Question on Airplane Purchase

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jpflysdfw

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JpFlys-DFW
I'm about to close the deal on my first airplane purchase and am looking for advise of those of you who have done this before. The buyer has requested payment via wire transfer. The idea of an irrevocable transaction, in advance of the airplane in hand, is making me a little nervous. My suspicions are the buyer doesn't want the delay of associated with a bank check actually hitting his account but the notion of potentially transferring money in advance of handing over the keys and signing the 8050 is a bit unsettling. Admittedly, I'm probably being a bit paranoid, as the buyer has not done anything specifically to make me suspicious. Still, I'm interested in protecting myself regarding a fairly sizable chuck of money. Since I'm not aware of a means to wire money in a way that explicitedly creates a permanent and/or official record that the transfer is was solely was the purchase of that airplane. I'm seeking advise those of you who have gone through this one or more times in the past. How have you guys gone about the actual funds transaction portion of buying the plane? Wire and blind faith, go to the bank after you have signed 8050, bank check, certified check, cash, use a third party or . Again, I apologize for an obviously newbie question but I expect several of you have gone through this before and can share lessons learned so im solicit a bit of coaching, to make sure I get this right. Thoughts? Jeff
 
You can call and initiate the wire while he is standing there and he hands you the keys at the same time. He can call and verify receipt. You don't do it in advance without signed bill of sale.


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And of course completed prebuy inspections!


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Use a aircraft escrow agency. There are several in Oklahoma City, where the FAA aviation registry office is located. The seller has no right to expect payment until title is secure in buyers name.
 
gsengle said:
And of course completed prebuy inspections!


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Thanks, I was able to get a prebuy done, send off and receive an oil analysis and just received the CD from FAA yesterday with all the registration and AW records. Now it primary down to the final transaction to transfer dollars and the airplane. I guess I hadn't considered doing it over the phone, thanks for the quick and helpful.
 
I don't have any experience with any specific company, but there are escrow services that handle this kind of transaction. If you know a business attorney, they would have a recommendation for one they trust.
 
Make sure you're not exceeding your banks wire limits in advance for your account. Ask me how I know...


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GRG55 said:
Use a aircraft escrow agency. There are several in Oklahoma City, where the FAA aviation registry office is located. The seller has no right to expect payment until title is secure in buyers name.
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Great intel. This is intriguing though I don't actually have any experience with this. I assume this means I'm committing the money through escrow and he doesn't receive it until the transfer. Are you saying he doesn't get the money until FAA has received and recorded his signed off registration? How does that actually work with FAA in the equation?
 
Frogs97 said:
I don't have any experience with any specific company, but there are escrow services that handle this kind of transaction. If you know a business attorney, they would have a recommendation for one they trust.
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Thanks, I take it that's a TCU handle? What airport are you flying out of?
 
I bought a truck and made the payment with a three way call to my bank and the seller. He gave the teller his account info and I approved the transfer while we were all thousands of miles apart. If you have a good relation with your bank they should be able to accommodate something like this.
 
jpflysdfw said:
Great intel. This is intriguing though I don't actually have any experience with this. I assume this means I'm committing the money through escrow and he doesn't receive it until the transfer. Are you saying he doesn't get the money until FAA has received and recorded his signed off registration? How does that actually work with FAA in the equation?
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The escrow agency acts as an intermediary to protect both buyer and seller. The seller knows you are good for the funds because you wire them to the escrow agent to hold in trust. The buyer knows their funds will not be released until seller has completed the documents needed to legally transfer ownership and re-register the plane.

Google "aviation escrow agencies" and give any one of them a call after the weekend.
 
jpflysdfw said:
Thanks, I take it that's a TCU handle? What airport are you flying out of?
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That it is. I have a Cherokee 140 out at Bourland.

I was going to let you get answers to your initial question before bringing the hammer down for not bringing any details and pictures along with the post. But just know there will be hell to pay on here if we don't get plane details, home drome ... your basic plane porn stuff ... in short order!
 
How much are we talking about here? IMHO, escrow is a waste of time and money for "smaller" transactions (anything under $75-100k). Remember, once the money is in the escrow agents hands, you're NOT getting it back unless both sides instruct the escrow agent to release it to you. If there is any dispute, you're going to Court to get your $$ back.

