Question on Purchase Sale Agreement

I'm in the final stages of closing on a purchase of my first plane. Inspection passed with flying colors from a very reputable IA.

I'm trying to get the purchase sale agreement completed so we can finalize the transaction. It should have been done prior but we never got around to signing it- we just had a verbal agreement and agreeement to use the AOPA purchase sale agreement as a template.

Seller is a good guy. He actually did a ground up restoration on it and seems pretty reasonable for what it is worth.

Seller does not like this clause and wants it removed:

"Warranties. Seller warrants that to the best of Seller’s knowledge: (a) the Aircraft is in airworthy condition; (b) the Aircraft has a current annual inspection; (c) the Aircraft has a currently effective Standard Category airworthiness certificate issued by the Federal Aviation Administration; (d) all of the Aircraft's logbooks are accurate and current; (e) all applicable Airworthiness Directives have been complied with."

His position is I had an IA inspect it, and check everything out, and that this is on me to ensure. I wouldn't say he is ademant against signing it- he just says he is selling the plane as is and it's my job to make sure everything checks out. I think he just doesn't want any liability after the sale.

My question: Should I care if this is not in the purchase agreement?

Now- I think this is supposed to be signed prior to the pre-buy, which is now done. In that case perhaps it was in there to protect the buyer (me) from doing an inspection on an airplane where the seller knows there is a bunch of issues?

Also- do I need to list out the engine/serial number in the purchase agreement? Sometimes I feel like less is more and I'm not worried about an engine swap or anything.

Sounds as complicated as a pre-nuptial agreement. No guarantees there either. I hope it works out ok for everyone.

Gary

Tell him to actually read the verbiage there: "To the best of seller's knowledge". He apparently hired an IA to inspect and annual the airplane....said IA's signature is in the logbook, correct? And, BTW, a complete review of applicable ADs is required for an annual inspection to be "complete". And, at the end of that inspection, said IA states that the airplane is in an "Airworthy Condition".

That should fulfill his requirement that all that stuff is done. The IA is the one that should be on the hook if an AD wasn't complied with at annual, etc.

That statement is simply to ensure that the seller hasn't hidden something really egregious from the buyer (and the IA).

MTV

I agree with the seller. Avoid interpretation. As is, where is. If my IA says good? Good enough.

You hired an IA and he says all those things are good so why does the owner need to sign that?

It's your job to do the due diligence on those items, not the seller. I would not allow that as a seller, either.

Tim

Just buy the airplane. You’re making it too hard.

Me neither. I am selling a Decathlon right now and the only paperwork will be a bill of sale.

simple document:

Buyer pays seller through escrow. Once plane is signed over to buyer, escrow will release money to buyer.

Buyer to receive plane and all documents, logs and such AS IS at X airport.

Signed: all parties.

Carry a suitcase of cash over and hand it to him, have him hand you signed bill of sale. DONE

Just like that.
We have done local sales with checks. But cash is king.
Don't kill a good deal with legal mumbo jumbo - it doesn't add anything and just bothers the seller.
We have a local IA that has a caveat on each annual he signs - meaningless, and clutters up the logbook pages.

Cash is King? Not in my book. I bought an airplane once and the seller wanted cash. Getting $80K from the bank was a pain. For him to deposit $80K was also a pain. And in that case the $80K never left the bank. It was a complete waste of time. A cashier's check is guaranteed funds and is way easier to deal with on both sides of the transaction.

Is it still $10K that triggers the bank having to report cash transactions to the alphabet agencies?

I Think it is actually less, but it is just a computer thing if less than 10,000. I did cash for my last two aircraft buys. Just call the bank ahead of time and make sure they have the cash on hand. Both sellers dropped the price by 5 grand when I said I had cash. DENNY

stewartb said:

Cash is King? Not in my book. I bought an airplane once and the seller wanted cash. Getting $80K from the bank was a pain. For him to deposit $80K was also a pain. And in that case the $80K never left the bank. It was a complete waste of time. A cashier's check is guaranteed funds and is way easier to deal with on both sides of the transaction.

Is it still $10K that triggers the bank having to report cash transactions to the alphabet agencies?

Click to expand...

I totally agree with you in concept, but the paperwork really is not much more than a signature.

