Prices are market-led. AIR FLEET keeps abreast of the market and can recommend the price that should be paid for a given aircraft, valuing against the competition, advising on current trends, pending issues and best negotiating strategy, also handling or assisting in resulting negotiations with the required technical knowledge and understanding.
Pre-contract, it is important to verify true ownership of aircraft being offered, together with engines, also ensuring that any bank charges and/or other liens and encumbrances are identified so that they may be properly discharged at time of title transfer.
Charges and liens can accrue from past financing, but also maintenance and repair services, unpaid airport charges and navigation fees. Engines may also be leased separately or be subject to further charges from different parties.
The title search is conducted by searching the relevant mortgage registers. In certain countries, including in particular the United States, specialist bonded title search agencies are retained for the purpose.
A standard industry purchase agreement may be used for the purpose of purchasing an aircraft. Key elements are transfer of clear title, in an agreed condition, for an agreed price, on an agreed date, and the proper discharge or release of any liens or charges. The transaction will be subject to the completion of a full and complete survey of the aircraft, its engines and associated records to the buyer’s complete satisfaction.
The price negotiated may include certain required rectification work, verification of status and records, and may be re-negotiated in the light of the resulting survey report. A procedure for accepting the condition of the aircraft at delivery must be established and documented.
Insurance arrangements, particularly an agreed time for transfer of risk, must also be clear.
Funds for the purchase are normally handled by an escrow arrangement in order to protect all parties concerned in the transaction.
Following execution of a purchase agreement, an appropriate, well-known and bonded escrow agent is mutually agreed and formally appointed under strict terms. The escrow agent will deduct its fees from the purchase proceeds on completion.
The seller lodges aircraft registration documents and an executed Bill of Sale with the escrow agent. Any creditors having security over the asset, i.e. the aircraft or its engines, simultaneously lodge agreements to discharge the same against payment of the outstanding amounts from the sale proceeds.
The buyer first lodges a (fully refundable) deposit with the escrow agent to bind the transaction, such held to buyer’s sole order until he or she is happy with the technical survey results of the subject aircraft and thereafter made non-refundable, transferring the balance in time for the agreed completion date.
Upon completion, the escrow agent releases payment to the seller and, where applicable to any other beneficiaries or lien-holders, and title documents, including executed Bill of Sale to the buyer.
The buyer or his representative will simultaneously take physical possession of the aircraft and associated records at an airport location and the aircraft will be registered in the name of the buyer.