return of deposit?

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stapler101

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stapler101
Short version.
A "buyer" sends a deposit ($1500 on a $30000 deal) on an airplane, agrees on the price, agrees to pay 1/2 of annual and some other items.
The agreement is verbal.
The day the annual is completed the buyer advises that he has decided not to buy the plane.
The decision not to buy was based on finances, not any result of the annual.
Since the deposit was made the seller had cancelled ads to sell the plane and had also told two prospective buyers that the plane was sold.
What, if any, of the deposit should be returned?
 
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Seller should return whatever portion of the $1500 is left after plane is sold. Deductions should be taken for whatever reasonable price reduction is offered to sell the plane, as well as hangar or tie-down fees until plane is sold, whatever taxes become due, and any insurance for not in motion coverage.
 
My unexperienced opinion based on the information provided: None.
 
While verbal contracts can be legal, In the absence of a written contract it depends on whether you can prove that you had a meeting of the minds. If his interpretation was that he got his deposit back if he changed his mind and yours was that he would NOT get his deposit back except under specific circumstances, then you did NOT have a meeting of the mind and therefore there was no contract.

Contract law is rarely about what SHOULD happen, it is about what the contract said. You could keep the money and force him to take you to court to get it back. But what if you lose based on my first statement. Then you lose the deposit AND court costs. Sorry, but next time, get it in writing.
 
If I was the buyer I would not expect any of it back.
 
Bad move by the buyer to send a deposit without a written contract explicitly stating his/her options to back out of the deal.

I wouldn't expect any money back.
Never hurts to ask though...


stapler101 said:
Short version.
A "buyer" sends a deposit ($1500 on a $30000 deal) on an airplane, agrees on the price, agrees to pay 1/2 of annual and some other items.
The agreement is verbal.
The day the annual is completed the buyer advises that he has decided not to buy the plane.
The decision not to buy was based on finances, not any result of the annual.
Since the deposit was made the seller had cancelled ads to sell the plane and had also told two prospective buyers that the plane was sold.
What, if any, of the deposit should be returned?
Click to expand...
 
Common sense says, you send a deposit and a seller withdraws a plane from the market to prepare it for sale to you, you should not expect a refund if you change your mind for any reason other than the failure of the seller to cooperate or of the plane to meet reasonable expectations at inspection.

Inquiring minds might differ, but if someone approached me with a case like this, I'd likely decline to represent them (and I have done, in analogous circumstances).
 
I don't understand why there might be confusion.
What would a deposit be for, if not to 'hold' the asset for the buyer?
Is it not a payment for that service?

Maybe we should start using clarifying terms such as "non-refundable deposit".
 
I would give it back possibly deducting any costs directly attributable to the transaction. I think it is always better to have everything spelled out in a written contract. Just because you can keep the money does not mean it is the right thing to do.
 
stapler101 said:
Short version.
A "buyer" sends a deposit ($1500 on a $30000 deal) on an airplane, agrees on the price, agrees to pay 1/2 of annual and some other items.
The agreement is verbal.
The day the annual is completed the buyer advises that he has decided not to buy the plane.
The decision not to buy was based on finances, not any result of the annual.
Since the deposit was made the seller had cancelled ads to sell the plane and had also told two prospective buyers that the plane was sold.
What, if any, of the deposit should be returned?
Click to expand...

$0 should be returned
 
I believe there is usually a "cooling-off/buyer's remorse" period (in real estate transactions anyway) of a couple of days during which the deposit is returned in full. Unfortunately, the agreement was oral so there was probably no written agreement

The deposit was to hold the airplane pending the outcome of the inspection and preclude sale to another buyer in the interim. Since the decision not to buy was not the result of deficiency in the aircraft, I think that the seller owes the prospective buyer nothing.

Legal eagles may disagree.
 
The buyer should realize he was foolish to send any kind of deposit to anybody other than an escrow company with respect to an airplane deal. But since penny-wise pound-foolish is the order of the day in most of these deals, whatever he gets is whatever he gets.
 
tparsons said:
Since the decision not to buy was not the result of deficiency in the aircraft, I think that the seller owes the prospective buyer nothing.
Click to expand...

This is what I based my earlier comment about expecting $0 back. If there was a problem with the plane I might expect some back.
But I would expect an understanding about the deposit before I sent it. Even if just a verbal agreement.
 
My first response would be to do whatever it says in the signed sales contract. Absent that, I'd say whatever the two parties agreed to verbally when they originally shook on the deal. If they didn't consider this possibility, I'd say seller keeps the deposit unless there's state law to the contrary regarding such transactions in the state where the deal was made.

I'd also say they're both fools (and the buyer the bigger fool) for entering a verbal deal and handing over money without an agreement (preferably in writing on advice of counsel to both parties) on such matters.
 
stapler101 said:
Short version.
A "buyer" sends a deposit ($1500 on a $30000 deal) on an airplane, agrees on the price, agrees to pay 1/2 of annual and some other items.
The agreement is verbal.
The day the annual is completed the buyer advises that he has decided not to buy the plane.
The decision not to buy was based on finances, not any result of the annual.
Since the deposit was made the seller had cancelled ads to sell the plane and had also told two prospective buyers that the plane was sold.
What, if any, of the deposit should be returned?
Click to expand...

You really need to ask expert legal advice, not strangers on the Internet. That said, it looks like both parties made mistakes:
1) No written contract.
2) Seller mistakenly believed the airplane was sold simply because he or she had an earnest money deposit.

It is not the fault of the prospective buyer that the seller told other prospects the plane was sold when it was not.

