An aircraft bill of sale is a legal document that formalizes the transaction details when an aircraft is sold from one private party to another. It serves as a vital record, providing proof of purchase and establishing the transfer of ownership of the plane.
When to Use an Aircraft Bill of Sale
You should use an Aircraft Bill of Sale in the following scenarios:
- Private Sale: When you’re selling a personal aircraft, such as a small plane or helicopter, to another individual.
- Commercial Transaction: For businesses dealing in the sale or purchase of aircraft for commercial use.
- Gifting or Donation: If you are gifting or donating an aircraft, it is necessary to legally document the transfer.
- International Sales: If you are selling an aircraft to a buyer located in another country, the Bill of Sale can help ensure that legal documentation is completed for international regulations.
Why Do You Need an Aircraft Bill of Sale?
An Aircraft Bill of Sale is necessary for the following reasons:
- Proof of Ownership Transfer: It provides evidence that ownership of the aircraft has been transferred from the seller to the buyer. This is vital when registering the aircraft with the FAA (Federal Aviation Administration).
- Legal Protection: It serves as a legal safeguard by defining the terms of the sale, such as purchase price, description of the aircraft, and date of transfer, preventing disputes down the line.
- Required by FAA: The FAA mandates that any change in aircraft ownership must be documented through an Aircraft Bill of Sale and submitted for proper registration.[/lt_tip]
What Forms Do You Need to Sell an Aircraft?
The FAA requires buyers to submit several specific forms when registering an aircraft for the first time.
The FAA website provides certain documents available for download.
- Aircraft Registration Application (AC Form 8050-1).
- Aircraft Bill of Sale.
- The current owner should provide an airworthiness certificate, but the new buyer must submit an Application for U.S. Airworthiness Certificate before registering the plane.
- A purchase and sale agreement. This is a sales contract, not a bill of sale. It should include the pre-purchase inspection, whether the aircraft is being sold “as-is” or if there are warranties of merchantability, and other terms and conditions.
Pilots’ associations caution private buyers and sellers against drafting their own purchase and sale agreements. These contracts are complex and should be outlined, or at least reviewed, by a contract attorney.
Entity purchasers, corporations, or LLCs have different documents and submission requirements to register a plane. Corporate buyers should contact their attorneys before making an aircraft purchase.
How To File an Aircraft Bill of Sale
Step 1 – Negotiate the price of the airplane
Negotiating the price of a private airplane involves carefully assessing several factors to ensure you are making a wise investment. Here are key points to consider:
- Market Research: Understand the current market value of the aircraft type you’re interested in. Prices vary based on make, model, age, and market demand. Use resources like aircraft sales listings, trade publications, and valuation guides to understand fair market prices.
- Aircraft Condition: The overall condition of the aircraft is a significant factor in its value. Look for signs of wear and tear, the condition of the interior and exterior, and any signs of corrosion or damage.
- Maintenance and Logbooks: Review the aircraft’s maintenance history and logbooks thoroughly. Regular maintenance and clear, complete logbooks indicate a well-maintained aircraft and justify a higher price. Missing entries or gaps in maintenance records can be a red flag and a point for price negotiation.
- Total Time and Engine Hours: Check the total airframe and hours since the engine’s last overhaul. Aircraft with lower total time and engines closer to the beginning of their lifecycle may command higher prices. High-time aircraft or engines nearing overhaul can be a point to negotiate a lower price.
- Avionics and Upgrades: The type and condition of the avionics and any upgrades done to the aircraft can significantly affect its value. Modern, well-maintained avionics are desirable and can increase the aircraft’s price. Outdated or non-functional equipment can be a negotiation point for a price reduction.
- Pre-Purchase Inspection: Arrange for a pre-purchase inspection by an independent, qualified mechanic or inspector. This inspection can uncover issues that may not be obvious but could require costly repairs. Use the findings from this inspection in your price negotiations.
- Operating Costs: Consider the operating costs, including fuel efficiency, insurance, storage, and maintenance. An aircraft that is less expensive to operate may justify a higher purchase price.
- Market Timing: The timing in the market can influence aircraft prices. During a buyer’s market, you may have more room to negotiate. In a seller’s market, high demand might limit negotiation leverage.
