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Buying a Used Aircraft: An Overview
The purchase of an aircraft represents a major commitment that should be approached carefully and cautiously. Nowhere is this more important than when buying a used aircraft. AOPA recommends careful consideration of the following points BEFORE making your purchase. With a little advance planning and legwork, your aircraft purchase can turn out to be an enjoyable experience.
Analyze Your Needs
One of the most common mistakes in purchasing an aircraft is to buy on the basis of impulse without fully considering the effects of your decision. Take the time to analyze your requirements carefully and be realistic. Consider the typical flight loading, trip distance and conditions of flight, then compare aircraft. To avoid the trap of buying more than you need or can use, ask yourself if you really need all the fancy bells and whistles. You can save a bundle by matching your needs and aircraft capability closely. If possible, rent the type of aircraft you are interested in to get a feel for how well it will meet your requirements. Keep in mind that the biggest expense of owning an aircraft is not always the initial purchase price.
Where to Look
Once you have decided on the type of aircraft that will fit your needs, shop around and do some pricing. For retail and wholesale price information, check with AOPA, a bank, financial institution or Fixed Base Operator (FBO) for the latest aircraft bluebook values. There are several good publications available that advertise aircraft for sale. A partial list is included at the end of this material under "Reference Sources." Other sources include periodicals such as AOPA Pilot, local or regional aviation publications, newspapers, airport bulletin boards and your local FBO.
Try to keep your search for an aircraft close to home. That deal halfway across the country might sound good, but when you add the cost of retrieval it may be a different story. If a problem pops up after the sale, you may not find the long-distance seller as willing to help you as someone closer to home. The old adage, out of sight, out of mind, is equally applicable in the world of aviation.
Financing
The amount you borrow will have substantial impact on the total cost of your purchase; therefore, it pays to put some effort into finding the right source of financing. Interest rates on aircraft can vary widely and may reflect a bank's knowledge, or lack of knowledge, about the subject. Check with your local banks, or other financial institutions, to see if they offer aircraft loans and at what rate. Shop around and remember that lowering your rate even one point means a healthy savings over the life of a loan.
Valuation Factors: Vref — Perform an aircraft valuation now
Know the major factors that affect resale value. Generally speaking they are:
• Engine hours — perhaps the most common influence on resale value. The closer an engine is to its recommended time between overhaul (TBO), the less its value. There are many factors that affect engine health, and a high-time engine is not necessarily bad. Equally important is a record of consistent use coupled with a good maintenance program. Regular use helps keep seals and other engine components lubricated and in good shape.
• Installed equipment — such as avionics, air conditioning, deicing gear and interior equipment. The big item here is usually avionics that can easily double the value of some older aircraft. The more exotic the equipment, the more you pay. Also, the older it is the more you pay to maintain it.
• Airworthiness directives — also called ADs. ADs are issued by the FAA for safety reasons and are a fact of life for most every aircraft. Once issued, owners are required to comply with the AD within the time period allotted. What's important is to look at the AD history of an aircraft. Some aircraft have more ADs than others, but pure numbers tell only part of the story. Check the nature of the ADs and whether they are recurring or one-time compliance. Make sure the logbooks show compliance with all applicable ADs. You will find a list of ADs by make and model in the FAA's "Summary of Airworthiness Directives," or you can have a list prepared by AOPA's Aircraft Title Services, Inc. in Oklahoma City.
• Damage history — major repairs can affect the value of an aircraft significantly, but may be hard to pin down. A damage history will decrease the value of an aircraft, depending on the type of accident, nature of the damage and the degree to which major components have been involved. The older an aircraft is, the less the damage history seems to impact its value. Any aircraft with a damage history should be closely scrutinized to make sure it has been properly repaired in accordance with the applicable FAA regulations and recommended practices.
• Paint/interior — used on occasion to give "tired" aircraft a quick facelift. Check new paint jobs carefully for evidence of corrosion under the surface. Interior items should be checked for proper fit and condition. Done properly, both items enhance the value of the aircraft.
Overhauls
Be careful of the terminology used to describe engine condition. Do not confuse a top overhaul with a major overhaul, or a major overhaul with a factory remanufactured "zero-time" engine. A top overhaul involves the repair of engine components outside of the crankcase. A major overhaul involves the complete disassembly, inspection, repair and reassembly of an engine to specified limits. If an engine has had a top or major overhaul, the logbooks must still show the total time on the engine, if known, and its prior maintenance history.
A "zero-time" engine is one that has been overhauled to factory new limits by the original manufacturer and is issued a new logbook without previous operating history. As a general rule, an aircraft with a "zero-time" engine has more value than the same aircraft with an overhauled engine.
Fly Before You Buy
It is always a good idea to fly the aircraft before you make your final decision. During the flight, carefully check all equipment and systems to determine if they are fully functioning. Pay special attention to the operation of communications and navigation equipment, autopilots, and door and window seals.
Pre-Purchase Inspection
Before buying, have a mechanic you trust give the aircraft a thorough inspection and provide you with a written report of its condition. While a pre-purchase inspection need not be an annual, it should include at least a differential compression check on each cylinder of the engine and any other inspections necessary to determine the condition of the aircraft. In addition to a mechanical inspection, the aircraft logbooks and other records should be carefully reviewed for such things as FAA Form 337s (Report of Major Repair or Alteration), AD compliance, the status of service bulletins and letters, and aircraft/component serial numbers. Ideally, the mechanic you select to do the inspection should have experience and be familiar with the problems that may be encountered on that type of aircraft.
Title/Ownership/Liens
Have an aircraft title search done. Don't make the mistake of finding out about a lien after you purchase the aircraft. Title searches and related services are available through AOPA Aircraft Title Services, Inc. A brochure of services is included with this material. Special handling and rush service is available, for an extra fee, on request. Call toll free 800/654-4700 for assistance.
Title Protection
Consider the protection afforded to you by the title insurance. For a nominal fee you can protect yourself from surprise claims against your aircraft's title.
Sales Contract
Once you have decided to buy a particular aircraft, put the terms and conditions of the agreement in writing. This is for the protection of both parties since it is often difficult to enforce verbal contracts. The agreement need not be complicated, but it should clearly state the intentions of the parties and cover any warranties made by the seller. To assist you in developing a contract, a checklist has been provided with some points to consider. Since state laws govern the interpretation of commercial agreements, we recommend that your contract be drafted with the assistance of a local attorney.
Aircraft Records
Make sure the following documents are available and in proper order for the aircraft. Airworthiness certificate, engine and airframe logbooks, aircraft equipment list, weight and balance data, placards, FAA-approved aircraft flight manual or owner's handbook, and FCC radio station license if currently applicable. Missing documents, pages or entries from aircraft logbooks may cause significant problems for the purchaser and reduce the value of the aircraft.
Insurance
Seek the help of an experienced aviation underwriter when determining what coverage you need. Check on hull rates before you buy so you won't be surprised. Some aircraft are insurable only at very high rates because of age or other factors. Avoid the trap of either over insuring or under insuring. Each has its unique problems that can be handled by securing the proper amount of coverage appropriate to the risk. An experienced underwriter or agent will be knowledgeable about any minimum insurance requirements that may be mandatory in your state. Many owners find that the best insurance is not necessarily the most, or the least expensive. When shopping for insurance compare coverage, not just premium cost. Check on the reputation of any insurance company you intend to do business with. Ask for a sample policy and READ IT CAREFULLY so you can compare features.
Contact the AOPA Insurance Agency for information on the policy that offers broad ranges of coverage at competitive rates (800/622-AOPA).
State Registration
Determine whether you will need to register your aircraft with the state. Some states have registration requirements and impose a fee based on aircraft type, age, value or weight. In some instances this fee is in lieu of personal property taxes.
Taxes
Determine what state sales or use tax might be applicable. AOPA's Pilot's Guide to Taxes: Income, Personal Property, Sales and Use is available on the Web site.
At the Closing
Because of the importance of properly completing and filing ownership documents, AOPA recommends that you not allow other parties to the transaction to submit ownership documents affecting your interest in the aircraft.
Final Inspection
Visually inspect the aircraft prior to taking possession to assure yourself that no damage has occurred since the pre-purchase inspection and that all contract conditions have been fulfilled. Also, make sure the necessary documents as required in FAR 91.419 are transferred with the aircraft at the time of sale.
Bill of Sale
Have the seller execute a Bill of Sale, FAA Form 8050-2 (now available as an interactive form on the Web site) according to the instructions provided. Make sure that the seller signs his or her name, in ink, as it appeared on the previous Bill of Sale.
Aircraft Registration
Execute an Aircraft Registration Application, FAA Form 8050-1, (also available as an interactive form on the Web site) and submit this, along with the Bill of Sale and a $5 recording fee, to the FAA. The pink copy of your Registration should be retained and placed in the aircraft as a temporary registration certificate. It is valid for flight within the United States for 90 days. At the same time, submit any necessary state registration forms and fees to the appropriate state office.
FCC Forms
As of mid-1996, the previously required FCC Aircraft Radio Station License is no longer required within the boundaries of the continental U.S. Note: Although countries adjoining the U.S. realize this and are not asking to see a "station license," ICAO {International Civil Aviation Organization) signature countries still have this law on the books. Call AOPA for updates on the structure for international flights.
Choosing the Right Aircraft
Choosing the right aircraft to buy means arriving at a workable balance between emotional appeal and objectivity. The aircraft has to meet personal standards of style and taste, but it also has to fit needs and a budget. Matching an aircraft to a budget may be the most critical element in assuring a happy partnership between owner and airplane.
Purchase price is only one yardstick of affordability. The cost of operating and maintaining the aircraft also must be taken into consideration. A $25,000 light twin may seem like a bargain until the fine print in the advertisement indicates the engines are due for a $25,000 overhaul in l00 hours.
The way to determine the total cost of owning an aircraft is to estimate hourly operating, maintenance, and overhaul reserve expenses. There is no trick to estimating hourly costs. Simply add up all of the expenses for one year, and divide by the number of hours flown. Overall expenses go up the more the aircraft is flown, but hourly operating costs go down.
