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'Annual in lieu of Pre-Buy' - ?


Firebird2xc

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9 minutes ago, smccray said:

A seller that expects to control the potential buyer's inspection isn't reasonable. I wouldn't allow a seller to control my pre-buy, and I wouldn't expect to control a buyer's pre-buy. Trust- but verify. The seller may be a smooth talking liar- verify. Seller may not be aware of a real issue with the plane- verify.  Any buyer should expect to buy a plane as is, where is, no warrantee even for airworthiness of the plane. You pay your money and you take your chances. Every one of these planes can experience a $25k+ uninsured loss without warning. If you want a warranty buy a new plane. 

Or worse. A few years ago I had a rod bolt back out and take out the entire engine. Try pricing an overhaul with no usable core. Then add in the debris shed through the governor, prop, cooler, etc. I was far over $25K. That was 1000 SFNEW. But with virtual no market for Mooneys without engines I didnt have much choice. Even the junk yards didn't want to come out to get the plane for almost free.

-Robert

Edited by RobertGary1
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2 minutes ago, N9201A said:

 


Uh, that would be the "adequate security" referenced in my sentence you quoted.

Others have mentioned requiring the Buyer to prepay a set inspection fee. That's wise too.

Or don't, I don't really care. But now that you've read this thread, don't expect any sympathy as a seller when a flighty buyer sticks you with the prebuy tab.

 

If a seller agrees to release a deposit from escrow without the plane back home, or if a purchase contract gives the seller the right to walk for any reason at any time, then there isn't any security.

You're right that a flighty buyer could stick me with a pre-buy tab, but if a buyer isn't willing to give a seller some control of the deposit then the buyer isn't reasonable.  It could happen- I would be crazy to think it would never happen to me- but a seller controlling the buyers inspection isn't reasonable. 

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4 minutes ago, RobertGary1 said:

Or worse. A few years ago I had a rod bolt back out and take out the entire engine. Try pricing an overhaul with no usable core. Then add in the debris shed through the governor, prop, cooler, etc. I was far over $25K. That was 1000 SFNEW. But with virtual no market for Mooneys without engines I didnt have much choice. Even the junk yards didn't want to come out to get the plane for almost free.

-Robert

:(

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If a seller agrees to release a deposit from escrow without the plane back home, or if a purchase contract gives the seller the right to walk for any reason at any time, then there isn't any security.


Um...yes...?

If seller HAS security -- my original premise -- then seller RELEASES security (your changed hypothetical fact), then seller would have "NO security." That is unarguable...kinda like not bothering to get security would be just like having "NO security."

See earlier comment re "avoidable problem."

Where S is Security:

S - S = 0
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4 minutes ago, N9201A said:

 


Um...yes...?

If seller HAS security -- my original premise -- then seller RELEASES security (your changed hypothetical fact), then seller would have "NO security." That is unarguable...kinda like not bothering to get security would be just like having "NO security."

See earlier comment re "avoidable problem."

Where S is Security:

S - S = 0

 

So if a seller has real security in the deposit, how does the seller get stuck with the bill for the prebuy?  If real security exists, then the buyer cannot just walk away from the bill and the seller need not control the inspection.

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So if a seller has real security in the deposit, how does the seller get stuck with the bill for the prebuy?  


EXACTLY!! How indeed?

I guess release the security without the bill paid?

S - S = 0

I'm done here..

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I think there is a mis conception here about escrow ,  Escrow is not a deposit , It is a good faith gesture , if the deal is not consummated , ALL escrow is returned .... ALL escrow.....I have a plane going to prebuy next week , The shop he uses will be advised to get paid before the prebuy , as I (the seller) will NOT pay , The buyer is also instructed NOT to use any shops that are on my field , or any shops that I do business with ,   as a rule , I will not recommend a shop for prebuy , It is about transparency ,      The things that I do require are expenses for moving the plane to be prepaid , and an escrow account established for the plane , and 5000 dollars in that account ,  I also do all negotiating prior to the prebuy , The customer , then has the opportunity to purchase , or not , the airplane.....  Remember , the escrow acct is the PURCHASERS account , the buyer has NO ACCESS to those funds until he supplies a signed bill of sale to the customer.....

