Acquiring an airplane can be an exciting moment for either a business or an individual. Whether someone with a private pilot license wants their own plane to pursue their current favorite hobby or a business that offers aviation-based services wants to expand its fleet, acquiring an airplane is a major investment that could create a number of valuable opportunities. It can also be a time when a buyer is exposed to a great deal of risk, which they may largely ignore.
Particularly when the timing or price for a listed plane seems like a perfect opportunity, enthusiasm may overshadow someone’s natural sense of caution when contemplating a major transaction. Yet prospective buyers should never let their enthusiasm prevent them from engaging in proper due diligence when buying an airplane. These are just a few of the reasons why research is an important part of making a plane purchase.
There could be title issues
Purchasing an airplane could lead to legal challenges if there are liens against the plane or other issues that will prevent someone from becoming its lawful owner. Service providers and even fuel companies can sometimes secure liens that give them precedence over buyers and other parties with a potential interest in an airplane.
There could be latent defects
Although thorough disclosures are typically a key component of any airplane sale transaction, there are some people who will misrepresent the condition of a specific airplane to sell it more quickly or for a higher price than it warrants based on its condition. There are also countless others who may be unaware of issues with the plane when they list it for sale.
Hidden or latent defects may not show up during inspection, which means that if they are not on the disclosure paperwork provided by the seller. The buyer may purchase an airplane in far worse condition than they anticipate. Although it is sometimes possible to take sellers or the professionals that represent them to court over the misrepresentation of a plane’s condition, the process can be lengthy and can further increase the investment required from the new owner.
Being very thorough about due diligence and seeking legal guidance can, ultimately, help reduce the level of risk involved in an airplane purchase transaction.