The most common mistake made in computing hourly costs is an error of omission. Not all expenses are considered, and therefore, the figure does not represent the true cost of owning and operating the aircraft. It is easy to overlook the cost of a propeller overhaul or a reserve fund for replacing avionics, for example. Manufacturers, estimated aircraft operating costs often paint a rosier picture than what owners actually experience, partly because not all costs are included. Loan payments and unscheduled maintenance may not be factored into the computations, for example. Manufacturers also tend to overestimate the hours owners will fly the aircraft, resulting in a lower hourly cost.
To arrive at a realistic estimate of hourly operating costs, make an honest assessment of use. It is unreasonable to anticipate logging 500 hours over the next year if the average has been about 50 hours. Owning an aircraft certainly stimulates the desire to fly more, but time and need really determine how much a pilot will fly. It pays to be conservative in estimating usage.
Hourly operating expenses can be broken down into four components: direct, fixed, reserves, and variable. Direct costs are out-of-pocket expenses: fuel, oil, and landing fees. The amount depends directly on how much the aircraft is flown. Fixed expenses do not change with flying time. These are bills that must be paid regardless of how much or little the aircraft is flown: insurance, hangar or tiedown fees, annual inspection, state and local personal property taxes or registration fees for the aircraft, and, if applicable, principal and interest on the loan used to purchase the aircraft in the first place.
Reserve funds should be established to pay for expensive engine, propeller, avionics, and airframe overhauls. Ideally, the owner pays into an escrow fund each time the aircraft is flown so that when it comes time to schedule a major overhaul, the money to pay for the work will be on hand.
The spoiler in estimating aircraft operating costs is variable expenses, which usually derive from unscheduled maintenance. No one can predict with certainty if and when a vacuum pump, starter, or radio will fail. An unanticipated repair can devastate a carefully constructed budget. Owners of new aircraft covered by a warranty have some protection against unscheduled maintenance bills, but the buyers of used aircraft should be prepared for a few problems.
We have constructed a hypothetical operating cost estimate using a 1975 Cessna 172M Sky hawk. Pilot Frank Lee Hooked has just bought the Sky hawk for $39,000. The airplane has a mid-time Lycoming O-320-E2D engine; Cessna IFR avionics, including dual nav/coms, transponder, automatic direction finder, and audio panel; and original paint and interior. How much can Frank expect to spend for each hour he flies his new-found joy? Frank anticipates logging 300 hours over the next 12 months. However, since he has averaged only 100 hours over each of the past three years, he decides to make two estimates — one based on 300 hours usage, the other for l00 hours.
Frank's research includes a call to the Cessna Pilots Association. He is told that a Skyhawk owner who helps maintain the aircraft and who shops around for the best prices on fuel, oil, parts, and repairs can expect to pay about $40 an hour in expenses, not including financing charges. Additional research reveals that Skyhawks are prone to certain problems: worn nosewheel struts and seals from nosewheel-first landings, worn seat tracks, and a cracked elevator bellcrank bracket caused by gust loads placed on the elevator surface with the control lock in place. These are potential unscheduled maintenance items.
With that estimate in mind, Frank begins to compute expenses for the aircraft. For direct costs, he figures $16 an hour for fuel, 92 cents per hour for oil, and $50 annually for landing fees. The fuel estimate is based on fuel consumption of 8 gallons per hour at $2.00 per gallon. The Skyhawk owner's manual claims 7.4 gph at 5,000 feet and 2,500 rpm (68-percent power), but Frank makes an allowance for climbing and less than optimum performance due to the aircraft's age. The previous owner of N7575H said the aircraft uses one $2.76 quart of oil every three flying hours. Landing fees are difficult to estimate, but Frank knows that the airport he flies to once a month on business trips charges a $2 landing fee. He adds $26 for unanticipated landing fees at other airports for an annual cost of $50. That breaks down to 50 cents per hour if he logs 100 hours and about the same, hourly, if it turns out to be a busy 300-hour flying year.
There are two other major projects Frank factors into his operating budget. The aircraft is beginning to look a little frayed around the edges. He can live with it for a while, especially because the airplane will be hangared, but he makes up his mind to have it painted and the interior refurbished in the near future. As with the avionics, the cost of the paint job, which he estimates at $5,500, and the interior refurb, estimated at $1,600 for a kit he can install himself, will be spread out over five years.
The last and most nettlesome category of costs Frank has to consider is unanticipated expenses. Into this smorgasbord of unscheduled maintenance will go shop receipts for fixing or replacing failed engine accessories, silent radios, flat tires, and thin brake linings. It is tempting to discount the chances of such emergency repairs popping up given Frank's meticulous care and the simplicity of the Sky hawk, but he knows that 22 years and 3,500 hours have to have taken their toll on the airplane.
Frank budgets for $500 annually in unscheduled repairs. Now that he has identified all the costs, it is time to figure the bottom line. Frankly, he is not prepared for the numbers that appear on the display of his electronic calculator. Logging 300 hours a year, Frank will pay $68.39 per hour to operate the Sky hawk. At l00 flight hours each year, the cost will be $150.32. The total annual costs are $15,032 for 100 hours and $20,517 for 300 hours.
He refigures, cutting discretionary expenses to the bone. The new radios, paint, and interior are struck from the budget. Frank resolves to do as much of the maintenance work himself as regulations allow and therefore trims the line items for unscheduled maintenance and the annual inspection. Giving up the hangar for an outside tiedown spot cuts storage expenses in half. The bank loan and insurance expenses are locked in and cannot be adjusted.
Frank punches the buttons of his calculator to figure the new totals: $113.12 per hour for 100 hours annually and $55.99 for 300 hours. That's much better, but he still is uneasy. Frank realizes he is only fooling himself by not planning for airframe and avionics improvements and underestimating the cost of repairs and the annual inspection. He returns to his original estimates, knowing he will be prepared for the unexpected and that the aircraft will be properly maintained.
Besides, there are two sides to a balance sheet. Offsetting the expenses will be the equity Frank builds in the Sky hawk! In fact, some aircraft owners absorb the cost of improvements, such as new paint, interior, and radios, rather than factor the cost into hourly operating budgets because the investment is reflected in increased equity that is returned when the aircraft is sold. If Frank does that, his original calculation of operating expenses decrease about $10.40 an hour with 300 hours of use a year, or $31.20 an hour at 100 hours annually.
Further, the engine reserve figure of $10 per hour ($10,000 over the next 1000 hours until overhaul) could be handled by another loan or refinancing at a future time. Thus, Frank's figures were now down to $109.12 wet @ 100 hours/year and $47.99 wet @ 300 hours/year compared to the $65 wet rate he was paying for a rental.
There are other benefits Frank will realize that can't be displayed on a calculator — the convenience of setting his own flight schedule rather than adjusting it to an FBO's and the peace of mind that comes from knowing the aircraft is well maintained and safe to fly. Finally, there is the pride that will flow when Frank tells friends and business associates that not only is he a pilot, he also is an aircraft owner.
Guidelines for Estimating Direct Operating Costs and Reserves
As a rule-of-thumb for initially setting rates, the hourly contribution for Routine Maintenance (Engine and Airframe combined) can be roughly equated to one-half the hourly cost of fuel and oil. Appropriate adjustments can later be made based upon actual operating experience.
|Direct Operating Costs |Per Hour |
|Fuel (1) | |
|Oil (2) | |
|Routine Maintenance — Engine(s) (3) | |
|Routine Maintenance — Airframe (4) | |
|Routine Maintenance — Avionics (5) | |
|Total Direct Operating Costs |$ |
| | |
|Reserves (or charges against depreciation) | |
|Overhaul — Engine (6) | |
|Overhaul — Airframe (7) | |
|Overhaul — Avionics (8) | |
|Total Reserves |$ |
| | |
|Total Cost Per Flight Hour |$ |
These guidelines provide a basis for determining aircraft operating costs. The actual cost will vary depending aircraft type, age, and utilization. Records of actual cost should be maintained for each aircraft in order to make adjustments to the guidelines.
1. $ /GAL X GPH = $ per hour
2. $ /QT X QPH - $ per hour (include oil service charges, if any)
3. Filters, spark plugs, accessories, etc.
4. Batteries, instruments, brakes, tires, alternator, etc.
5. As a starting point, set asides for avionics maintenance can be estimated as 5% of the current replacement value of the avionics installed per 500 hours of flying. ($ value of avionics X 0.05/500 = $ per hour.)
6. Based on the average cost of replacement with factory remanufactured (FRM) engine or overhaul of existing engine. Use manufacturer's recommended TBO, adjusted to allowance for the possibility of premature replacement, ie: FRM @ 12,000; Avg. OH cost @ 10,000; Mfr. Recomm TBO @ 2,000 hrs; Expected TBO @ 85% of Mfr. Estimate.
Hourly Reserve: [(12,000 + 10,000) / 2 / (2,000 X .85)] = $6.47 per hour.
7. Propellers, mechanical systems, accessories (ie: vacuum pump, alternator, etc.)
8. Trade/upgrade option of any avionics.
As a rule of thumb, for initially setting rates, the hourly contribution for Routine Maintenance (Engine and Airframe combined) can be roughly equated to one-half the hourly cost of fuel and oil. Appropriate adjustments can later be made based upon actual operating experience.
The Cost of Maintenance
If you're like many renter-pilots, you probably remember the occasion — prior to a weekend flying trip with the family or that sort of thing — when you first heard the term from the individual behind that fixed-base operator's desk: Sorry, the airplane isn't available,; it's just come in for its 100-hour.
So, you might well ask, what is the 100-hour, and why are aircraft used in charter and hired out for instruction bound by the requirement? The 100-hour inspection is, according to the Federal Aviation Regulations, basically the same as an annual inspection. Identical checks must be made, and the airplane must meet the same airworthiness standards. (The regulations explaining the extent of the annual are quite vague; we'll touch on some of them later.) Airplanes used for hire (instruction, or charter) are required to have 100-hour inspections; they are in addition, required to undergo annuals. So the airplane on the rental line receives what is essentially an annual inspection every two or three months — more, if the airplane is used heavily. It should be noted that an aircraft which is made available for rent and is not carrying passengers for hire or used for instruction does not need a 100 hour inspection.