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  • 3 years later...
On 8/2/2017 at 12:38 AM, Dream to fly said:

I would like to make a recommendation to the forum that a pinned link on how to purchase a Mooney be made.  Using information from Forum members that have credible proof of how a deal should go and how a bad one goes.  Everybody has an opinion and some maybe more apt on the laws and some more so on the art of the deal.

I SECOND THIS!

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I’ve not read the whole thread, but was shocked at how many of you think a pre-buy is more through than an annual inspection.

If I had a shop ,I’d love to do pre-buys, then an annual soon after, charge you twice.

‘Anyone can do a pre-buy, guy who cuts grass, your neighbor etc. The reason is there is no such thing as a pre-buy, it’s not legally defined, the FAA could care less, there are no performance standards.

‘However an Annual is legally defined, only an IA or above can preform one, and it’s legally defined, which means if as an IA I miss something, then the owner of the aircraft can come after me legally, and the FAA can also. There are well defined min performance standards for an annual. what are they for pre-buy?

Miss a horribly unsafe grounding airplane killing problem on a pre-buy? Well life is tough isn’t it. Better luck next time.

 

I would whole heartedly recommend if you can work it that way to get an annual, combine it with this mythical pre-buy if you want to, but get credit and hold the inspector responsible for an annual.

‘First day of an annual you know almost certainly if you want the airplane or not, and you can walk anytime you want.

I can almost always tell you in an hour or less if an airplane has been professionally maintained, or if the “hanger elves” have been at work.

‘If there is any IA out there that looks harder and inspects more in a pre-buy than an Annual, well don’t ever let them work on your airplane

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44 minutes ago, A64Pilot said:

I’ve not read the whole thread, but was shocked at how many of you think a pre-buy is more through than an annual inspection.

If I had a shop ,I’d love to do pre-buys, then an annual soon after, charge you twice.

‘Anyone can do a pre-buy, guy who cuts grass, your neighbor etc. The reason is there is no such thing as a pre-buy, it’s not legally defined, the FAA could care less, there are no performance standards.

‘However an Annual is legally defined, only an IA or above can preform one, and it’s legally defined, which means if as an IA I miss something, then the owner of the aircraft can come after me legally, and the FAA can also. There are well defined min performance standards for an annual. what are they for pre-buy?

Miss a horribly unsafe grounding airplane killing problem on a pre-buy? Well life is tough isn’t it. Better luck next time.

 

I would whole heartedly recommend if you can work it that way to get an annual, combine it with this mythical pre-buy if you want to, but get credit and hold the inspector responsible for an annual.

‘First day of an annual you know almost certainly if you want the airplane or not, and you can walk anytime you want.

I can almost always tell you in an hour or less if an airplane has been professionally maintained, or if the “hanger elves” have been at work.

‘If there is any IA out there that looks harder and inspects more in a pre-buy than an Annual, well don’t ever let them work on your airplane

I JUST finished reading the whole thread, and it seems overall that even though as you say an annual is federally mandated, some owners can work with the IA to get it to "pass" this inspection(something us A&P's call "pencil whipping") just to keep the a/c flying. This is unfortunate and at the IA's discretion and danger of legal enforcement.

Where as a "pre-buy" or PPI is requested on the buyers behalf to better assess the condition and state of the purchase he/she is planning to take on, in hopes of also being able to negotiate the purchase price if anything major comes up. I guess if specified, the buyer can have it become an annual since there are very similar items being "examined" in the PPI and "inspected" in the annual.

Also seems like there are very bad scenarios that fortunately for us MSers are sharing where they have found that a pre-buy which should ALWAYS be paid for by the buyer and annual which should most always be paid for by the seller sometimes have had mixed results and have not gone that way.

NOW, would anybody with sufficient knowledge and experience in these interactions draft up a reccommded basic purchase agreement in their knowledge works best for both parties involved subject to change by the buyer and seller?

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I’m an IA or have been for the last 15 years or so, but got caught out overseas and couldn’t renew, so I’ll retest this year.