That said, a collected funds check is my preferred method, and easier for most people to handle. A collected funds check can be cancelled though by the original issuer.

For me, cash or collected funds works on transactions. Only time I refused them was when a bank teller gave me a ration, I made her count out the cash just to make her day better.

I've only made one plane purchase (so far) and that was with a cashier's check. A lot easier than counting out bills and dealing with pulling five figures in cash from a bank. With covid and people being conscious about spreading germs I think cash as a medium for doing any transactions over a few bucks is a way of the past.

Having your paperwork together and knowing the process is key from whichever side of the deal you're on. In my case the old timer that sold me my plane wasn't tech or paperwork savvy so I showed up with the FAA bill of sale already filled out and ready for signatures. The guy was really appreciative and it was as simple as getting signatures and giving him a check to close the deal.

I’ve set up a wire on a few plane purchases, that’s my favorite. Do a final look over the plane and logs, call the bank and tell them to send the money, sign a bill of sale and eat lunch while you’re waiting on the funds to transfer. Fly home on a full belly.

Not a banking expert. I have heard that cashier's checks are not bulletproof. Worse, personal checks have no time limit. A VP of a major bank explained to me that there is no time limit - six months down the line they can dishonor a check you have deposited.
Electronic transfer might have more safeguards. I am accepting cash for the Decathlon.

Deal is closed. Thanks to all.

I ended up telling the owner I would pull it if he didn't want it. He then said I could keep it- just modify the language a bit. Funny how that works.

In any case- appreciate all the feedback.

FWIW, as soon as a buyer starts dragging in lawyers and unnecessary documentation, I lose interest in dealing with him. You're buying a plane as is/where is. Do your own due diligence and don't ask me to sign paperwork full of legal weasel words.

Contrats on your new plane!

-Cub Builder

stewartb said:

Is it still $10K that triggers the bank having to report cash transactions to the alphabet agencies?

Click to expand...

Yes, 10K cash is still the trigger for banks.

Also, if the seller is in a trade or business, regardless of whether he sells airplanes, he should file IRS form 8300 for cash transactions 10k or over. That includes "structured transactions", like $9000 today and $1000 next week.

From time to time I've had a client want to deal strictly in cash for legal matters. I tell them that I'll have to report to the IRS the source of payments when it goes over 10k. One guy said, "it's cash, nobody will know except you and me."

My response: "that's one person too many. I report my income."

If the seller is not an A&P, IA or DAR etc. how can he certify that the airplane is airworthy? With what authority? "Mr. Jones, you should have known the plane could crash, so why did you state is was airworthy?" He can state that the aircraft has been inspected by an authorized person, and that the person signed it as airworthy. Any good lawyer will go after the seller regardless, but why certify that for which you are not technically qualified? As far as that goes, you're on the hook anytime you rent an airplane? How are you supposed to know that all AD"s have been complied with- sit and read the logs and all paperwork for the 172 you rent here and there? You lose every lawsuit even if just by paying to defend yourself. As far as my 2 cents goes... less is better. I never heard of a P&S for a small airplane until recently. Most people simply paid the money, got an FAA bill of sale that said $1 OVC and that was it. Mission creep. Anyways, Merry Christmas to one and all! :lol:

WhiskeyMike said:

If the seller is not an A&P, IA or DAR etc. how can he certify that the airplane is airworthy? With what authority? "Mr. Jones, you should have known the plane could crash, so why did you state is was airworthy?" He can state that the aircraft has been inspected by an authorized person, and that the person signed it as airworthy. Any good lawyer will go after the seller regardless, but why certify that for which you are not technically qualified? As far as that goes, you're on the hook anytime you rent an airplane? How are you supposed to know that all AD"s have been complied with- sit and read the logs and all paperwork for the 172 you rent here and there? You lose every lawsuit even if just by paying to defend yourself. As far as my 2 cents goes... less is better. I never heard of a P&S for a small airplane until recently. Most people simply paid the money, got an FAA bill of sale that said $1 OVC and that was it. Mission creep. Anyways, Merry Christmas to one and all! :lol:

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And even when an A&AP or IA signs the log book indicating it is airworthy, the moment the pen leaves the page, all bets are off. We sign for the past and present only, not the future.

Every airplane I’ve purchased has been cash and carry so to speak. No agreement, just pay your money and get a signed bill of sale.


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