By the Federal Aviation Administration's reasoning, such airplanes need more frequent inspections because of high usage; as such, sacrificial items like tires, brakes, and engine oil need to be inspected more often than in an owner-flown airplane. What's more, an airplane used for primary training receives punishment that it would never experience at the hands of the owner, and inspections based on that premise could avert mechanical turmoil.
Such differences between owner-flown and rental airplanes might beg the question of whether a 100-hour-inspection program has merit for personal airplanes. Your answer will depend on your airplane. If a simple single occupies your hangar and you are the only one who flies it, chances are that the annual inspection route is adequate to catch deterioration while being as merciful as possible on the checkbook, especially if your use of the airplane does not place unusual demands on the airframe or powerplant; aircraft living on floats or flown in the bush country, for example, would be excellent candidates for the 100-hour routine.
Also, if you fly a high-performance (turbocharged, especially) single or twin, you might want to consider having 100-hours performed on the engine or engines. Assuming you fly even 200 hours a year, you'll double your chances of finding problems or deterioration before they manifest themselves as failure. Unless you've got an extremely temperamental or sensitive engine, the 100-hour interval ought to keep you abreast of the engine's health and alert you well before major surgery is needed. For the meticulous owner, these inspections would be in addition to the usual 50-hour oil and filter changes.
Performing a 100-hour on the engine involves, as mentioned earlier, the same inspections as required on an annual. According to FAR Part 43, Appendix D, an annual or l00-hour, regarding the "engine and nacelle group," will include a differential compression check and inspection of oil filters and screens for foreign material. If there is "weak cylinder compression," the cylinders are to be checked for proper internal condition and tolerances. The FAA doesn't specify precisely what is considered weak compression; generally, a differential pressure reading below 60/80 is considered insufficient compression.
Beyond the cylinders, the 100-hour inspection is expected to include the engine mounts controls and control cables, exhaust system, accessories — and a general look-see for excessive fluid leaks and improper torque and obvious defects in fasteners, cowlings, and cooling baffles. There are a few common-sense items not on the Appendix D list, including ignition timing, magneto and harness integrity, spark plug gap and condition, air filter condition, and vacuum pump integrity, among others.
Better let the manufacturer's list of recommended inspection items — which is considerably more detailed than the barest letter of the law as spelled out by Appendix D — be your guide.
Not all mechanics and FBO managers think the 100-hour inspection is a good idea. Several we talked to said that because the rental airplane sees regular use, much of the deterioration that takes place in low-use aircraft isn't a problem. Even though it gathers hours quickly, a rental-line airplane often comes through its inspections with fewer squawks than a similar model that is seldom flown. (We're talking about functional squawks here: Frayed fabric on the pilot's seat and chalky paint don't make an airplane unairworthy. Which perhaps explains something about the great unwashed rental fleet.) And some say that constantly opening up the airplane to inspect systems that have just been looked at 60 or 90 days before only increases the chances that such an inspection will induce failure. It's a well-worn, but fairly accurate, statement that an airplane is more likely to have a failure or squawk just after an inspection than before it. This is especially true, according to mechanics, of the airframe, which in most simple airplanes includes few and basic systems.
One alternative to l00-hour inspections is a progressive inspection program. Essentially, the airplane undergoes an annual inspection in pieces, in 25-, 50-, or 100-hour segments. The idea is that, say, control cables need not be inspected at every stop but should be seen once a year. In this case, the cables appear on the inspection list so that they're only checked every 12 months and deferred on the in-between inspections.
Dividing up the work pays dividends in keeping the airplane flying, according to several sources. When an operator cannot afford to have an airplane grounded for a week while it receives its 100-hour inspections, the progressive is the way to go.
(The engine and airframe manufacturers can provide guidelines for such progressive inspections. For-hire airplanes must adhere to an approved inspection program to operate in lieu of the l00-hour ritual. Similarly, the FAA must be notified before the airplane is removed from a progressive program and returned to l00-hour or annual inspection basis. For more details, contact your local FAA flight standards district office.)
An opposing argument to progressive inspections goes thus: By bringing the airplane into the shop every 25 hours, you often spend more money in labor because you have to get to the parts in the first place. An inspection plate takes the same amount of time to remove the fifteenth time as it does the first. And for a busy FBO, where an airplane's time on the line is money, an airplane on progressive inspections can make itself unavailable too often for the whole process to be cost effective. Several FBOs cite this reason for sticking with the 100-hour on rentals.
Owners, however, who have opted for the l00-hour-the-engine routine say that the additional expense of more frequent inspections pays for itself with reduced downtime (you tend to catch systems in decline before they fail) and peace of mind. Certainly it provides a greater hedge against unexpected mechanical troubles than does the annual inspection. But with the l00-hour scheme, it's up to you — not the person behind the rental counter — to explain to the kids why the airplane isn't available for the weekend.
The Spare Parts Market
A series of television commercials aired recently depicting something like this: A young mother and her children are driving in a nondescript station wagon. She is distracted trying to quell her recalcitrant offspring as a fire truck, unseen by her, charges toward the intersection she is about to enter. At the last minute, she sees the truck, slams on the brakes, and stops short, plucking her family from the jaws of danger.
The kids continue to howl as the voice-over intones: There are no unimportant parts. If this axiom holds true for the nascent family and its station wagon, surely it is true for us. Light aircraft, which are for the most part rugged and reliable, rely more upon the quality and durability of components than redundancy of those parts. After all, singles have but one propeller, one crankshaft. Without the redundancy of multiple propellers and crankshafts, we must rely on the strength of those individual parts.
We expect new airplanes to be relatively free of defective parts — and certainly of worn parts. But those parts won't stay new forever, and at some point, the owner (or the owner's mechanic) will have to go on the hunt for new or used replacements. Perhaps more than price, availability is critical to the success of this endeavor. Replacement parts, by and large, come from the airplane manufacturers (in many respects, they have to; we'll get to why later), and their availability often is directly tied to the company's health. In the middleman role are parts distributors, who are the mechanic's link to the factory parts supply and who maintain a stock of common components. But first, the good news about new parts. According to a brief survey of parts houses and maintenance facilities, the majority of components needed to keep the light airplane fleet flying is readily available. And though not cheap — the industry has seen steep parts price increases as new — airplane production remains stagnant the more common parts are reasonably priced, according to those interviewed; however, there are examples of scarce parts with dizzying price tags. What's more, the wait for common parts often is short or nonexistent; this is for the more popular airplanes, though, and owners of limited-production makes or models speak a different tongue on this subject.
Before we get into the nuts and bolts, so to speak, understand that while model-specific parts (control surfaces and cowlings, for example) must come from the manufacturer or a supplier that has received Federal Aviation Administration approval in the form of a Parts Manufacturer Approval (PMA), there are a great many bits and pieces that are considered standard parts. Such bits — things like nuts, bolts, bushings, tumbuckles, and so on — can be bought from any number of sources. The key here is that the part must conform to some sort of standard, usually a military specification, or mil-spec. That's why you can't replace an AN bolt (the designation comes from the old Army/Navy fastener standards) with something from the corner hardware store. Aside from this being illegal, chances are that the fastener will not be as strong or conform to consistency standards as its AN counterpart. Unfortunately, it's not uncommon to find non-AN hardware on airplanes, and the nature of such a transgression makes finding the individual who installed the non-spec part as likely as winning the lottery.
What's more, this appears to be more a case of sloth than despair because, according to our sources, such standard parts are in plentiful supply. So are items like brake components, tires, batteries, and basic flight and engine instruments — although in this category, there are a few notable exceptions. If the part appears on many airplanes, or if your airplane is a popular model, you will be able to find a replacement.
Where the parts picture turns from sunny-day bright to overcast gray is in airframe-specific parts. Owners of Cessnas, Beeches, Mooneys, and Pipers are in better shape than most because the parent companies are around to produce replacements. Cessna, Mooney, and Beech reportedly have a surprisingly good stock of parts on hand (especially for the F33 and A36 Bonanzas, as they remain in production), with parts for Pipers in somewhat shorter supply.
If the part is not in stock, one alternative is to have the factory make you one. According to one large distributor of Cessna parts, that company will make them to order, without a minimum purchase; for example, you don't have to buy two elevator skins if you only need one. But the wait could range from "next week" to "we'll call you when we find the tooling." And the prices for such one-off parts can be, in the words of one distributor, "breath-taking."
The spares outlook for more unusual and/or older airplanes often depends upon the degree of support provided by an owners' group. The Navion Society, to use one example, has in the past pressed vendors to make spares long out of production. The same can be said for the Cessna Pilots Association, which is now working on finding replacements for engine instruments originally produced by Stewart -Warner and found in a great many Cessnas. Stewart-Warner pulled out of the aircraft market, making replacement instruments and overhaul kits scarce. Also, the Mooney Aircraft Pilots Association helped convince a supplier to provide overhaul kits for the hydraulic flaps on early M20s; for a time, the only option was to convert the system to electric actuation at considerable cost. All the owners' groups that help their members find parts, either through shepherding production or providing a classified-advertisement forum for the trade of used parts, deserve a hearty pat on the back. The groups' efforts could mean the difference between having a pristine classic and an unserviceable old relic.
Another source of new parts comes from companies that have obtained a PMA. A supplier of parts for the original airframe builder produces its wares using the manufacturer's production certificate, which makes the airframe builder responsible for a measure of quality assurance. It also provides a channel of product liability through the airframe manufacturer even though someone else built the part. Not so for a company building parts with a PMA.
An outside supplier can build replacement parts independent of the airplane 's original manufacturer provided it proves to the FAA that the parts match exactly the specifications of the factory and these specifications will be maintained through an FAA approved quality control program. The cost of providing this proof (and the need for product-liability protection) can drive start-up costs sky high — and often deter companies looking at low-volume items from entering the market altogether.