‘But anyway any IA that does as you suggest is committing a felony, and is subject to federal imprisonment to say nothing about losing their livelihood as in revocation of privileges. I hope that they are few and far in between.

‘All I’m saying is if your paying for a very comprehensive inspection, one that you think is more through than an Annual, why wouldn't you you have the Annual block checked?

If the answer is, well we didn’t do everything an annual requires, well then it wasn’t as comprehensive as an annual was it?

IF these pre-buys are so good and comprehensive, how come I hear about all these really expensive first annuals? I’d submit that if the Annual finds anything that you didn’t break, then the pre-buy must have missed it, and wasn’t as through an inspection as the Annual.

If your an A&P then you know that problems are found at least as often doing servicing than in a formal inspection, bad wheel bearings and broken strands on control cables as a for instance, so there is an inspection part to servicing.

What’s the logic of an Annual should be paid by the seller? I’d bet it comes from the thought that an annual is overdue. 

‘Why even look at an airplane thats past Annual? Being out of Annual isn’t an indicator of a well maintained airplane, but things happen I guess, either way if it’s out of Annual, it’s going to get one, one way or another, so why not during the initial  inspection, assuming it passes the sniff test, any Good IA will have a impression in the first hour or so, they will know if you have a Gem or a Pig.

I’m trying to think of exactly how the expression goes, but my German neighbor when I lived there told me that “professionals” are like a Lady of the evening, whoever is paying gets what they want. So no, of course don’t go for an Annual paid for by the seller, but negotiate  a purchase price based on an Annual needing to be paid for, and pay for it yourself. You were going to do that anyway for a PPI as it’s apparently called, except you don’t get to deduct that from the purchase price.

Bottom line is price wise who pays and when is so much noise, in truth you the buyer are paying for everything because your buying the airplane, the bottom line is what is the price?

Any purchase agreement I have ever seen, and I have not seen many, I’m not the type that flips airplanes, but anyway they have all said that if the buyer backs out he is responsible for returning the aircraft to the condition it was prior to the inspection, whether a PPI or an Annual is irrelevant, if you don’t want it, you have to pay the mechanic to put it back together.

‘I was initially looking to buy a Meyers 200D, Actually an Aero Commander. After agreeing on a price which was lower than I expected things got flaky when I insisted on an Annual at my expense, conducted by a local IA of my choosing, told me that something was wrong, I strongly suspected hidden damage, or an extensive illegal modification.

‘Either way, I think I’m better off with my Mooney, just the Meyers had a emotional attachment, but the Mooney is more practical.

Edited by A64Pilot
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There is absolutely nothing magical about getting an annual done on an airplane. Pencil whipped annuals are available everywhere. (I personally know two who will sign it off for a case of beer) And are seemingly very common as attested to by those very same expensive first annuals sited by @A64Pilot

When I have a pre-buy done, it's a more thorough inspection than any annual requires. And it's done by a shop and individual who I trust completely. And no force of law will make me trust him/her more. In fact if I feel I need the force of law to have any confidence in the pre-buy, I've chosen the wrong guy, and wouldn't trust his signature on an annual any more so.

Even if you have the highest quality annual performed, it's not enough for a pre-buy for me. I don't just want to know if the plane is airworthy, but rather I'd like to know a lot more about it. Airworthy is the minimal standard.

The process is very simple. 

  1. Open everything up for a detailed quality pre-buy inspection.
  2. Give me the buyer a report on the condition of the airplane. The report will have two categories of squawks.
    1. Airworthy issues - Seller will either pay to have them corrected, or reduce the price by the estimated cost to correct.
    2. Non-airworthy issues - If there's enough, I might walk away and forfeit my deposit. Or I might have the shop set to correct them after I own the plane.
  3. I agree to buy the plane, transfer funds, take possession of the airplane, log books, pink slip.
  4. Have the shop now complete the annual and sign off a new annual in the log books. There is no double cost, the plane is already opened up and 80% of the annual done. 
  5. I also might have other squawks addressed at the same time.

If I'm selling the plane, no shop that I'm not paying, will put anything in the log book. If you want an annual noted in the log book, you have to complete the purchase and own the airplane. (Of course, I wouldn't be selling a plane that's out of annual)

I've never had a problem with a first annual, or second or third for that matter. It starts with a thorough pre-buy and good maintenance after that.

