Understanding the current condition of an aircraft is important when negotiating a purchase and sale transaction. Those looking to acquire a private aircraft or to expand a small commercial fleet may choose to purchase a pre-owned aircraft on the global market which are usually much less expensive that a factory new model. Individuals and businesses buy and sell aircraft for both personal and business reasons. When a particular aircraft seems to fit a buyer’s budget and overall transportation needs, they need to plan how to make an offer. Once it is made, negotiations with the seller usually follow.
The law in most places requires sellers to make thorough, good faith disclosures regarding the condition of the aircraft to prospective buyers. However, buyers must also exercise due diligence in carefully evaluating the aircraft, its condition, logbooks and maintenance history to ensure that they are not walking into an expensive trap for the unwary. Professional sellers know that the mechanical condition and appearance of the aircraft will directly influence the level of buyer interest, so they will normally take steps to ensure that the aircraft is in good marketable condition before publishing it on the market. Less professional sellers may take steps to conceal or minimize the mechanical condition and appearance of the aircraft or its maintenance history.
Only a thorough, professionally managed pre-purchase inspection and logbook review overseen by an experienced aircraft engineer or technician working for the buyer will provide the buyer with the most accurate information about the condition of the aircraft of interest, and its likely expense of ownership and operation into the future.
Buyers pay for inspections, Sellers pay for repairs
While good faith disclosures are legally mandatory in most places for an aircraft transaction, pre-purchase inspections are not required. They are only provided when a buyer requests one, and specifies the scope and detail of that inspection in advance. This is typically a buyer’s expense, and they choose the service center where the inspection is to be performed. Experience, expertise with the productline and quality of work are often the most important considerations when choosing a service center to thoroughly inspect an aircraft prior to the closing on the transaction.
Inspection cost: what’s reasonable?
Every aircraft service center sets their own rates for the work they do. Some are facilities of the same company which designed and built the aircraft, and others are independent companies who organize and operate their business in their own way. The relative expense of a thorough inspection depends more on the make and model aircraft being considered than on the service center selected. Piston-powered aircraft inspections are typically a few thousand dollars. Turbojet aircraft inspections are typically tens of thousands of dollars.
The scope of a typical pre-purchase inspection involves a thorough review of the aircraft condition, its engines, systems and avionics, as well as a careful review of the logbooks and maintenance records associated with the aircraft. At the conclusion of the inspection, the service center produces a comprehensive report that identifies all “discrepancies” which result in the aircraft airworthiness certificate being no longer valid.
The cost of a pre-purchase inspection is generally minimal when compared to the typical cost of repairing latent conditions which render the aircraft unairworthy after closing. Professionally written Offer Letters and Aircraft Purchase Agreements protect buyers from financial loss when an inspection later reveals airworthiness discrepancies in an aircraft which were not previously disclosed or known.
Having legal and technical support when negotiating an aircraft purchase can protect buyers, and help them take the right steps at the right time. Buyers who chose not to pay for an expensive pre-prchase inspection usually end up regretting that decision bitterly, and pay a much larger repair bill after the closing.