Airframe manufacturers don't generally like PMA-supplied parts because their quality cannot be controlled or monitored by the manufacturers themselves; also, if a 172 crashes because of a failure of a PMA part, you can bet Cessna will be brought into the ensuing courtroom machinations. For this reason, the airframe builders are often loathe to provide the blueprints and engineering analyses the outside suppliers need to gain the PMA. Some suppliers thrive providing PMA parts, though. One example is Univair of Aurora, Colorado, the primary (and often sole) producer and distributor of parts for early Cessnas and Pipers as well as for the Ercoupe, Luscombe, Stinson 108 series, and Taylorcraft.
Of course, if you can't find the part new, you could buy used. For some owners on a limited budget, this often is the only recourse to high-priced new-manufacture spares. This road, though often economical, is rockier than a Beirut expressway, and if ever the advice caveat emptor applies, it is here.
Used major components are supposed to carry a certificate of serviceability, otherwise known as the yellow tag. In fact, there are many types of yellow tags, but the most common are inspected, repaired, and overhauled. All the inspected tag guarantees (and some mechanics don't believe the tags guarantee anything, that the reputation of the shop is far more important than a piece of paper) is that the part was working, or serviceable, when it was removed from its previous installation. There is no indication of how much longer the part will work or even if it was originally the right part for the job. Inspection can entail nondestructive testing to determine its condition.
Should some aspect of the part be unserviceable, it can be fixed and would carry the repaired title. Along similar lines, a part might be overhauled, with any worn parts replaced or brought to new limits, and the yellow tag would indicate this. Both repair and overhaul of used parts must be performed by a repair station or signed off by an A&P with inspection authorization. A garden-variety A&P can only sign off parts as serviceable.
The origin of the overhauled or repaired part is of greater significance, according to many mechanics, than the type and quality of the overhaul. If the part had simply worn and been replaced with a new one, it could, after an overhaul, live a long and happy life in your airplane. But if the part had been in a wrecked airplane, guarantees go out the window. Heat, as from a post-crash fire, could weaken heat-treated parts, as an example.
What's more, although the tag might say the part was from a certain make/model/year airplane, there's no way to be certain it was the right part for that airplane in the first place. Most shops will not accept parts from salvage unless they know the history of both the component and the company providing it. Naturally, the owner/operator is the one responsible for having the right parts on the airplane. The best advice we could gather was to find a reputable distributor or salvage company and believe, as Lou Reed says, none of what you hear and only half of what you see.
Fortunately, the situation has not degenerated to desperate "Mad Max" scrounging of parts, at least not for the more popular members of the general aviation fleet. And while there are arguably no unimportant parts in these airplanes, at least for now there are few unobtainable parts, either.
Where to Look: Sources of Information — Finding the Market
Apart from AOPA Pilot, there are several noteworthy publications that carry information about, and advertisements for, used aircraft. One publication, Trade-A-Plane (P.O. Box 509, Crossville, Tennessee 38557; telephone 615/484-5137 or 800/337-5263), consists of nothing but advertisements, insurance, parts, avionics, and every imaginable type of airplane for sale. The classified section of the McGraw-Hill Companies magazine Business and Commercial Aviation contains display advertisements for aircraft sale or lease, principally turbine aircraft. The A/C Flyer is another monthly magazine published by the McGraw-Hill Companies. It contains numerous color display advertisements of used aircraft, with a slant toward turbine twins and corporate jets. The Aircraft Bluebook-Price Digest is perhaps the most often-quoted source of used aircraft price information. The Bluebook is published four times a year (spring, summer, fall, and winter) and tracks average retail prices of the entire production runs of more than 70 different aircraft manufacturers. Also included is a list of airworthiness directives, arranged according to date of issue, and price information on a variety of avionics. The Bluebook is intended for use by aircraft dealers, service facilities, manufacturers, lending officials, insurance officials, government agencies, and certain consultants — not the general public. Those who feel they are qualified must submit proper affiliation identifications with their subscription orders. The fortunate few who obtain subscriptions will not be disappointed, as the Aircraft Bluebook-Price Digest contains hundreds of pages of densely packed information.
Buzzwords: Deciphering the Ads
As prospective buyers of used aircraft pour over classified and display advertisements, there is apt to be some confusion. To keep costs down, advertisers use certain abbreviations to indicate an aircraft's condition or features. A time, expressed in hours, usually precedes these abbreviations. The following glossary translates the most common of these shorthand phrases.
|0SFRM |Zero time since factory remanufacture |
|OSMOH |Zero time since major (engine) overhaul |
|COMP |Compression |
|C/R |Counterrotating (propellers in twin-engine airplanes) |
|CSPD |Constant speed (propeller) |
|CYCLES |In turbine engines, a cycle is from start to full power to shutdown. |
|FWF |Firewall forward |
|MDH |Major damage history |
|MSP |Maintenance service plan |
|NDH |No damage history |
|NoFWF |No firewall forward (engine and propeller missing) |
|OXY |Oxygen system |
|SCMOH |Since chrome (cylinder) major overhaul |
|SFRM |Since factory remanufacture |
|SHS |Since hot section (overhaul of a turbine engine's power compressors) |
|SMOHA&E |Since major overhaul, airframe, and engines(s) |
|SMOHRE/LE |Since major overhaul right/left engine |
|SMOH |Since major (engine) overhaul |
|SOH |Since (engine) overhaul |
|SPOH |Since propeller overhaul |
|STOH |Since top (cylinder, piston, and valve train) overhaul |
|TBO |Time between (engine) overhaul |
|TT |Total time |
|TTA |Total time, airframe |
|TTAE |Total time, airframe and engine(s) |
|TTE |Total time, engine |
|TTSN |Total time since new |
Pre-Purchase Inspection: A Small Investment Now Could Preclude Major Expenses Later
A pre-purchase inspection is not an annual inspection, although the buyer and seller could agree to such an arrangement. The object is to examine the aircraft for damage and wear that might not be evident to an untrained eye and to form an educated guess as to maintenance problems that might arise in the future.
Obviously, the outcome of a pre-purchase inspection is likely to affect price. If a mechanic discovers a serious problem, the buyer is not likely to close the deal without a reduction in price equal to the cost of the repair. For that reason, the seller may be wary of such an inspection. Nevertheless, it is to the buyer's advantage to insist upon one. The aircraft may be found to be unairworthy because of faulty equipment or lack of compliance with an airworthiness directive. Once the deal is closed and the buyer takes possession of the aircraft, it will be extremely difficult to force the previous owner to bear the cost of repairs that should have been performed before the sale.
The extent of a prepurchase inspection depends upon the complexity of the aircraft and the wishes of the buyer. Because of the complexity of its systems, a late-model, turbocharged Cessna 210 requires a more thorough check-out than a simple Ercoupe. A wood-wing aircraft should be inspected for rotting or drying of the wooden components. Fabric-covered aircraft should be subjected to punch tests.
The buyer should specify the shop conducting the inspection or annual, but it is often the seller who rules in this decision. If that is the case, the buyer is well advised to evaluate the shop's credibility and reputation. The inspection could amount to a "paperwork annual" in which the mechanic does his work looking through an office window, fingers attached to a coffee cup.
Poor annual inspections technically may not be fraudulent, but there have been incidents of improper repairs using stove bolts, hardware-store pop rivets, and other atrocities that cost a new owner with a fresh annual more than $5,000 to rectify. There is legal recourse in such cases, and the Federal Aviation Administration probably will be interested in a visit with the inspector, but the aircraft owner still loses money and use of the aircraft.
Following is a checklist of items that should be covered on a thorough pre-purchase inspection. Many of the checks can be performed by the buyer, but a properly qualified authorized inspector (AI) or airframe and powerplant mechanic (A&P) should be retained to examine critical items such as the engine and logbooks.
Checklist
1. Paperwork. Check to see if the following are in order:
a. Valid airworthiness certificate, current registration, operating limitations/placards, weight and balance with current equipment list, pilot's operating handbook.
b. Engine and airframe logbooks. Check for complete maintenance history, airworthiness directive and service bulletin compliance, and also entries that suggest repairs due to an accident or incident.
c. Title search. Insist on one to ensure there are no liens against the aircraft that may affect financing or your ability to sell the aircraft.
2. Engine
a. Is it clean and dry? Be wary of a spotless engine compartment that may have been treated to a "spray paint" over haul. Check the source of fluid leaks.
b. Baffles. Eroded, misshapen baffles may be a sign of improper engine cooling over an extended period.
c. Induction/exhaust systems. Check for corrosion, leaks, worn gaskets, and loose connectors.
d. Cylinder compression check.
e. Battery condition.
3. Empennage
a. Horizontal and vertical stabilizer attach points. Check for play and loose rivets.
b. Elevator/stabilator attach hinges. Examine for excessive play in worn hinges. Replacing them can be very expensive.
c. Rudder trailing edge. Look for dings (minor dents) or putty that would indicate hangar rash and potential control problems.
4. Wings, ailerons, and flaps
a. Look for wrinkles, warps, and chafing rivets. Pay particular attention to clean, freshly painted, or waxed aircraft. It may be more difficult to spot problem areas.
b. Look for dings that may have to be repaired on leading edges of wings and trailing edges of ailerons and flaps. Check the undersides of wings near jack points for dings. Check wingwalks or strut steps for dents, corrosion, and worn-off rivet heads.
c. Fuel caps and drains. Look for fuel stains around seams, rivets, and wing roots. This may indicate leaking tanks or bladders or, in a wet wing, leaking sealants.
5. Fuselage
a. Doors, hinges, and latches. Are all hinges in place and free of rust or corrosion? Do doors close easily and with a tight seal?
b. Skin. Look for wrinkles or warping. Some "oil canning" is acceptable.
c. Belly. Look for scrapes, dents, replacement panels, and patches that indicate a gear-up landing. While gear-up landings that result in minor damage need not affect the value of an aircraft, the logbook entries should reflect the repairs.
d. Antennas. Are they properly located for best reception and transmission? Is the fiberglass coating eroded? Have all antennas been mounted properly?