Assuming you've given the seller no reason to believe you're untrustworthy, a reasonable seller should accept a certified/cashier's/teller's check from your bank. Airplanes, and other expensive items, are routinely bought and sold using certified checks. Wire transfers cost money to initiate, take time to process and verify, and are only available during banking hours. What if you end up needing to close on Saturday afternoon, on Sunday, or of an evening? I recently bought a plane and paid with a certified check from my bank. No issues at all. I'd be irritated, and likely somewhat uncooperative, if a seller insisted on a wire transfer.
 
It is customary to use an aviation escrow company to protect both parties to the transaction. They also do a lien search and coordinate that any existing lien gets paid off prior to the seller receiving the remainder. They are cheap. I would be weary of a seller who has 12 different reasons why he needs a wire.
 
jpflysdfw said:
The buyer has requested payment via wire transfer.
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You are the buyer you control the payment. Bring a bank check and make the transfer in person. If he balks, then go elsewhere for your aircraft. Why pay escrow fees for a small amount of money?
 
I apologize but I've read the OP's post a couple of times but I'm not following it. Who is the buyer and who is the seller?
 
bradg33 said:
How much are we talking about here? IMHO, escrow is a waste of time and money for "smaller" transactions (anything under $75-100k). Remember, once the money is in the escrow agents hands, you're NOT getting it back unless both sides instruct the escrow agent to release it to you. If there is any dispute, you're going to Court to get your $$ back.

Assuming you've given the seller no reason to believe you're untrustworthy, a reasonable seller should accept a certified/cashier's/teller's check from your bank. Airplanes, and other expensive items, are routinely bought and sold using certified checks. Wire transfers cost money to initiate, take time to process and verify, and are only available during banking hours. What if you end up needing to close on Saturday afternoon, on Sunday, or of an evening? I recently bought a plane and paid with a certified check from my bank. No issues at all. I'd be irritated, and likely somewhat uncooperative, if a seller insisted on a wire transfer.
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Yeah, dude... what kind of broke chump would screw around with pocket change like a hundred grand and waste everyone's time with an escrow company? I can't imagine what it's like to be so door dirt poor and greasy like that! Anyone who cares about that piddly amount must not have enough to just replace that lost money with more from Daddy, ya know? Man, I hate poor people. They're so...... poor!

Add me to the list of people who recommend using escrow for this transaction.
 
Here is one way:
Seller signs the bill of sale in the buyer's presence and puts it on the seat of the airplane. Buyer makes the phone call to wire transfer the money. Seller calls his bank to confirm transfer. Seller turns over the the airplane, all keys and bill of sale to the buyer.
 
Escrow service or wire transfer via telephone both are fine. Otherwise what I did was to provide a bank check for the funds, take possession of the keys, but leave the plane at the tie down for a couple of weeks while I made arrangements to fly it to my A&P. Of course I insured the plane as soon as the check left my hands, so that covered me. But for peace of mind, escrow service is cleanest and will help ensure all registration paperwork is done and filed properly.
 
bradg33 said:
How much are we talking about here? IMHO, escrow is a waste of time and money for "smaller" transactions (anything under $75-100k). Remember, once the money is in the escrow agents hands, you're NOT getting it back unless both sides instruct the escrow agent to release it to you. If there is any dispute, you're going to Court to get your $$ back.

Assuming you've given the seller no reason to believe you're untrustworthy, a reasonable seller should accept a certified/cashier's/teller's check from your bank. Airplanes, and other expensive items, are routinely bought and sold using certified checks. Wire transfers cost money to initiate, take time to process and verify, and are only available during banking hours. What if you end up needing to close on Saturday afternoon, on Sunday, or of an evening? I recently bought a plane and paid with a certified check from my bank. No issues at all. I'd be irritated, and likely somewhat uncooperative, if a seller insisted on a wire transfer.
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A certified cheque is as good as cash once the seller has possession of it. I like to believe that most people are trustworthy. But unfortunately not all.
So what do you suggest if there are any issues getting the aircraft ownership transferred and the seller is uncooperative, after he has your money? Or do you expect a seller to transfer ownership and registration before you give them the certified cheque?
 
