Aerlex Law Group

Why Aircraft Buyers Should Show Up for the Closing of their Purchase

07 July 2016Why Aircraft Buyers Should Show Up for the Closing of their Purchase — Originally published in BusinessAir Magazine, July 2016, Volume 26, No. 7.


Deal after deal, there seem to be reasons why NOT being at the delivery location makes sense to buyers. The aircraft is going into immediate refurbishment or paint at its current location; no one is available on the day of closing to go to the delivery location; the aircraft will be flown to where the buyer is located in a few days when a crew is available; or the closing location isn’t conveniently located.

Regardless of the reason and to some extent the cost, the buyer – or at the very least, a buyer’s representative – should be at the closing. First, the aircraft purchase agreement usually requires that the aircraft be in a certain condition at closing, and the buyer is required to sign a delivery receipt which typically states the aircraft is in the condition required. How can the buyer verify the aircraft’s condition if the buyer or representative is not at the delivery location? Has the loose equipment that is being sold with the aircraft been inventoried, and is everything accounted for? Even if the aircraft has been on the ground in the same location since the conclusion of the pre-buy, damage on the ground occurs often enough that a walk-around before purchasing and signing the delivery receipt is warranted.

Additionally, states are becoming more aggressive on sales and use tax collection and more inclined to scrutinize and audit claims for sales and use tax exemption. Having a delivery receipt signed by the buyer or the buyer’s representative and notarized at the delivery location at the time of delivery can help support the tax plan put into place to minimize tax liability.

When building the team of individuals to help acquire an aircraft, the buyer will likely hire a broker and/or technical representative. If the buyer doesn’t personally plan to be at the delivery location for closing, a team member should be identified as the delivery agent, and this responsibility should be spelled out in the services contract for this individual when hired. Ideally, the person at the delivery location should have some knowledge of the technical aspects of the aircraft and be able to confirm that the delivery conditions have been met. On the day of closing, the delivery agent should be provided with a checklist of items to verify on the aircraft. The checklist should include items such as the inventory of loose equipment being sold with the aircraft, final log entries and need for final airframe and engine times to be entered onto the delivery receipt.

Even if the purchase agreement is an “as is” sale with no delivery conditions or pre-buy, the buyer still needs a presence at the delivery. This is necessary to make sure the records are all with the aircraft and arrangements are made to get the records to where the aircraft will be hangared by the new buyer.

Please contact Amanda Applegate at 310-392-5200 or