6. Landing gear
a. Struts. Check for leaks, proper extension of struts, and integrity of hardware.
b. Brakes. Check condition of discs and rotors. Don't forget to test the brakes to see if they are effective.
c. Tires. Are the sidewalls dried and cracked?
7. Cabin or cockpit
a. Seats, tracks, backs, seat belts, and shoulder harnesses. Check for wear.
b. Instruments and avionics. Test them all thoroughly.
Aircraft Condition Checklist
The following checklist has been designed to assist you and your mechanic in evaluating the condition of an aircraft. A pre-purchase inspection can be as simple as a glance or as complex (and expensive) as an annual inspection. With this in mind, ALWAYS discuss your intentions and what you expect from the mechanic first. An unsatisfactory condition is not necessarily cause for rejection of the aircraft, but it should be treated as a point for further investigation and/or negotiation with the seller. The money spent on a pre-purchase inspection can be well worth the price when compared to the size of your investment and the potential for loss.
To be completed prior to inspection:
|Aircraft Model |S/N: |Number |
|Aircraft Total Time | | |
| | | |
|Engine #1 Model |S/N | |
|Total time since major overhaul | | |
|Type of overhaul | | |
|Date of overhaul | | |
| | | |
|Engine #2 Model |S/N | |
|Total time since major overhaul | | |
|Type of overhaul | | |
|Date of overhaul | | |
| | | |
|Recommended Engine TBO | | |
| | | |
|Propeller #1 Model |Blade S/N |Hub S/N |
|Total time since overhaul | | |
|Date of overhaul | | |
| | | |
|Propeller #2 Model |Blade S/N |Hub S/N |
|Total time since overhaul | | |
|Date since overhaul | | |
| | | |
|Recommended Propeller TBO | | |
| | | |
|List Airworthiness Directives that have not been complied with or need recurring attention: |
|AD No. |Description |Status |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Major component/system checklist:
Airframe
• Paint
• Corrosion
• Fabric
• Attachment points
• Control cables/pulleys
• Control surfaces
• Fuel tanks/lines
• Doors/windows, emergency exits
• General condition
Landing Gear
• Tires
• Brakes
• Shock absorbing system
• Scissor links
• Retraction system
• Shimmey damper
• Gear attach points
• Microswitches
Cabin Interior
• Cockpit controls
• Circuit breakers/switches
• Instruments
• Avionics
• Seatbelts
• Seats/tracks/frames
• Ventilation/heat
• Interior fabric
• Door/window seals
• Window/windshields
• Lighting
Engine Systems
• Corrosion
• Induction system
• Turbocharging system
• Exhaust system
• Ignition system
• Electrical system
• Battery
• Cooling baffles
• Control cables
• Lubriction system
• Starter
• Filters
• Vacuum system
• Fuel system
• Engine mounts
• Seals
• General condition
Propeller(s)
• Blade conditions
• Hub conditions
• Governor
• Spinner
• Seals
• Deicing
Cylinders
• Compression
• Oil Consumption
Aircraft Title: AOPA Aircraft Title Services, Inc.
Buying an aircraft, whether it is new or used, is a momentous occasion. For many, it represents the largest single lifetime investment next to buying a home. Quite often, the purchase price of an aircraft approximates or exceeds the price of a new home.
Who would think of buying a home without having a formal "closing" or "settlement" to ensure that good title is being conveyed before the purchase price is paid? Unfortunately, many aircraft sales and financing transactions are done in just such a casual manner — sometimes without a title search, and often without a closing. It's a historical accident that these practices persist. From the very beginning, general aviation has been a small, close-knit community. Aircraft were bought and sold among known persons or, at least, known reputations. Times changed. Aviation grew. But the informality of aircraft sales and financing transactions remained the same. There have been casualties of these practices.
We can recall an incident that occurred more than 10 years ago involving one of our members who paid cash for a brand-new Beechcraft Bonanza, bought from a well-established, authorized Beechcraft dealer. He lost his aircraft because he didn't get a title search and because he didn't have a formal closing. About two months after he bought the Bonanza, the dealer's finance company repossessed the aircraft from our member because the dealer was delinquent in his payments and because the dealer violated his agreement with the finance company not to sell the aircraft without its prior consent. The case wound up before the California Supreme Court, which upheld the validity of the finance company's lien because it had been recorded at the FAA Aircraft Registry (though some other states have reached a different result in similar situations).
A title search would have disclosed the lien. A closing would have assured a release of that lien before the dealer got its money. Our member would have kept his airplane.
Over the years, we have heard other horror stories from our members. Most recently, we read a news report in the Orlando Sentinel about an aircraft owner losing his aircraft to a sheriff's seizure because he did not have a closing. He had purchased and paid for a Piper Seneca. A few days after the sale, he allowed the seller to borrow the airplane to fly from Fort Lauderdale, Florida, to Orlando. As it turned out, the seller had earlier pled guilty to drug trafficking and went to Orlando for a sentencing hearing, which he expected to be postponed by the judge. When he found that there would be no postponement, he flew the airplane from Orlando to the Pompano Beach Airport, where he abandoned it, and promptly disappeared. The sheriff seized the airplane because it was used in the commission of a crime — skipping out on the sentencing. The sheriff was able to prevail in court even though the owner had no part in the crime. That's because on the day the airplane was seized, the owner's interest had not yet been recorded at the FAA Aircraft Registry. The news report quotes the court as saying, "Under the law, an innocent person could have property seized and be barred from challenging the seizure, simply because of a delay in title transfer." There is no delay in title transfer with a closing.
Just as in real estate transactions, laws and procedures help protect against these kinds of injustices in aviation. The laws are the Federal Aviation Act, various state versions of the Uniform Commercial Code, and others. The procedures are the title search, the closing, the escrow, and title insurance.
AOPA, from its beginning, has been helping members take advantage of these laws and procedures. AOPA first inaugurated its title search service more than 30 years ago at AOPA's Oklahoma City office, close to the FAA Aircraft Registry.
The Federal Aviation Act requires the FAA to maintain a recording system for aircraft bills of sale, security agreements, mortgages, and other liens. This is done at the aircraft registry, which also processes applications for, and issues, aircraft registration certificates. Actually, the two systems are tied together because a person must prove ownership in order to be entitled to register an aircraft.
How does filing ownership and lien documents at the FAA Aircraft Registry help protect aircraft sales and financing transactions? These filings constitute formal notice to the whole world of the ownership and security interests recorded. A person who engages in a financial transaction involving a U.S.-registered aircraft who doesn't get a title search is taking a risk. Under the law, that person will be charged with knowing what is on file with the FAA, even if he or she doesn't actually know. This is what happened, unfairly, to our member with the Bonanza. A simple title search will show the federally recorded ownership and lien status of any aircraft registered in the United States.
AOPA has made a title search at the registry easy and inexpensive. While a title search goes a long way to help, it does not provide complete protection. For one thing, it speaks only as of the time it is made. Documents could have been filed with the FAA between the time the search was made and a new ownership or lien interest is filed. For more complete protection, a closing is desirable. The buyer would like not to have to pay for the aircraft until his ownership interest is filed with the FAA and the record is clear. On the other hand, a seller does not want ownership transferred out of his name until he has been paid. Any lienholder, as for example the seller's bank or finance company, does not want to file its release of lien until it is paid. Any new lender to the buyer is looking for similar kinds of protection. Aircraft closings are more difficult than real estate closings because the parties are typically in different locations, usually not in Oklahoma City near the FAA Aircraft Registry. This problem is overcome by an escrow service.
Aircraft Sales Contract Checklist
This aircraft sales contract checklist is provided to assist you and your attorney in the construction of a sales agreement that will meet your needs. Since state law governs commercial agreements of this type, we recommend you seek the services of a local attorney to draft the contract. It is AOPA's experience that "good contracts" do not come from forms or samples. They come from fully understanding the intentions of the parties and drafting an appropriate written agreement.
1. Parties
a. Identify the parties to the contract — use the complete name and address for both.
b. For convenience purposes you may want to attach a specific, short title to each party for use throughout the contract — for example "BUYER" and "SELLER", "PURCHASER" and "OWNER", etc.
2. Purposes
a. What is the purpose of each party behind the contract.
3. Aircraft
a. Identify the subject aircraft completely. This should include make, model, serial number and FAA registration number.
b. Do you also wish to list the major components and accessories to the aircraft radios, engines, props, etc.? If you do, you should identify these items by serial number.
4. Date/location
a. What will be the date of the sale and delivery of the aircraft?
b. Where will the sale and delivery take place?
5. Cost
a. What is the agreed upon selling price?
b. When and how will payment be made?
6. Deposit
a. Will you leave a deposit on the aircraft? How much?
b. What happens if you cannot get financing or if you change your mind? Do you forfeit the deposit? How will the deposit be returned?
7. Aircraft condition
a. What will be the condition of the aircraft at the time of delivery? Airworthy? Current annual? All ADs complied with? Complete with all documents required by Federal Aviation Regulations?
b. What warranties does the seller make as to the condition of the aircraft?
8. Encumbrances
a. Are there any encumbrances on the aircraft? If so, how and when will they be satisfied? (Be sure you get any necessary releases.)
b. Does the seller know of any other potential or threatened claims against the aircraft?
c. Does the seller warrant the title?
9. Default/enforcement
a. What if either party defaults on the terms of the contract? What are the rights of the other party?
b. Do you want to provide for arbitration prior to legal actions? If so, outline the arbitration procedure. Do you want to make the results of the arbitration binding on both parties? Who will pay for arbitration costs?
10. Invalidity of specific contract provisions
a. Do you want the entire contract to be considered invalid if a court determines that one of the terms of the contract is invalid?
11. Time of essence
a. Do you want to make time of the essence in the contract? If not, the parties will likely be given a "reasonable time" to comply with any of their requirements under the contract.
