An Aircraft Bill of Sale is an essential document that acts as evidence of the sale transactions of airplanes between a seller and a buyer.
This document records the private details of the sale of civilian-owned and non-commercial aircraft.
Other names for an aircraft bill of sale:
- Airplane bill of sale
- Plane bill of sale
- Aircraft purchase agreement
Just like any other ‘bill of sale,’ the aircraft bill of sale is a document that shows the change of ownership of an aircraft from one person to another. It contains all the details that pertain to the aircraft and the transaction in question. It represents a shift in the ownership of the aircraft in question. More to that, the document also displays the transaction costs involved, any taxes, and the associated liabilities (if any). The document may also be used to argue court cases should such arise later.
What is the purpose of “bill of sale” ?
An aircraft bill of sale has different purposes. Some of the reasons why this document is prepared are listed below:
- An aircraft bill of sale is evidence of a buyer (new owner) and the amount of money they paid to receive the airplane’s ownership.
- An aircraft bill of sale is an essential document for the registration process after the buyer gets the airplane.
- An aircraft bill of sale also legalizes and indicates the sale of an aircraft.
NOTE: After the sale transaction is done, the buyer (new owner) must register the airplane to finalize the transaction. According to the Federal Aviation Act (FAA), the aircraft bill of sale is an essential document for this process.
Selling a Plane
To sell an aircraft, there are six steps involved for the process to be complete and legal. Here are the steps of selling a plane:
Establish the plane’s value
Just like a lot of thought is put into establishing the price of a used vehicle, many factors are also considered before determining the price of a used aircraft. Unlike the use of mileage in vehicles, the price of an aircraft is more than just checking the flight hours. Some of the other factors considered before determining the value of the plane include:
- Engine hours- If the engine records more usage hours, then the value of the aircraft will depreciate. If the plane’s engine is in a state that needs its scheduled maintenance, then the overall price of the plane will reduce even further.
- Maintenance records- To get a better deal when selling an aircraft, they need to have well-kept records of all scheduled maintenance the plane has received.
- Equipment/technology- Aircraft with the latest and upgraded type of technology and equipment tend to get better price offers as their value appreciates compared to older types of airplanes with outdated technology/ equipment that require upgrading.
- Airworthiness directives- If the plane on sale has any pending airworthiness directive, then the value and price will lower. Airworthiness directives are not issued by manufacturers like “recalls” but by the FAA. Directives are issues related to the plane’s safety that determine if it is “worthy of being on air.”
- Whether it is the buyers’ or sellers’ market, the plane’s value will go higher if the particular aircraft is in great demand based on its make and model. The seller is likely to make higher pricing of their aircraft in such a situation.
Learn the Types of Appraisals in Varying Intensity
For those airplane sellers who do not have the art and experience of the process involved in selling a plane, getting a place appraiser would be the right thing to do. Based on the Aircraft Owners and Pilots Association, here are the three types of appraisal. They vary in intensity and have been listed, starting with the simplest one.
- Pricing Digest Valuation- This type of appraisal is free of charge. It involves using an online tool, the “VREF” Aircraft value reference tool, to get an estimated price of an aircraft. The owner of the plane or seller will be required to enter the model, year, make, and even the airplane’s manufacturer to determine the value of their plane.
- Desktop Appraisal- The cost of this type of appraisal ranges between $500 and $600. For this appraisal, an actual appraiser is hired to conduct it. The appraiser analyzes the aircraft’s current market data against any improvement made to the plane after it was first purchased to determine its value and estimated price. The analysis, however, is not conducted in person.
- Physical or In-person Appraisal- This type of appraisal is conducted for unique and expensive aircraft like jets. This appraisal costs $2000 to $3000. An appraiser inspects the plane him/herself and estimates the plane’s value based on factors surrounding the aircraft’s worth.
Use a Broker or Go Online
Choosing to use a broker is not necessary. However, it is safe and wiser to have help from an experienced individual when selling a plane. Brokers of aircraft generally do not have official certification. When choosing a broker, one should look at their experience and their history of selling planes.
Before picking a particular broker, here are some valuable questions to ask:
- The methods they use to market a plane on an online platform
- The kind of reach they have on their online platform. This is essential if the plane is to be sold in another country.
- If they have sold other planes similar to the one that needs to be sold
- The qualifications they have
- The amount they charge for their services
- The average time length they take to sell a plane
At this step, the buyer has been found, and negotiations can start. A buyer may choose to put a deposit down before the final purchase is done. For this deposit, the buyer must establish if the deposit is refundable or non-refundable. The terms that determine the conditions for the deposit to be refundable should also be well-known by the buyer.