Frogs97 said:
That it is. I have a Cherokee 140 out at Bourland.

I was going to let you get answers to your initial question before bringing the hammer down for not bringing any details and pictures along with the post. But just know there will be hell to pay on here if we don't get plane details, home drome ... your basic plane porn stuff ... in short order!
Click to expand...
Ha! Point taken.. Since I didn't yet have an airplane, I wasn't going to torture all of you by posting my mugshot Will be initially hangered at GPM but looking to find something a bit further north, ala 52F, DTO or T67. Will get a pic loaded once I'm the actual owner.
 
Lachlan said:
Yeah, dude... what kind of broke chump would screw around with pocket change like a hundred grand and waste everyone's time with an escrow company? I can't imagine what it's like to be so door dirt poor and greasy like that! Anyone who cares about that piddly amount must not have enough to just replace that lost money with more from Daddy, ya know? Man, I hate poor people. They're so...... poor!

Add me to the list of people who recommend using escrow for this transaction.
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Thanks for the recommendations. Do any of you have a positive experience with a particular escrow service?
 
I've done aircraft purchases two different ways, both mentioned above: certified check, and wiring the money. With the certified check, I just had the guy google my bank's phone number (so he knew for sure he was getting their number, and not a fake number that I might provide if I was scamming him). Then the seller called my bank, ensured the funds for the check were there and good, and we were all set.
When I wired the money, it did not go smooth at all, but it was 100% the fault of my small (perhaps too small) credit union...they have only one person that does the wires at the bank, and she was apparently overworked with other things...they said the funds would be wired at 11 a.m., and the seller got paid about 6 pm, which left us standing around for 7 hours.
 
Yeah, some people can't be trusted. Here's one example:
The guy that told me this was a mechanic and he told me the story while we anualled my plane. This guy owned an FBO. He had a doctor that owned a Cessna twin 337 and the doc asked him to sell the plane for him. So he finds a buyer and the buyer says ok, deliver it up to Minnesota from New Mexico. So the FBO owner has one of his instructors deliver it and tells him to pick up the certified check. The instructor does that. Instructor comes back on airline and gives the envelope with the check in it to the FBO guy. FBO guy takes the check out and its the CARBON COPY ONLY! So he calls the buyer and says "we have to talk about how to get me the check for the plane". And the seller says "No, what we are going to talk about is HOW MUCH I'm going to pay for this plane!!!!!!!!!!!!!!"
(theres an end to this story if you want to hear it)
 
The last couple of times I bought and sold used cars around here, I was required to do a wire transfer because apparently there have been a lot of fraudulent certified checks. My bank suggested I also use a wire transfer to receive the money rather than certified check.

How much does an escrow service charge?
 
Wire transfer is the best. Its almost instantaneous. Doesn't cost much. Escrow is a hassle IMO. And you never know how solvent the escrow company is. Given a choice, Id rather have it all in my control. Once youve done a Title Search and verified there are no prior unreleased liens. Seller with Bill of Sale and cellphone in hand, me with cell phone in hand. All done right there in front of the hangar. Still the best way!
 
coloradobluesky said:
Yeah, some people can't be trusted. Here's one example:
The guy that told me this was a mechanic and he told me the story while we anualled my plane. This guy owned an FBO. He had a doctor that owned a Cessna twin 337 and the doc asked him to sell the plane for him. So he finds a buyer and the buyer says ok, deliver it up to Minnesota from New Mexico. So the FBO owner has one of his instructors deliver it and tells him to pick up the certified check. The instructor does that. Instructor comes back on airline and gives the envelope with the check in it to the FBO guy. FBO guy takes the check out and its the CARBON COPY ONLY! So he calls the buyer and says "we have to talk about how to get me the check for the plane". And the seller says "No, what we are going to talk about is HOW MUCH I'm going to pay for this plane!!!!!!!!!!!!!!"
(theres an end to this story if you want to hear it)
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Does it include an offer he couldn't refuse?
 
OK. Now for the REST of the story. First of all, don't do it this way. Relying on your instructor to pick up the Cashiers check is not a good idea. And yes, Cashiers checks can be forged (pretty easily). Use wire transfer instead of Cashiers Check. Good to be in good with the bank president too.