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After the PPI there should be virtually no surprises. As for completing the Annual, it should be down to the servicing items on the Mooney check list.  Clean, gap and install the spark plugs, add oil to the sump, clean the fuel filters/screens, clean/ replace the air filter, service the battery, service the ELT, swing the compass etc. correct the issues discovered during the inspection, close the inspection panels and complete the logs.

Clarence

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3 hours ago, A64Pilot said:

I’m an IA or have been for the last 15 years or so, but got caught out overseas and couldn’t renew, so I’ll retest this year.

‘But anyway any IA that does as you suggest is committing a felony, and is subject to federal imprisonment to say nothing about losing their livelihood as in revocation of privileges. I hope that they are few and far in between.

We all hope there far and few in between, but as @gsxrpilot also confirms it, it's not as uncommon as you might imply.

The reason I bring it up in the first place is because an A&P mechanic friend of mine that actually works on GA aircraft and mooneys(my job is withe wide-bodies) advised me to go ahead with a pre-buy on an potential a/c I wanted to purchase.

The 69 M20C Mooney was coming out of an annual and (with your same original logic @A64Pilot) I thought why do a pre-buy if it just came out of an annual right..?

Well as many have advised here, an annual is just MINIMUM to keep it legally flying, and a PPI inspection is more for ACTUAL condition of the whole aircraft,airworthiness items and squawks.

So now I know better

21 minutes ago, gsxrpilot said:

When I have a pre-buy done, it's a more thorough inspection than any annual requires. And it's done by a shop and individual who I trust completely. And no force of law will make me trust him/her more. In fact if I feel I need the force of law to have any confidence in the pre-buy, I've chosen the wrong guy, and wouldn't trust his signature on an annual any more so.

Even if you have the highest quality annual performed, it's not enough for a pre-buy for me. I don't just want to know if the plane is airworthy, but rather I'd like to know a lot more about it. Airworthy is the minimal standard.

Very grateful for your words here and will take this wisdom with me for a transparent purchase process of my first aircraft! 

BTW,I did start a thread in the classifieds if anybody sees a 65-67 M20C, I would be grateful for the tip!

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29 minutes ago, M20Doc said:

After the PPI there should be virtually no surprises. As for completing the Annual, it should be down to the servicing items on the Mooney check list.  Clean, gap and install the spark plugs, add oil to the sump, clean the fuel filters/screens, clean/ replace the air filter, service the battery, service the ELT, swing the compass etc. correct the issues discovered during the inspection, close the inspection panels and complete the logs.

Clarence

Nope those in the know seem to think that instead of spending a couple hundred more to complete an Annual, that it’s better to come back in an average of 6 months and spend ten times as much for another inspection, this one counting for an Annual.

‘Can any of you actually explain how completing an annual could possibly reduce the scope of your pre-buy? 

It may help to hear from those that have actually performed an Annual inspection and actually understand what one is, it seems there is confusion.

‘How could these supposedly Criminal IA’s affect your inspection? 

‘Who does your pre-buys if not an IA?

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1 minute ago, A64Pilot said:

 

It may help to hear from those that have actually performed an Annual inspection and actually understand what one is, it seems there is confusion.

The guy you quoted above, @M20Doc, has done more Annual Inspections than you.

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35 minutes ago, avtech72 said:

 

The 69 M20C Mooney was coming out of an annual and (with your same original logic @A64Pilot) I thought why do a pre-buy if it just came out of an annual right..?

Well as many have advised here, an annual is just MINIMUM to keep it legally flying, and a PPI inspection is more for ACTUAL condition of the whole aircraft,airworthiness items and squawks.

So now I know better

 

No, that is not at all what I am saying, I’m not sure how you got there.

‘What I am saying is of course have the aircraft inspected, but if your going to pay for a comprehensive inspection, which you should do, why not have it count as an Annual? Unless of course you want to do it all over again and pay again in a few months.

