If you’re considering buying an aircraft with someone else or becoming part owner of an aircraft owned by a friend or associate, you need a co-ownership agreement. Whether you’ll be using the plane for personal or business travel or some other purpose, certain things need to be included in all co-ownership agreements.
You’ll also want to include provisions specific to your unique situation. That’s why it’s worth the time, effort and money to have legal guidance as you draw up and negotiate it.
The basics
It’s crucial to identify the aircraft clearly in the agreement. That includes the make, model, registration, serial number and other identifying information. The agreement also needs to specify how the title is held. For example, is it joint tenancy, tenancy in common or another type of legal arrangement?
It’s wise to include some language around all parties agreeing to operate the aircraft per Federal Aviation Regulations (FARs) and perhaps how any alleged violations and penalties will be handled.
How expenses are shared
Typically, private aircraft have fixed expenses, like insurance and hanger fees, as well as operating expenses, like fuel and maintenance. You’ll want to specify how these are split. That may be based on how many hours per week or month each party flies the aircraft, for example.
It’s a good idea to include a provision about how to determine if and when upgrades are made to the aircraft. Do all co-owners have to agree to an upgrade (like new upholstery, paint, improved systems and so forth) and share in the cost or can one owner decide and pay for it on their own?
Use of the aircraft
A co-ownership agreement should include provisions about things like:
- Who is authorized to fly the aircraft
- How scheduling use of the aircraft will be arranged
- Whether each party is allowed to use the aircraft a specified number of days per week, month or year
You can include other restrictions as well – for example, involving who can ride in the plane and where it to go
Selling the aircraft
You’ll likely want to address how a sale will be handled. For example, do all owners have to agree to a new co-owner if one party wants to sell their share?
These are just a few things that are typically addressed in a comprehensive co-ownership agreement for a private aircraft. This is a big and complex investment. It’s smart for each party to have their own individual legal guidance to protect their rights and interests.