What happened next is the FBO guy called the doctor (worst call of his life he said). Doctor called the president of His bank. President of His bank called the president of the buyers bank and that guys said "Oh, I know him. He can't do that. We'll treat it like a lost check and issue another" (guy HAD the money in the account thank God). So it worked out OK. But it might not of.

The most common problem is not discovering previous unreleased liens (usually the loan has been paid off but the lien wasn't properly released). Don't panic, these can be cleared up, but it costs money and takes time.

Another way to lose out is if the seller sells the plane twice. That can happen because the new sale hasn't been recorded yet. Thats happened but its rare. Thats why its important to take possession of the plane immediately.

No matter what you do, the parties have to trust each other somewhat. Even wire transfer can be unwound if its fraudulent funds behind it. Its happened. What are you going to do, demand gold?
 
GRG55 said:
A certified cheque is as good as cash once the seller has possession of it. I like to believe that most people are trustworthy. But unfortunately not all.
So what do you suggest if there are any issues getting the aircraft ownership transferred and the seller is uncooperative, after he has your money? Or do you expect a seller to transfer ownership and registration before you give them the certified cheque?
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If you've done your homework ahead of time, there won't be any issues getting ownership transferred. By homework I mean lien searches, etc. The seller should sign the bill of sale simultaneously with delivery of the check. If there's a lien on the plane, that's another matter. In that case, the buyer should be sending the proceeds directly to the lienholder (based on a recent payoff statement), not relying on the seller to pay it off.
 
coloradobluesky said:
The most common problem is not discovering previous unreleased liens (usually the loan has been paid off but the lien wasn't properly released). Don't panic, these can be cleared up, but it costs money and takes time.
Click to expand...

I bought Title Insurance for both my airplane purchase (as well as my homes, etc). It is inexpensive, and if a lien pops up later, they will cover it. I highly recommend it.
 
Lachlan said:
Yeah, dude... what kind of broke chump would screw around with pocket change like a hundred grand and waste everyone's time with an escrow company? I can't imagine what it's like to be so door dirt poor and greasy like that! Anyone who cares about that piddly amount must not have enough to just replace that lost money with more from Daddy, ya know? Man, I hate poor people. They're so...... poor!

Add me to the list of people who recommend using escrow for this transaction.
Click to expand...

You completely missed my point. For smaller transactions, a cashier's check is a pretty practical way to pay. When the transactions start to get very large, banks will get a little more hesitant to issue a cashier's check. Larger transactions also tend to get a little more complicated in terms of making sure all conditions are satisfied (deposits are larger, pre-buys are more complicated, etc.). Escrow services are also usually several hundred dollars ($500 is about the norm of <$100k transactions). I'd rather spend that money on gas than on some third party to hold the money and make the transaction a hassle. For smaller transactions, $500 can be a decent percentage of the sale price; for larger ones, it's nothing more than a rounding error.
 
Anthony said:
I bought Title Insurance for both my airplane purchase (as well as my homes, etc). It is inexpensive, and if a lien pops up later, they will cover it. I highly recommend it.
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Thanks Anthony, I'm embarrassed to admit, I hadn't thought of that. I see your a Grumman guy....I'll soon be picking up a Tiger. Any recommendations regarding who you used for title insurance?
 
Mtns2Skies said:
Cash?
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I sold my plane yesterday. Buyer came with cash, I signed the paperwork and he took it away. Of course it was under $10K, which made that a little more reasonable.

The plane I just bought, I wrote a personal check and he signed the bill of sale... but I was leaving the plane in his hangar for a month until I could pick it up, hopefully next week.
 
Dana said:
I sold my plane yesterday. Buyer came with cash, I signed the paperwork and he took it away. Of course it was under $10K, which made that a little more reasonable.

The plane I just bought, I wrote a personal check and he signed the bill of sale... but I was leaving the plane in his hangar for a month until I could pick it up, hopefully next week.
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Congrats on selling the FP404! :)
 
I remember just writing a check and handing it to the seller for my plane. We signed a few papers and shook hands and it was done.
 
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