You actually have it backwards or you guys should find better IA’s. The Annual inspection is the once a year when you clean everything up real good and disassemble the aircraft and throughly inspect it, and determine the condition of everything, with particular interest in things that are beginning to wear so you’ll know what to expect next year etc. like motor mounts etc.

‘If your not doing that, then in a few years all you’ll have is a junk airplane.

Any Good IA will give you three lists. They may not actually be three lists, but he or she will tell you what must fixed to be airworthy, What needs to be fixed, with special attention to what will cost x today, but xxx if we defer it, and what should be fixed, boots on flight control rods etc.

If your not getting that then you need to go else where.

‘Before I would ever do an Annual inspection on an aircraft, I have an understanding that it will be maintained to my standards. there will be no pissing contests about what your not going to pay for because in your expert opinion it’s airworthy, I don’t need the work.

Those I let pass, I only ever perform an Annual as a favor, and with the owner doing a lot of the work, I have no interest with Mr. Business suit dropping off his aircraft, others can cater to them, and should as I am not in the Business, and I don’t want to take money away from them.

I’m not beneath doing an Annual for a case of beer, not if it’s a kid trying to build time in his little 150 or whatever so he can get a job, but he’s doing all the grunt work etc.

Edited by A64Pilot
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22 minutes ago, A64Pilot said:

Nope those in the know seem to think that instead of spending a couple hundred more to complete an Annual, that it’s better to come back in an average of 6 months and spend ten times as much for another inspection, this one counting for an Annual.

‘Can any of you actually explain how completing an annual could possibly reduce the scope of your pre-buy? 

It may help to hear from those that have actually performed an Annual inspection and actually understand what one is, it seems there is confusion.

‘How could these supposedly Criminal IA’s affect your inspection? 

‘Who does your pre-buys if not an IA?

I actually do hold a valid Transport Canada Aircraft Maintenance Engineers License, equivalent to A&P IA, and it’s not lapsed.

Clarence

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25 minutes ago, A64Pilot said:

No, that is not at all what I am saying, I’m not sure how you got there.

‘What I am saying is of course have the aircraft inspected, but if your going to pay for a comprehensive inspection, which you should do, why not have it count as an Annual? Unless of course you want to do it all over again and pay again in a few months.

 

This I do agree with, no doubt. As long as the scope of the PPI is that thorough, which it should be,then there should be no problem making it into an annual,so be it your choice, if you choose to keep the plane.

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FAR 43 App. D opens with:

(a) Each person performing an annual or 100-hour inspection shall, before that inspec- tion, remove or open all necessary inspection plates, access doors, fairing, and cowling. He shall thoroughly clean the aircraft and air- craft engine.

Even Mooney shows that only certain inspection covers need be opened to complete an Annual.  Imagine that you complete and Annual inspection before purchasing the Mooney instead our more thorough and complete airplane inspection and behind some of the unopened inspection panels the wing spar is rotten.  
 

Am I supposed to say “Well tough luck customer I did the mandated Annual inspection”?

Most of us agree that during a PPI, ALL parts of the aircraft should be opened for examination/inspection.

At the end of the PPI process, once the snags have been dealt with and the last servicing items are completed, most practical maintainers would have no issue signing off the Annual without double charging.

Clarence

 

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1 hour ago, M20Doc said:

Most of us agree that during a PPI, ALL parts of the aircraft should be opened for examination/inspection.

At the risk of being pedantic, I don't know that I'd agree ALL parts should be opened.  I mean, if the guy doing a PPI on my plane took a cylinder off to look inside, I'd be doing some face-punching real fast.

As a seller, I'd draw the limit at opening stuff to anything that does NOT require a signature to reinstall.  Stuff that could be trivially removed or considered preventative maintenance, sure.  But if the PPI person opened something that needed a mechanic signature to reinstall, I'd be pissed.  I wouldn't be in control of the quality of work (significant enough to require a signature) since the mechanic isn't working for me, unless it was my mechanic.  Of course, if the buyer used my mechanic, that would defeat the purpose of an independent PPI.

Long story short, visual inspection, ops checks, removing cowling, access panels, removing spark plugs, sure, that all makes sense.  But if they pulled the transponder to look behind it, it'd need a signature to reinstall.

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