Did the buyer pay half the annual or was that supposed to come out of the earnest money deposit?
 
Here is a lender's sample agreement:
8. If, for any reason, the Buyer is unable to pay the price of the Aircraft, as specified in this Agreement, the Seller shall return all documents to the Buyer except for the deposit which shall be retained as liquidated damages.
http://www.1st-of-pryor.com/aircraft_purchase.htm
 
I can't see how there wouldn't be confusion.
Click to expand...


It appears the days of the practical man with a lick of common sense are well and truly behind us.

If you are buying something, you do not send the seller a wad of cash for safe-keeping. Hint - that's what a bank is for.
 
JOhnH said:
While verbal contracts can be legal, In the absence of a written contract it depends on whether you can prove that you had a meeting of the minds. If his interpretation was that he got his deposit back if he changed his mind and yours was that he would NOT get his deposit back except under specific circumstances, then you did NOT have a meeting of the mind and therefore there was no contract.

Contract law is rarely about what SHOULD happen, it is about what the contract said. You could keep the money and force him to take you to court to get it back. But what if you lose based on my first statement. Then you lose the deposit AND court costs. Sorry, but next time, get it in writing.
Click to expand...

One question that I have not seen asked yet: Has the buyer ASKED for his deposit back? This whole discussion may be irrelevant. Perhaps he realizes that he should forfeit it. Even if he asks for it back he may not really expect it.
 
I've put a deposit on a plane with no contract. It wasn't a million dollar deal and it was a local plane. The seller agreed to fly the plane to a place for inspection and he would pay for anything that was an airworthyness issue. I would pay the rest. I would expect the deposit back if he didn't deliver the plane or pay for the issues that affected airworthness. Otherwise, which seems to be the case here, I'd expect the seller to keep the deposit. I had a broker involved and this was all discuss among the three of us before I wrote a check.

On my next bird, which was more expensive, I did have a written agreement, but the seller was an attorney and HE STARTED IT!! :)

In the end, I wouldn't make a deposit without trusting the seller or having a written agreement. And, it wouldn't be an amount that was more than a couple hours of flying time in the plane that I wouldn't worry about if dealing with a bad actor. Might be the cheapest part of having dealt with that fella and his plane if that's the way he is.

Best,

Dave
 
A deposit on anything is a good faith payment by the depositor, that they intend to complete the transaction. Good faith money (deposit) is not expected to be returned, unless clearly stated by both parties at the time the deposit is tendered.

Keep the money.

John
 
Says who?

John Baker said:
A deposit on anything is a good faith payment by the depositor, that they intend to complete the transaction. Good faith money (deposit) is not expected to be returned, unless clearly stated by both parties at the time the deposit is tendered.

Keep the money.

John
Click to expand...
 
My take is that this is really at the sellers discretion.

If I were the seller, I would make the decision to return part or all of it on how much inconvenience it caused me.

Treat the guy fairly, it makes the world a better place to live in.
 
Karma says deduct the agreed upon amounts for what was done and return the rest, that's what I would do. As far as lost time/sales, none of that was a done deal either.
 
wabower said:
Says who?
Click to expand...

This is a perfect example of why a "meeting of the minds" should be specifically agreed to, written down and signed. What one person thinks is obvious, another may not think is obvious at all.
 
I have always thought of deposits to be "earnest deposts." Non refundable if the decision not to buy was the purchasers decision.

Unless there is some extraordinary reason that you feel compelled to break with tradition, I think this is the way it goes.
 
SkyHog said:
I have always thought of deposits to be "earnest deposts." Non refundable if the decision not to buy was the purchasers decision.

Unless there is some extraordinary reason that you feel compelled to break with tradition, I think this is the way it goes.
Click to expand...
That may be true in aviation but I think that at least in some states deposits are usually refundable. Would the annual not have been done if not for the pending sale? Did the seller incur any expenses based on the pending sale? I would probably return the entire deposit unless there were expenses that were the exclusive result of the canceled sale. If the annual was done 6 months early then you can make an argument that part of the annual expense should be paid for by the intended buyer due to the unnecessary expense. An attorney can decide the legal issues but it would not necessarily be the ethical thing to do. Think of it from the buyers perspective. Hopefully next time this will be spelled out in a contract. When I bought my airplane I had the pre-purchase contract changed to make the deposit refundable.
 
stapler101 said:
Short version.
A "buyer" sends a deposit ($1500 on a $30000 deal) on an airplane, agrees on the price, agrees to pay 1/2 of annual and some other items.
The agreement is verbal.
The day the annual is completed the buyer advises that he has decided not to buy the plane.
The decision not to buy was based on finances, not any result of the annual.
Since the deposit was made the seller had cancelled ads to sell the plane and had also told two prospective buyers that the plane was sold.
What, if any, of the deposit should be returned?
Click to expand...

really dumb method of buying any aircraft. IMHO

I don't believe the seller owes the buyer anything, the buyer backed out of the deal for reasons other than what was agreed. the seller took the aircraft off the market and lost 2 buyers, and paid the cost of an annual, and transport fees, If I were the seller in this case I'd keep the money.

this is a good reason I do not take deposits on my aircraft. nor do I remove the aircraft from the market until I have cash in hand/bank
 
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When I ALMOST bought a plane, I had given a deposit and buying it was contingent on the inspection by MY mechanic.
The inspection came out fine, but I changed my mind. I didn't even ask for it back, figured it was MY LOSS since I changed my mind.
The seller DID give me the money back though, because he felt it was the right thing to do.

We had nothing in writing either, all verbal.
 
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