12. Governing law
a. Under which state's laws do you wish to have the contract construed and interpreted?
13. Modifications
a. Do you want to require that any change to the contract be in writing? If so, should be signed by both parties.
14. Waiver of provisions
a. Do you want to be able to have the flexibility to decide not to enforce one or more of the provisions of the contract against the other party without your actions being construed as a complete waiver of the provisions?
15. Signatures
a. Get signatures from the appropriate individuals or corporate officers. If an officer, be sure to include his or her title with the signature block. Make certain that person has the authority to sign.
b. Does your state have any specific formalities for such a contract? Should it be notarized? Should a corporate seal be affixed?
c. What is the effective date of the contract?
|[pic] |AOPA Insurance Agency |
Aircraft Insurance: What Every Prospective Aircraft Owner Should Know About Insurance
States requiring liability insurance on noncommercial aircraft:
• California
• New Hampshire
• Maryland
• Minnesota
• South Carolina
• Virginia
Would it surprise you to learn that most states do not require you to carry liability insurance on your aircraft? Or that none require hull insurance? Or that your aircraft insurance policy probably does not cover you, yourself, in the event of death or disability and may not cover your family (or your employees or co-workers) when they fly with you? Insurance is probably the last thing most people want to think about when they prepare to sign on the dotted line for a shiny new (or used) airplane, but the consequences of ignorance can be tragic. It behooves the pilot considering an aircraft purchase to become familiar with the legal ramifications of aircraft insurance.
Insurance is a form of economic self-protection and is available in two different forms. Hull insurance protects your investment in your airplane from damage or loss. Liability insurance protects you in the event that your aircraft does damage to other people or their property. While no legal obligation to carry hull insurance exists, you will probably be required to obtain it by the lending institution that holds the note on your airplane. If you pay cash for your airplane, or when you payoff the loan, the decision whether to carry hull insurance is yours. And while few states require liability insurance (see above for those that do), it is almost a foregone conclusion that, if your airplane causes damage or loss to another person, you will be sued. If you do not carry insurance and are involved in an accident or incident in a state that requires it, your aircraft may be seized. Without insurance, few people are prepared to sustain the financial losses that an accident can bring. Simply "being insured," however, can be useless unless the aircraft owner understands exactly the coverage he has purchased.
Just because your hull insurance carries the words "all risk," for instance, you are not necessarily fully covered against any exigency. There are three main types of all-risk hull insurance that cover damage or loss to the airframe, engine, propeller, avionics, and other systems and equipment, regardless of the cause of the accident. All risk, not in motion coverage protects your airplane while it is tied down, parked, moored, or being moved under power other than its own. All risk, not in flight coverage protects the aircraft while it is moving on the ground (or water) under its own power. All risk coverage protects the aircraft at all times, on the ground or water and in flight. Bear in mind that, according to most policies, a flight begins when you begin your takeoff roll and ends when you end your landing rollout at your destination. Under such a policy, not-in-flight insurance will not cover you for an accident that occurs on the ground on the active runway (a ground loop, for example).
Another important point regarding hull insurance is that it may not pay actual replacement costs. Some policies are written for actual cash value (ACV) — in other words, the blue book or market value. For an older, fully depreciated airplane, this value might not even approach the actual cost of replacing the aircraft. Some insurance underwriters reserve the right under such policies to simply replace your airplane with one of the same general type and approximate value. Look instead for a stated value (SV) policy, in which you state the monetary value you place on the aircraft (within reasonable limits). In the event of a total loss, this is the amount you will be paid, less applicable deductibles (which often vary depending on whether the aircraft is in flight, in motion, or not in motion at the time of the accident). If you own an aircraft that is appreciating in value (a restored J-3 Cub, for instance), you must remember to increase your SV from time to time. ACV and SV are referred to as limits of coverage. In terms of hull insurance, the limits are fairly straightforward.
It is in the realm of liability insurance that limits take on an added importance. Most policies establish separate liability limits for each accident for bodily injury, which mayor may not include passengers, and property damage. Bodily injury limits are usually stated in terms of the maximum amount each person entering a claim may be paid for any single accident. Increasingly, insurance underwriters are issuing single limit (sometimes called combined coverage) policies in which bodily injury and property damage are lumped together under one inclusive limit of liability.
This limit is often notated in the policy as each occurrence — in other words, the total amount for which the insurance underwriter is liable for anyone accident. Some policies also include limits of medical expenses, which may or may not include those of pilot(s) and other crew, that may be paid. The specific wording of a policy depends on the types of coverage offered and the underwriter offering it. It is therefore absolutely essential that you read and understand each part of the policy before signing it. If you are confused by any portion of the policy, do not sign it until it has been explained to your satisfaction.
When you purchase aircraft insurance, the risks from which you are seeking to protect yourself are assumed by an underwriter. There are about 20 aviation underwriters, the vast majority of which market insurance to the public exclusively through approximately 50 aviation insurance brokers. (These numbers do not include Lloyds of London, which is not itself an underwriter but rather a market comprising hundreds of individuals who assume risks against their personal assets.) Insurance is also available through agents, who are licensed by one or more underwriters to sell the underwriters' products. Simplistically, the difference among these three entities is that, whereas the underwriter represents itself and the agent represents one or more underwriters, the broker represents the buyer, just as a stock broker represents the investor and not the companies whose stock he or she helps the investor to buy. Aviation insurance brokers can save the aircraft owner much of the time that might be spent comparison shopping for the coverage sought. Still, there is no reason not to consult a number of underwriters, brokers, and agents and compare their quotes. If your needs are very simple, then dealing directly with an underwriter may save you some money, but if you need a custom-tailored policy, a broker will usually check a half-dozen sources for the best coverage at the best price. Remember, however, that you get what you pay for; skimping on insurance is false economy.
How do you select an agent, broker, or underwriter? Ask other aircraft owners and fixed-base operators for their recommendations, or call several underwriters for the names of brokers or agents in your area. Find out how long the brokers or agents you are interested in have been in business, what portion of their business is aviation insurance, which underwriters they usually deal with, whether they are pilots themselves. Be sure the broker or agent you select specializes in aviation insurance. While the most insightful sources of information are often pilots and FBOs, be sure to seek out some who have made claims; people seldom have any trouble with their insurance coverage before they file a claim.
No two insurance policies are alike; here again is reason for careful reading, and this is where a broker can be particularly helpful. First you must establish the type and limits of coverage you need. You certainly do not want to be underinsured, nor is there any reason to pay for more insurance than you require. But how much is enough? The answer is to accurately assess your potential exposure to loss and decide how much protection you need. As indicated above, if you want to be able to recoup your investment in case your airplane is destroyed, you should write your hull insurance on stated value rather than actual cash value. For liability insurance, take a look at your own assets. It is not unknown for a court to award damages in excess of the limits of liability of a policy. If this happens, the remainder will come out of your pocket (or the pockets of your heirs). You may think you are leaving your spouse and children well protected, but if a damage judgment exceeds your insurance limits, your family could lose their nest egg (or their home). If you fly your airplane on business, a judgment could be awarded against your company — a particularly damaging situation if you are self-employed. (Another consideration: If you fly on business, your company may require you to carry specific limits of liability. Check on this before binding a policy.) If you are single and have little property, low liability limits may be acceptable to you. Nevertheless, even personal bankruptcy might not protect you from significant losses, because in some states future earnings as well as assets may be attached as a condition of the bankruptcy. In any case in which claims are filed against you, adequate insurance is worth considerably more than what you paid for it.
Next, you must read all the fine print; it is here that exclusions are usually listed, and it is here that you can often tell a "good" policy from a "bad" policy. Exclusions specify the conditions under which the underwriter will not payoff. Minimize exclusions; you may be able to eliminate most of them, usually in return for higher premiums. One exclusion you certainly do not want is one that invalidates your claim if any Federal Aviation Regulations have been broken; it is all but impossible to have an accident without breaking a FAR. Moreover, the violation need not have a causal relationship with the accident. Fortunately, most policies issued by reputable companies do not carry this exclusion, but never assume this to be true. In a case of gross negligence or flagrant disregard for regulations, of course, any underwriter may question your claim.
Some policies will specify pilot qualifications, an important exclusion if anyone else will be flying your airplane or if you plan to rent it or enter a leaseback agreement. Some policies exclude flights outside the continental United States. Some exclude any of your employees or co-workers who might fly with you, the assumption being that workmen's compensation insurance will cover them (it probably will not, unless the trip was part of an employee's job). Some exclude family members, presumably because your family is not expected to sue you (a dangerous assumption). Some policies exclude flights made under a special waiver of the airplane's airworthiness certificate or a ferry permit. Some exclude use of the aircraft for instruction.
Your insurance also will not normally cover damage caused by and confined to wear and tear (including damage to tires, except when caused by fire, theft, or vandalism), any personal property left in the airplane, commercial activities, seizure or destruction of the aircraft as a result of war or warlike activity, whether declared or not, or governmental action. That means if your airplane is, rightly or wrongly, seized by authorities abroad (even if you are covered for flight to, from, and in that country), you might not be able to recover for your airplane.
This is by no means an all-inclusive list of exclusions; it is merely presented to indicate some of the more common ones. Besides, exclusions are not the only items of concern in the fine print. Look also for implied exclusions in sections containing endorsements, definitions, conditions or limits of the company's liability.
Remember, too, that insurance pays for damage resulting from an accident; it may not pay for damage that was the cause of an accident. A broken crankshaft, for example, may not be covered by hull insurance, though subsequent damage to the engine (and airframe, if it is damaged in a subsequent forced landing) would be.
Under some policies, the entire engine may be regarded as the failed part; in such a case, only the damage incurred in the forced landing would be covered. (This may seem unscrupulous, but it is known to happen: caveat emptor.) Even if damage to the engine is covered by your policy, you will only recoup the full value of a new engine if your engine was new. If repairing the damage requires an overhaul and your engine is halfway through its time between overhauls, you will only be paid half the cost of an overhaul. You will never come out of an insurance settlement with more than you had when you filed the claim.