Consider hiring an aircraft broker or consultant who can provide expert advice and negotiation assistance. They can help evaluate the aircraft and ensure a fair deal.
Step 2 – Fill out a Bill of Sale
Once you’ve done your due diligence, you’ll want to fill out two originals of an Aircraft Bill of Sale form, since one must go to the FAA with the registration. Here’s what you have to fill out and in what order:
- Date of Sale
- Buyer’s name and mailing address
- Seller’s name and mailing address
- Aircraft information – manufacturer, model, year registration, and serial numbers
- Agreed purchase price
- Agreed date of delivery
- Deposit amount due at time of purchase (if any) and whether non-refundable or refundable
- Number of days for an inspection period
- US state or territory where the transaction is happening
- Signatures and names of the interested parties and witnesses.
Step 3 – Gather additional documents
In addition to the bill of sale, you may need other documents, such as the aircraft’s current registration and a release of lien if there was a loan against the plane that has been paid off.
Step 4 – Register the plane with the FAA
To register an aircraft with the FAA, you must meet the following requirements as outlined in REG-AR-93:
New Registration:
Before giving the buyer the keys and bill of sale, the seller must:
- Remove the original aircraft registration certificate.
- Complete the sale information on the certificate and mail it to the FAA registry in Oklahoma City, OK.
- Remove the FCC radio license with the seller’s name (if any).
- Provide any logbooks and records to the buyer if agreed to.
- If the buyer is a foreign national, the N-number must be removed (painted over or stripped) from the plane before the transfer.
Registration Certificate:
- Aircraft Registration Application: You need to complete and submit the original form (available online or via the FAA). Paper forms can be requested from the Aircraft Registration Branch or your local FAA Flight Standards District Office (FSDO).
- Proof of Ownership: Provide documents like an Aircraft Bill of Sale (AC Form 8050-2) or equivalent legal proof of ownership.
- Fees: Pay a non-refundable $5 registration fee, payable to the FAA.
The aircraft registration application must include all new owners’ printed names and signatures. If the owners are part of a company or business, their signatures must include their titles or positions.
Registration Considerations:
- Temporary Registration: While processing your application, you may operate the aircraft under a temporary certificate, valid for up to 90 days. The pink copy of AC Form 8050-1 serves as this temporary authority.
- Registration Validity: Aircraft registration is valid for three years. You must renew it before the expiration date.
- Changes to Registration: Notify the FAA within 30 days of any change in ownership, address, or legal status of the registered entity.
- Deregistering an Aircraft: If the aircraft is sold, destroyed, or exported, you must inform the FAA by submitting a written notice or completing the back of the Certificate of Aircraft Registration.
Where to Send
Send the completed forms, the fee, and any additional required documents to the FAA Aircraft Registration Branch. The mailing address is:
- By US Postal Service – FAA Aircraft Registration Branch, PO Box 25504, Oklahoma City, OK 73125-0504
- By Commercial Delivery Services –FAA Aircraft Registration Branch, Registry Building Room 118, 6425 South Denning, Oklahoma City, OK 73169-6937
If you have additional questions, contact the FAA Aircraft Registration Branch at (866) 762-9434, Monday through Friday, 7:30 AM to 4:00 PM Central Time.
Aircraft Bill of Sale Sample
Frequently Asked Questions (FAQs)
Can I use a generic Bill of Sale for selling my aircraft?
No, it’s important to use a specialized Aircraft Bill of Sale. Aircraft sales are subject to FAA regulations, and a generic bill of sale may not meet all the legal requirements for the registration and transfer process.
What happens if I don’t file the Bill of Sale with the FAA?
If the Bill of Sale isn’t filed with the FAA, the transfer of ownership isn’t officially recognized, meaning the buyer cannot legally operate or register the aircraft under their name.
How do I find my aircraft’s serial number and FAA registration number?
The serial number can usually be found on a plate inside the cockpit or on the tail of the aircraft. The FAA registration number is commonly displayed on the exterior of the aircraft.
Do I need a notarized Bill of Sale for an aircraft?
While the FAA doesn’t require a notarized Bill of Sale, it’s a good idea to have the document notarized, especially for high-value transactions, to ensure its authenticity.
