, rather an assembly of parts, the new owner could have it re-certified with the all the data that shows it was fabricated by amateur builders via photos, a builders log, receipts, etc. I know those who will argue that the builder (new owner) must be the primary builder or build 51% of the aircraft, but that is not what the FAA says. They merely say that the aircraft must be built by amateurs for the purpose of recreation and education. Which it was. Only it was done in the 1990's and flown. Irregardless of that history, it seems to me like it may still meet the standard today if its not a certificate aircraft and it has all the data and evidence that shows it complies. I'd want to run this idea past the FAA FISDO, or the EAA and get their blessing before proceeding.
    Had a guy try that, FAA wouldn’t let him certify as Amateur Built, ended up with Experimental Exhibition. The logic was that once the parts were installed on the first airplane, and it received its airworthiness certificate, they would be handled the same as if they came from a certified airplane and no fabrication or assembly credit could be claimed for any of those assemblies. He couldn’t show that he met the major portion using the checklist, so the only option was exhibition.


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  30. #30
    mvivion's Avatar
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    Quote Originally Posted by Bill Rusk View Post
    There has never been a successful lawsuit against an experimental aircraft. Even all the money and top lawyers in the John Denver case resulted in NADA.

    If anyone knows of a successful lawsuit against an experimental aircraft please correct me.

    Bill
    Bill,
    That may be true, I don’t know. But a lawsuit doesn’t have to be “successful” to empty your bank account.

    MTV
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    I’d like to hear opinions from guys who’ve done it. All these scared of the dark comments don’t mean much.
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  32. #32
    supercrow's Avatar
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    It will probably be sold as a flying airplane. Thanks to all of you for your comments.

  33. #33

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    The last experimental i bought (RV , the builder/seller required that my immediate family (wife and children) sign a release of liability.
    Also he required a qualified A&P of my choosing do a condition inspection.

    He was picky about buyers. I had over a 1000 hours in RV experimentals, most of that time in a 8.

    I am guessing his liability risk was extremely low if i woulda taken the dirt nap while flying this airplane. It also had 300+ hours airtime without killing anyone.





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  34. #34
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    I have served as a SME in quite a few legal matters on behalf if aviation manufacturers over the years. I am aware of 2 occasions where the family of a deceased person attempted to sue following a fatal in an AB aircraft. Both times they were highly encouraged by the same attorney to do so. Neither of the cases were successful. They took the shotgun approach naming any component, person, manufacturer that was on the airplane and it was lead by this same "Expert Aviation Attorney".
    The last case they named a certain company that took offense to being fraudulently accused of causing the accident. If I recall, the attorney lost their ability to practice law in the countersuit due to their misconduct.
    IMO- as an AP/IA/DAR my name is on so many things that carry significantly more risk I would not worry about it. I think your plan to let the new owner have responsibility for the last Condition Inspection is solid.
    Also- dgapilot has had the same experience as I and together we have certified a few airplanes. The road to AB if deregistered and you are not the builder is problematic at best. Exhibition is where it will most likely land.
    Last edited by acroeric; 09-03-2021 at 04:11 AM. Reason: grammar
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  35. #35
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    Risk is rather rare. Size-up buyer and don't sell to idiot. I'm going to sell my Spezio Tu-holer. My plan is to do an extensive inspection(I just replaced bungees) but likely NOT sign-off an annual. Have buyer get another set of eyes(A&P) look/sign it off. OTOH I recently had a buyer who was an experienced builder who had once owned one, he was just too big at 6'3"-couldn't close canopy. I would have signed it off for him after he did the inspection with me and co-signed the annual as the new buyer. Maybe?.

    Also I think risk is probably greater on a kit built where they might go after designer who has assets or anyone else in the chain who might be worth going for real money. If you are like me, I'm a very small target..... If you are worth several million $, why take the risk? Keep it or part it out or burn it....?

    No way to to get risk to zero.



    Jack

    PS Don't sell to "John Denver" type- rich/famous. If they screw the pooch family will probably go for it?
    Last edited by n40ff; 09-03-2021 at 08:04 AM.

  36. #36
    RaisedByWolves's Avatar
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    Sounds like you need to sell to a young person who enjoys planes and will use it for years to come
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  37. #37
    Steve Pierce's Avatar
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    Quote Originally Posted by RaisedByWolves View Post
    Sounds like you need to sell to a young person who enjoys planes and will use it for years to come
    JB in the market?
    Steve Pierce

    Everybody is ignorant, only on different subjects.
    Will Rogers
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