Besides the exclusions listed in your aircraft policy, be sure that your personal life or disability insurance does not contain an exclusion for flying. Some policies do, particularly corporate group policies; others require an additional premium from pilots. Many companies, however, will accept the risk at no additional charge if you have safely accumulated a reasonable amount of flying experience.
What constitutes a "reasonable" amount of experience is at the discretion of the underwriter. Similarly, insurance premiums are calculated according to a complex formula. The premiums you pay in exchange for the aviation underwriter's assuming your risk will depend on a large number of factors, the three most important of which are your qualifications and experience as a pilot (and the qualifications and experience of any other pilots who will fly the airplane), the value of the aircraft and its ease of repair, and the sort of operations you intend to conduct in the aircraft. A low-time private pilot with no ratings who buys a high-performance aircraft that he intends to lease back to an FBO for instruction will be paying hefty premiums. In contrast, an instrument-rated pilot with many hours of experience and time in type who buys the same airplane for personal use will face much lower payments. You will be asked questions such as: Will charges be made for use of the aircraft? (Not even gas money is allowable in many cases.) Will it be used for carrying anything other than people? Will it operate from anything other than paved runways? Will it be used outside the United States? Will it be used for instruction? Do you own any other airplanes? You will probably also be asked if you have had any accidents; FAR violations; pilot or medical certification limitations; physical impairments; felony convictions, arrests, or license suspensions for motor vehicle offenses, or citations for reckless operation or operation of a motor vehicle while under the influence of drugs or alcohol. Any affirmative answers will have to be explained in detail.
Even though you may name other pilots on your policy, find out what distinction the underwriter makes between a named pilot and a named insured. The former may not be fully protected under the policy; the latter is. It may take a waiver of subrogation (subrogation is the acquisition by the underwriter of your rights against third parties for the purpose of indemnification of loss to the extent that the underwriter pays the loss) to make sure that pilots other than the owner are personally covered by the policy. Named pilots are normally covered by the liability insurance but not necessarily by the hull insurance. While the aircraft owner might be paid for damages incurred by a named pilot, the underwriter could then sue the named pilot for recovery. (For renter-pilots, the same generally holds true of aircraft owned by an FBO, hence the importance of insurance disclosure statements for rental aircraft.)
Premiums will also be based on the aircraft, including its age, make and model, number and power of engines, number of seats, type of landing gear, and value. Homebuilts, antique or classic aircraft, helicopters, and aerobatic and ex-military aircraft may be expensive to insure, and not all underwriters will handle them. Balloons and sailplanes have their own special requirements. But unremarkable taildraggers and floatplanes, seaplanes, and amphibians may also face higher premiums than plain-vanilla tricycle-gear aircraft. Even the number and type of instrument approaches available at your home field can make a difference.
Your premium will reflect how many exclusions you want removed from your policy, how many other pilots will be named on your policy, and whether you are buying through a broker, whose fee (generally 10 to 15 percent of the total annual premium) is added to your premium. Your premium may be reduced by building accident-free hours (particularly in night and cross-country flight), improving your proficiency and ratings (particularly in attaining the instrument rating), storing your aircraft in a secure hangar at a well-equipped airport, and in other ways demonstrating a reduced exposure to risk.
The number and relative weight of the factors that determine your premiums vary within and among underwriters. It is therefore impossible to estimate in an article of this type what a specific premium for a given aircraft flown by a given pilot for a given type of mission might be. When buying insurance, do not start by shopping around for the best price. First, determine precisely how much and what kind of coverage you need to adequately protect yourself, then compare policies for the best value for your insurance dollar. Establishing a good relationship with a reputable broker is well worth the few extra dollars his or her services might cost and might save you some money, and a lot of heartache, in the long run. Only a very few, very rich people can afford to be self-insured.
The AOPA Insurance Agency can help you get the very best aircraft insurance coverage and service available. They'll make sure that, as aircraft owners, you get full family coverage, automatic increases in hull value when you add expensive equipment, coverage for hand-held avionics and options for expanded liability coverage. Call 1-800-622-AOPA (2672) for a free consultation and quote or to answer any other questions you may have about aircraft insurance.
Financing: How to Avoid a Lemon of a Loan
Tips for a fast approval
• Select an aircraft that will fit your needs.
• Put together a complete financial package.
• Provide a thorough description of the aircraft.
• Give a detailed description of the purpose of the aircraft.
• For higher loan amounts you may need up to three years of tax returns.
Information that may be needed
• Credit application.
• Personal financial statement.
• Verification of income: W-2; Pay stub; Tax returns.
• Aircraft information: Annual date; Airframe and engine times; Equipment list; Photographs; Purchase agreement.
Prospective aircraft buyer Jane F. Law learned early on the importance of careful research. She had her heart broken by a Pitts S-IS that seemed the perfect airplane until she realized that the 150-horsepower Lycoming out front had 1,500 stressful aerobatic hours on it. The impending need for an overhaul made the airplane too expensive for her checkbook. She reluctantly decided not to purchase the Pitts, but all the preparation was not wasted. She now knows just how much the bank will loan her, and she has completed all the applications for a loan. The money is there; the only task left is to find the right airplane on which to spend it.
Though 24-year-old Law brims with self-confidence, she admits that the thought of financing an airplane left her a bit nervous. Fortunately, several experienced friends agreed to usher her through the process.
Like about half of all prospective aircraft purchasers, Law estimated what she could afford and then sought an airplane that met her needs and her budget. Once she found the Pitts, she went to the bank to find out if she could actually afford it. The alternative is to first get "pre-qualified" by a lender. In that case, you confess to the loan officer at the bank or finance company your income and expenses and other relevant financial information, and they tell you how much you can afford to spend. You then shop for an aircraft within your budget.
Law figured a Pitts was out of her price range, but she spotted an S-1S in the used-airplane-shopper's bible — Trade-A-Plane — that was within her budget. She made several calls to the owner, who sent her photographs of the airplane. Though she had never seen the Pitts in person, she became convinced it was the one for her. Next, she had to find out if she could really afford it. She contacted a bank with experience in financing aircraft.
The $13,000 she was approved for is about 75 percent of the $17 ,500 the owner was asking for the Pitts. Usually, lenders in the aircraft financing business will finance 80 to 90 percent of the total purchase price or, in many cases, the low wholesale value, whichever is less, as determined by the Aircraft Bluebook-Price Digest. In determining the value, the lenders take into account the age and condition of the aircraft, time remaining before overhaul, and equipment on board. To most lenders, however, the important issue is the ability of the buyer to pay, not the aircraft value.
In determining whether to lend Law the money, the bank evaluated the financial information she provided. The loan officer helped her fill out the loan application form and financial statement that are designed to determine the purchaser's net worth. Assets and liabilities are evaluated, a debt-to-income ratio is established, and a credit check is conducted.
The bank also reviewed the photographs of the airplane and had a title search conducted. The loan officer was provided a Bill of Sale from the seller.
Less than 24 hours after completing the paperwork, the bank was able to approve the loan. Law had an insurance company write a policy covering the Pitts and had a copy of the certificate of insurance faxed to the bank.
Though she eventually backed out of the deal, the process Law went through is typical, particularly for smaller loans. Sometimes when financing a more expensive aircraft, a lender will require a pre-purchase inspection, and some buyers and sellers prefer to have the funds placed in an escrow account until both parties are satisfied that the deal is complete.
For most banks a well-managed portfolio poses very little risk. Light airplane values for the most part have been rising, building equity for the owner. An owner who finds himself in financial difficulty may be able to sell the airplane, payoff the loan, and perhaps even pocket some equity.
With most used aircraft appreciating in value since the mid-1980s (without regard to engine hours flown and mechanical/cosmetic wear), the number of banks offering aircraft loans may be at an all time high. Historically, a new aircraft depreciates for 2-8 years before leveling off in value to start appreciating.
A local bank with no aircraft department may be an option for some pilots. Because it is unsure of the risk involved, the local bank may end up charging a slightly higher interest rate than a bank that specializes in aircraft, but if you're a good customer of the bank, you may also end up with a lower rate. It's worth a telephone call.
Another reason to check with your local bank is not for an aircraft loan at all, but for a home equity loan. Just as you can use the equity built up in your home for adding on a family room, you also may be able to use it to buy an airplane. The best part is that the interest on home equity loans is deductible. Interest on personal aircraft loans is not. Home equity loans generally carry interest rates lower than those offered on aircraft loans, but fees and points assessed on home equity loans usually will be higher than for aircraft loans.
A home equity loan may be particularly attractive to someone who wants to borrow a small amount or to borrow for an experimental or kit aircraft. When using a home equity loan, the value of the aircraft for collateral purposes is not important because the home, itself, is the collateral.
A disadvantage of dealing with a local bank, as the specialty banks are quick to point out, is the lack of aviation expertise. The specialists know the market, and they can better advise you on how to avoid problems during the purchase.
One bank that has developed a niche in financing singles and light twins over the past 15 years is MBNA America Bank. AOPA members can take advantage of a program the association has developed with MBNA. The AOPA Aircraft Financing program is similar to financing offered by other financial institutions, but MBNA has established a toll-free telephone number and a dedicated service center to handle financing for AOPA members. Among its services are the ability to apply by telephone and an additional reserve line of credit to qualified borrowers. The unsecured line of credit can be drawn upon for refurbishment, maintenance, and other aviation-related expenses. The rates in the AOPA Aircraft Financing Program are competitive with those offered by other banks in the aircraft finance business. Plus, MBNA America will pay the annual AOPA membership fee for the entire term of the loan for members who obtain loans of more than $20,000.
Not everyone, of course, qualifies for an aircraft loan. Some AOPA members report being denied loans because of debt-to-income ratios that are too high and, particularly for self-employed pilots, the inability to substantiate income. Forty-two percent of AOPA members are self-employed. Those who own their own businesses generally have a more difficult time substantiating their income. In an effort to satisfy themselves that the business is successful and stable, the banks will require company and personal tax records for a least the past two years. Knowing that most business owners intentionally try to minimize corporate income to avoid higher corporate income tax rates, banks consider a pilot's complete financial wherewithal.
