Aircraft Brokers

[jetdriven]

There is no "title" per se for aircraft records.  The FAA is the final repository for all aircraft ownership items. Lienholders record their security interest with the FAA just as you do when you send in the bill of sale.  The broker for ours had his title saearch from a month previous and we ran our own also.  At some point you have to acept some risk and not spend an extra 2,000$ on a 80K aircraft on most likely, worthless insurance.

[Cris]

Jetdriven: For the record I just checked and the cost of the "title" insurance (which is what the insurance company calls it) for my Eagle was $652. This is for an A/C valuation that is based on more than double your $80K estimate for my A/C. Frankly I'll buy several low time Eagles at that price. Just tell me where. So as I said I did not recall the exact figures but now that I have looked it up the closing fees were $500 which included the "title" search, paperwork, registration, escrow & whatever else was required. The $850 differance between the $2000 & the 1152 was for the PPI. The $500 escrow fee plus the $652 title insurance fee = $1152. This insurance may well be worthless if never needed just like the cost of the A/C liability insurance but that is my choice. I belive it is a prudent decision-for me. Now here are the facts:

An aircraft title insurance policy can protect an owner or lender against actual losses that divest them of their interest in the aircraft.  The best title search or legal opinion can only report problems of record at the FAA, while a title insurance policy goes beyond that and insures risks that are never reported in the public records, and that the most thorough title report or legal opinion could never discover. Federal & State tax liens, some mechanic's liens, improper deregistrations, unenforceable bills of sale or security agreements, are just a few examples of undetectable risks that our covered by a title insurance policy. In the case of a covered claim, title insurance will pay the attorney's fees to defend your title, and if there is a total loss of title, will pay the value of the plane, the remainder of the loan, or the amount of the policy, depending on the circumstances. The cost of title insurance is typically based on the A/C valuation.

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[Becca]

Quote: Cris

Jetdriven: For the record I just checked and the cost of the "title" insurance (which is what the insurance company calls it) for my Eagle was $652. This is for an A/C valuation that is based on more than double your $80K estimate for my A/C. Frankly I'll buy several low time Eagles at that price. Just tell me where. So as I said I did not recall the exact figures but now that I have looked it up the closing fees were $500 which included the "title" search, paperwork, registration, escrow & whatever else was required. The $850 differance between the $2000 & the 1152 was for the PPI. The $500 escrow fee plus the $652 title insurance fee = $1152. This insurance may well be worthless if never needed just like the cost of the A/C liability insurance but that is my choice. I belive it is a prudent decision-for me. Now here are the facts:

[jetdriven]

Cris, I wasn't implying your Eagle was worth 80K, rather the average Mooney costs near that.   Your original post stated you paid 2,000$ for escrow/title services.  In a later post you said that also included an 852$ prebuy inspection.  The former sounds really expensive. The latter, more reasonable. 

900$ for title, escrow and insurance sounds like a good deal if you are risk-averse.  We chose to skip some of that cost and trust what looked like a straight transaction.  Instead, we spent some of that "saved" title insurance money for inspecting the aircraft in more detail. Some title insurance policies only pay the bank, which is a total rip off, why doesn't the bank pay for their own insurance?

At the 50-80K plane level, there are a lot of additional expenses that banks and insurance companies want to pile on and turn the whole thing into like buying a house.  Its way too complicated. I could leave the Ford dealer with a 65,000$ 3/4 ton diesel in an hour.  But an airplane somehow becomes a fee circus.

sorry for the misunderstanding.

Quote: Cris

Quote: Cris

I used the escrow/title services available thru AOPA simply because they are a known entity to me. I do not recall the exact cost but it was probably around $2000 including title ins. Of course AOPA makes money so the services are available elsewhere for less but I did not have the experience to determine who might be better. However the recommended company did the title search. provided title insurance, & guaranteed that the paperwork would be filed correctly.........

Jetdriven: For the record I just checked and the cost of the "title" insurance (which is what the insurance company calls it) for my Eagle was $652. This is for an A/C valuation that is based on more than double your $80K estimate for my A/C. Frankly I'll buy several low time Eagles at that price. Just tell me where. So as I said I did not recall the exact figures but now that I have looked it up the closing fees were $500 which included the "title" search, paperwork, registration, escrow & whatever else was required. The $850 differance between the $2000 & the 1152 was for the PPI. The $500 escrow fee plus the $652 title insurance fee = $1152. This insurance may well be worthless if never needed just like the cost of the A/C liability insurance but that is my choice. I belive it is a prudent decision-for me. Now here are the facts:

An aircraft title insurance policy can protect an owner or lender against actual losses that divest them of their interest in the aircraft.  The best title search or legal opinion can only report problems of record at the FAA, while a title insurance policy goes beyond that and insures risks that are never reported in the public records, and that the most thorough title report or legal opinion could never discover. Federal & State tax liens, some mechanic's liens, improper deregistrations, unenforceable bills of sale or security agreements, are just a few examples of undetectable risks that our covered by a title insurance policy. In the case of a covered claim, title insurance will pay the attorney's fees to defend your title, and if there is a total loss of title, will pay the value of the plane, the remainder of the loan, or the amount of the policy, depending on the circumstances. The cost of title insurance is typically based on the A/C valuation.