A pre-purchase inspection will be requested for a serious buyer, and it may take up to one hour or more to complete the inspection process. The time of length taken to conduct the inspection depends on the plane’s size and request for thoroughness.
Completing the Bill of Sale
When it comes to completing the selling process, this is an essential and crucial stage. Both the buyer and seller should uphold the laws and rules to ensure that the transaction is finalized and legal. After the seller receives the complete and agreed-upon funds of the airplane, both parties, the seller and the buyer, should now come together and sign the aircraft bill of sale.
The contract should be signed in copies. First, the buyer should sign the original bill of sale to finalize the sale transaction and transfer ownership of the plane. Second, the buyer should sign an additional copy for the registration process of the aircraft based on the FAA rules. Lastly, the seller can retain a signed copy, if they want to, as proof of the sale and complete transactions.
The seller can make the transaction process faster by completing the bill of sale before the signing time. For a bill of sale to be complete and legally usable by the buyer for the registration of the plane, then the contract should contain the following information:
- The date of the transaction/sale
- The full names and addresses of the buyer and seller of the aircraft
- Details of the aircraft, including
- Registration number
- Serial number
- Year of manufacture
- The agreed-upon and the total price of the airplane on sale
- The date was chosen for the delivery of the plane after the purchase happens
- The deposit required (whether refundable or non-refundable)
- A dealer’s certificate number, in case a dealer was used to facilitate the sale of the plane
- The length of time (a usually certain number of days) required for the inspection
- The State or jurisdiction that the sale of the plane is occurring
- The signature of both parties, that is, the buyer and the seller and witnesses
The aircraft bill of sale is legal and usable when the funds have been transferred, and both parties have signed it. Although not a requirement by the FAA, the bill of sale can be notarized. Notarization makes the contract more legitimate and might be a requirement in some states.
The aircraft bill of sale form has various titled sections that both the buyer and the seller must read and agree to before signing this form. These sections include “Inability to Perform, Taxes, Assignment, Notice of Parties, Laws, Waiver, and Severability.”
Transferring the aircraft
After the sale has been completed and the bill of sale signed, the seller should now transfer the airplane to the buyer (new owner). The seller will successfully transfer the aircraft through these steps:
- First, using the aircraft’s registration, the seller should fill and complete all the fields related to selling and then mail it to the FAA.
- Second, the seller should then get rid of the aircraft’s insurance.
- Thirdly, if the seller has an FCC radio license in the airplane they are selling, it should also be removed.
- The last step involves handing over all the logbooks and essential records of the aircraft being sold. These records will be necessary for future scheduled maintenance.
NOTE: For the buyer (new owner) to obtain a new registration, they will need to mail an AC Form 8050-1.pdf to the FAA’s office in Oklahoma.
Recording Requirements of Federal Aviation Act (FAA)
Based on the FAA rules (Federal Aviation Act), the buyer of the aircraft must provide proof of purchase, ownership, and registration of the newly acquired aircraft. The buyer can use the completed and signed aircraft bill of sale form for proof of purchase.
For evidence to show ownership of the aircraft, the buyer can deliver the current registration form of the seller of the airplane (previous owner) to the FAA. Also, the buyer should deliver any past bill of sales to indicate the chain of ownership, if any, of that plane.
Some funds should be delivered to the FAA when filing the AC Form 8050-1 to complete the registration process for proof of registration.
How to register your plane with FAA?
Following are some steps one can follow in order to register the plane with FAA:
- Complete AC Form 8050-1: Start off by completing this AC Form 8050-1. You will have to download it from the Federal Aviation Administration website
- Send original registration certificate: After filling it, you have to send it alongside the original registration certificate of your aircraft. These two, you send to the headquarters of the US agency. Its address is:
- Pay the mandatory registration fee: Now pay the mandatory registration fee. This costs $5 but may change with time. Use the same address if you use the US Postal Service as your preferred means of payment.
- Provide proof of purchase: The application will be assessed. If found successful, you will now be asked to provide proof of the purchase of the said aircraft. To do this, you will furnish the receipts, tax forms, and other documents which are used in effecting such purchases.
- Generate a temporary registration form: Make your copy of the AC Form 8050-1. It will act as your temporary registration form before receiving your official registration from the aviation regulator. After some duration of time, the regulator will call to inform you of your new original registration form.
An Aircraft Bill of Sale form is an essential document that acts as evidence of a sale transaction of a civilian-owned plane and indicates the transfer of ownership from the seller to the buyer. This document contains certain critical information that should not miss for the contract to be legal and complete. Read more about these details in our article.
Anyone seeking to buy or sell a plane should learn more about an aircraft bill of sale from our article to ensure they sell or buy a plane based on the legal requirements of the FAA (Federal Aviation Act).