AOPA's Oklahoma City office provides title searches, service difficulty reports, airworthiness directive services, and accident/incident reports, all of which are grouped together in what is called the Buyer Protection Plan. Call 800-654-4700 for more information on services offered.
Though the number of institutions willing to finance aircraft is growing; plenty of concerns remain. One concern expressed by all the lenders is the aging aircraft fleet. Older aircraft tend to have incomplete or questionable histories. Logbooks come up missing, old liens don't get removed from records — all of which affect resale values. The caution, then, is to shop carefully both for your airplane and for your loan.
MBNA and AOPA are dedicated to tailoring a program to finance the purchase of your plane and will work hard to design a loan that makes sense. This means everything: the down payment, rate, and term are structured to meet your needs. As an AOPA Certified Program, for every dollar financed through the AOPA Aircraft Financing Program, MBNA makes a contribution to AOPA — to help keep GA strong and your cost of flying down. For more information or your free pre-qualification, 1-800-62-PLANE (1-800-627-5263) and please mention priority code AAAT when calling.
Paperwork
Lining Up the Proper Documents for Your New Airplane Can Be a Formidable Task. Fortunately, AOPA Can Help
Legend suggests that there was a time when a handshake was enough to complete a transaction, but the days when a man's word was his bond (if those days every really existed) have passed. Today's world is tightly regulated by paperwork and bureaucrats. A person entering into a relatively minor transaction, such as buying a used car, may find himself being asked to sign one document just to attest that he has, indeed, signed another.
As you might expect, the purchase of a used airplane involves long and tangled streams of red tape, many of which are tied to Federal Aviation Regulations. Securing and processing the proper forms you need to operate a new airplane according to federal and local regulations can be a confusing and tedious task if you choose to tackle it all by yourself, but as we shall see, AOPA can provide a considerable amount of assistance in lining up the proper documents. First, let's untangle some of the red tape and see what we are up against.
We'll start on familiar ground, with the mnemonic AROW. The letters stand for the documents that must be carried aboard an airplane. They are an airworthiness certificate, registration certificate, operating limitations, and weight and balance information.
A current airworthiness certificate is required (by FAR 91.203) to be displayed in an airplane where it can be read by everyone aboard. An airworthiness certificate usually is transferred with an airplane when it is sold, but the certificate alone does not fulfill the regulatory requirement. A buyer must ensure that the airworthiness certificate is, as the regulation specifies, current. Don't look for a specific expiration date on the document; there is none. A Standard Airworthiness Certificate (FAA Form 8130-6 remains current as long as the airplane is maintained according to regulations and is properly registered, according to the Federal Aviation Administration.
Aircraft owners are required to keep records of all inspections and maintenance required by regulations, as well as any major repairs and alterations. Before purchasing an airplane, you should study the airplane's engine and airframe logbooks to determine if the maintenance and recordkeeping requirements have been fulfilled.
Check for the following information: the total time in service of the airframe, engine(s), and propeller(s); current status of any life-limited parts; time since overhaul of any component that is required to be overhauled at specific intervals; status of compliance with required inspections; status of compliance with applicable airworthiness directives, and copies of descriptions of major repairs and alterations (FAA Form 337s) that have been performed on the airplane.
An airplane used solely for personal transportation, business, or pleasure flying must be inspected at least once each year. Inspections every 100 hours are required for airplanes hired either to carry passengers or for flight instruction. Jets, turboprops, and large airplanes (those weighing more than 12,500 pounds) must be inspected according to a program approved by the FAA.
The FARs also include inspection requirements for specific equipment. For example, if the airplane has a transponder, you should check the logbooks to ensure that the unit was tested within the past 24 calendar months (as required by FAR 91.413). If an airplane is operated under instrument flight rules, its static system, altimeters, and altitude-reporting equipment also must have been inspected during the past two years (FAR 91.411).
Logbook entries must include descriptions of the work that was performed on the airplane, the date the work was completed, and the signature and FAA certificate number of the person who approved the airplane for further flight. Of course, a mechanic also has the authority to disapprove an airplane for return to service after he has completed a required inspection. In this case, the logbook entry would include his reasons for determining that the airplane is not airworthy.
If you buy an airplane that did not pass a required inspection, you will have to have the appropriate repairs performed and signed off before you can fly the airplane. The FAA may approve a ferry permit so that you can fly the airplane to another airport where the work can be performed. You can apply for the Special Flight Permit at a Flight Standards District Office (FSDO). The FAA may issue the permit after a mechanic inspects the airplane and determines that, although it does not meet all airworthiness standards, it is in suitable condition to make the one flight you have requested.
Airworthiness directives (ADs) are, literally, federal aviation regulations. An airplane may not be operated unless all applicable ADs have been complied with (FAR 39.3). Therefore, it is very important, when reviewing an airplane's maintenance records, to check for evidence of compliance with all applicable ADs. Inspection, repair, and operational recommendations are published by manufacturers in the form of service bulletins. Unless a service bulletin is specifically mentioned in an AD, compliance is not required. However, you should review all applicable service bulletins. If the person from whom you are buying the airplane does not have them, you can purchase them from the manufacturer. A review of service letters may disclose some recommendations you consider essential, and the airplane's maintenance records will show if the work has been performed.
To digress briefly from the subject of required documents, it is worthwhile to note the benefits of studying other sources of information on potential maintenance and operational problems while you are completing the prescribed paperwork. One source is service difficulty reports. They are compiled from Malfunction and Defect Reports (FAA Form 8010-4s) submitted by mechanics, aircraft owners and pilots. Sometimes these reports are grounds for issuance of an AD; however, most are not considered by the FAA to justify regulatory action. Nevertheless, the reports are useful in pointing out potentially serious maintenance problem areas that have been detected by others who have flown or worked on airplanes similar to the one you may buy.
If you employ a bit of Holmesian deduction, the airplane's maintenance records may reveal damage history that the owner may not have mentioned. You won't find any tattletale descriptions such as "Airplane landed gear-up, 3/13/87," but you may find such clues as "Fuselage belly skin replaced, 3/14/87." Be skeptical.
One final tip while we 're off the subject: To help you evaluate the condition of an airplane, you should consider contracting a mechanic who knows the airplane and its systems to perform a pre-purchase inspection. A recent annual inspection will indicate only that, in the opinion of the person who signed the logbook, the airplane is airworthy at the present time. A mechanic who performs a pre-purchase inspection, on the other hand, may tell you, for example, that a critical component probably will have to be replaced within the next three years.
As mentioned earlier, an airplane must be properly registered to maintain a current airworthiness certificate. You can re-register an airplane in your own name (and your co-owners' names, if there are any) by sending an Aircraft Registration Application (AC Form 8050-1), evidence of ownership, and a recording fee to the FAA Aircraft Registry, AAC-250, Post Office Box 25504, Oklahoma City, Oklahoma 73125. Evidence of ownership can either be an Aircraft Bill of Sale (AC Form 8050-2) or a conditional sales contract.
After completing the registration application, mail the white and green copies to the FAA, and keep the pink copy as evidence of your application. It will serve as temporary authorization to fly your airplane in the United States until the FAA mails you a Certificate of Aircraft Registration. The certificate is valid until the airplane is sold again, registered in another country, destroyed or scrapped, or until its owner dies.
You can count on extra paperwork and an additional fee if you want to change the airplane's registration number. You can list five different N numbers (actually, either one to four numbers with a suffix letter or one to three numbers with two suffix letters, following the U.S. designation "N"), in order of preference, in a written request forwarded with your registration application. The FAA will let you know which of the five numbers is being reserved for your airplane. But before you paint the new number on your airplane, you have to send another written request to the FAA. The agency will send you another document (AC Form 8050-64), giving permission to change the number. After doing so, you must sign and return one copy of the form to the FAA and present the other copy, as well as the airplane's airworthiness certificate, to an FAA inspector, who will issue a new airworthiness certificate showing the new number.
As stated earlier in this publication, the requirement for an FCC Radio Station License was dropped for operation within the continental United States. The final documents — operating limitations and weight and balance data — for relatively new airplanes usually can be found in the approved airplane flight manual. The information for other airplanes may be found on separate documents. You should check to see that all applicable placards listed in the limitations section of the pilot's operating handbook are installed in the airplane. Also, the weight and balance data should be up-to-date and accompanied by a current equipment list.
Now that I may have given you the impression that the paperwork will overgross your new airplane and tie up your spare time for the next few months, let me repeat the good news: AOPA can help. For a fee, the association will provide a wide variety of services, including title searches and compilations of damage reports, service difficulty reports, accident/incident reports, and ADs. In addition, the association will process several of the required documents for you.
State Registries
The following states require aircraft registration. For information, contact the state agencies listed.
|Alaska |(907) 451-2200 |
|Arizona |(602) 254-6234 |
|Connecticut |(860) 594-2530 |
|Hawaii |(808) 838-8600 |
|Idaho |(208) 334-8775 |
|Illinois |(217) 785-8500 |
|Indiana |(317) 232-1477 |
|Iowa |(515) 237-3301 |
|Maine |(207) 287-3318 |
|Massachusetts |(617) 973-8881 |
|Michigan |(517) 335-9283 |
|Minnesota |(612) 296-8202 |
|Mississippi |(601) 359-7850 |
|Montana |(406) 444-2506 |
|New Hampshire |(603) 271-2551 |
|New Mexico |(505) 827-1525 |
|North Dakota |(701) 328-9650 |
|Ohio |(614) 793-5042 |
|Oklahoma |(405) 521-2377 |
|Oregon |(503) 378-4880 |
|Rhode Island |(401) 737-4000 |
|South Dakota |(605) 773-3574 |
|Utah |(801) 715-2260 |
|Virginia |(804) 236-3624 |
|Washington |(206) 440-4000 |
|Wisconsin |(608) 266-3351 |
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