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[Becca]

This whole conversation has me curious about aircraft title insurance.  Has anyone had any experience actually making a claim on their title insurance?  For what reason?  I wonder if there are any statistics out there for claims on title insurance and the break down of common reasons.  It seems like the most obvious one may be unpaid sales or use taxes - if the state comes after for you for a previous owner's unpaid taxes later, that wouldn't show up in a title search because the claim wouldn't exist at purchase time.  I wasn't able to find any articles besides those written by title insurance companies on what its used for - I'd be interested in hearing more on actual practice.    This was the most thorough article I could find, but as an engineer, I found it still lacked hard data: http://www.ainonline.com/ain-and-ainalerts/aviation-international-news/single-publication-story/browse/0/article/aircraft-title-insurance-do-you-need-it-or-not-2556/?no_cache=1&tx_ttnews%5Bstory_pointer%5D=6&tx_ttnews%5Bmode%5D=1

[FairTrial]

To protect your money in the aircraft transaction, is it worth using a general purpose escrow service (such as Transpact.com) ?

These Government registered services give you the same or better financial protection as broker escrow, but at a fraction of the price ($24.99).

Obviously then don't deal with Title, but since your money is protected and dependent on good Title, this is not necessarily as issue

[Declaration - I work for Transpact.com]

[danb35]

I hadn't heard of transpact.com before, but it looks interesting and potentially valuable in a case like this.  It's curious that the US fee is much higher than for GBP or EUR-- $25 US vs. 2 GBP or 3.49 EUR.  It also seems that the fees are significantly higher for larger (> $50k) transactions, adding around $100 to the costs.

I'd be a little hesitant using this service because it appears to be based in Europe, and therefore not subject to US laws, which could make it much more inconvenient to resolve a dispute.  I think that using a general-purpose escrow service is fine in principle, but I'm not sure how attractive of an option this particular service would be for a US-based airplane purchase.

[Cris]

Becca/Jetdriven Thanks for the clarification. You have certainly made me feel better today than yesterday. This thread is really about brokers but we have morphed into the insurance end as a result of protecting one's assets which I guess is still part of the broker issue. Like you I think that the cost to acquire an A/C today is much greater than it used to be for various reasons. In my own case I have been on both sides of the transaction in seven or eight A/C so I guess that is 14 or 15 transactions. This is the first one where I purchased title insurance simply because there were to many flags along the way & the plane was held by an LLC.  However with that said the title ins product today is a whole lot differant than what was availble when I last made a purchase. It really does protect the buyer. Title insurance is typically at .15-.5 % of valuation so on Jetdriven's mid range 80K Mooney I'd make that to be about $400 at the higer rate. Becca your point that title insurance in real estate only protects the bank interest is true but you can for an additional fee also be protected. I did that with my own home. I'm not convinced that the bank would not come after an individual if there were an A/C title issue particularly if you stopped paying the note. These folks are not our friends. Just look at the fees they try to get out us as Jetdriven points out. At the very least it might be worth a call to check on the banks position in that regard. I define acquision costs from when I decide on a particular A/C to when I get it registered in my name. Therefore we have the title search which is as Becca points out $200 or less  but is included in the typical $500 escrow fee. That fee also includes processing the paperwork with the FAA, buyer & seller and returning the registration to the new owner. Many Brokers will do that as part of their value add but without a broker you do it yourself or use the escrow/title service. Next we have an inspection. Typically that entails the mechanical inspection & review of the logs. That seems to run about $500 but can be more depending on what one requires ie SB 208 check could add a couple of hours to the bill or converting a pre buy into an annual could be a whole lot more. Separately an Avionics check should be made to make sure that these very expensive panels today are really working particularly the Autopilot/HSI. Again that cost might be $150-$500 depending on what is required. I did not mention the avionics cost for my inspection but it came in at $800 since the databases had to be upgraded before the checks could be done. Turned out two of the database cards were corrupted & had to be replaced by the seller which cost him several hundred dollars. Now you have to travel to get the A/C or have it ferried to you. My personal preferance is to do everything by phone with only a final flight test with me & the owner/rep to accept the A/C. I make the entire deal conditional on the flight acceptance but I will have spoken to someone who has actually flown the A/C. Regadless there is an airline ticket or two plus lodging in one direction or the other. This assumes you did not buy the A/C locally. I have been lucky enough to have done that a couple of times. Otherwise I just consider tha expense as a "vacation". So really the optional costs are wheather you want title insurance, an avionics check & $300 for paper work processing. The really big cost savings might be negotiating with the lending institution to reduce miscellaneous fess. But in the end it is difficult to cut much else out.    

[Becca]

I have no doubt the bank would come after me for the loan amount even if the plane became "worthless" due to a title problem and I stopped paying the loan, but I don't think they'd recover their money with Texas's friendly-to-debtors laws, though I would take a pretty serious ding in my credit rating, it would probably be worth it compared to paying of the debt on a worthless airplane.  So the bank also takes a with their money without title insurance (and since they own 80% of my airplane they are actually taking more of a risk then I am in that regard).  Anyway..