Contingent Sales Contract Examples

[RoundTwo]

Is there a suggested place to see examples of contingent sales contracts? I’m most interested in specific verbiage regarding how to address items found during a Prebuy. My concern is anything drawn up by a broker or owner will need amending and I’d like to have some acceptable suggestions.

Thanks,

Chuck

[toto]

Fwiw, AOPA has a sample purchase agreement:

https://www.aopa.org/-/media/Files/PPS/AOPA-Legal-Services-Plan--Sample-Aircraft-PurchaseSales-Agreement2018-01.pdf

Obviously this is for reference only, and I’m not providing legal advice..

[toto]

I’ll also mention fwiw that the AOPA Pilot Protection Services plan has a benefit that will put you in touch with a local attorney for aircraft transaction advice. It’s a limited benefit, but well worth taking advantage of if you’re already a member. 
 

 

https://pilot-protection-services.aopa.org/pps-benefits

[1980Mooney]

2 hours ago, RoundTwo said:

Is there a suggested place to see examples of contingent sales contracts? I’m most interested in specific verbiage regarding how to address items found during a Prebuy. My concern is anything drawn up by a broker or owner will need amending and I’d like to have some acceptable suggestions.

Thanks,

Chuck

As you might suspect the purchase process is a popular subject - it is a big step, lots of variables, may be first plane, potential for disagreement and financial risk.  You may or may not have already see these threads:

 

[1980Mooney]

2 hours ago, RoundTwo said:

Is there a suggested place to see examples of contingent sales contracts? I’m most interested in specific verbiage regarding how to address items found during a Prebuy. My concern is anything drawn up by a broker or owner will need amending and I’d like to have some acceptable suggestions.

Thanks,

Chuck

More specific prior threads on your topic:

 

[1980Mooney]

3 hours ago, RoundTwo said:

Is there a suggested place to see examples of contingent sales contracts? I’m most interested in specific verbiage regarding how to address items found during a Prebuy. My concern is anything drawn up by a broker or owner will need amending and I’d like to have some acceptable suggestions.

Thanks,

Chuck

Here is an ongoing saga (one year now) of a purchase that "checked all the boxes" - ie bought from another MS member, used an MSC for prebuy, Purchase contract spelling out resolutions, etc.  He talks about his Purchase Contract on page 4:

The owner is still waiting for parts and has not yet flown the aircraft after owning it for one year.

 

[GeeBee]

I basically create two contracts. The first contract spells out the price, the pre-buy process, escrow instructions and what is required to complete the sale. The second contract is what is discovered on the pre-buy and how it will be handled. Agreement to the second part and completion of the Part II process is needed to complete Part I and close the sale.

[RoundTwo]

9 minutes ago, 1980Mooney said:

Here is an ongoing saga (one year now) of a purchase that "checked all the boxes" - ie bought from another MS member, used an MSC for prebuy, Purchase contract spelling out resolutions, etc.  He talks about his Purchase Contract on page 4:

The owner is still waiting for parts and has not yet flown the aircraft after owning it for one year.

 

I know that saga well as I also looked at that plane. Hopefully it is finished soon. Thanks for all of your searching efforts.

Chuck

[A64Pilot]

I’ve only bought three airplanes, all three were handshake deals, I figure anything found during inspection either they can fix or if it’s significant and they won’t, I walk.

If they aren’t willing to pay to fix it, I seriously doubt you can force them to, They will say something like my IA says it’s fine. I believe either party has the right to kill the deal and I doubt you’re getting any money back that you have spent if they pull out. What do you do, take them to court?

Not that I have ever been part of any lawsuits, so all my data is second hand, but I figure when Lawyers get involved the only winner is the Lawyers.

It’s always worked like this for me, I travel to the airplane, we agree on a price subject to passing my inspection, we shake hands on it, owner agrees verbally it’s off the market until I buy or pass, inspection starts ASAP, and that’s important, if they are taking it off the market, you owe them to complete the sale or pass ASAP, procrastinate and don’t be surprised if they have changed their mind or have sold it.

I tried to buy a Meyers 200 before I bought the Mooney, and my spider sense told me something was up, seller wasn’t rated in the airplane, Mom had bought it for a Son, Son fell out of favor, other Son was selling the airplane for Mom. Deal fell apart when they balked on me doing an Annual at my expense, they kept saying but it’s in Annual, it doesn’t need an Annual. I think they knew something they didn’t want me knowing  

Be very wary of people selling airplanes, often it’s because there is something wrong and they can’t or don’t want to put the $$ into fixing it.

Oh, I remember now, the Meyers had a lien still on it from the 70’s I think, sure it was probably a paperwork deal, but maybe it was valid?

So I learned be darn sure you pay for Title insurance, and I’d say use an escrow service, preferably one in Oklahoma City because they walk over to the FAA and file paperwork do searches etc, things go faster.

[Fritz1]

I have bought two Mooneys, no written agreement before the sale was executed, verbal non binding offer, key to success in my humble opinion is to bring your own technician along who really knows Mooneys, conduct a thorough inspection that exceeds a regular annual, pay the technician for the inspection, then negotiate the sale, buy the airplane or not, if bought technician fixes detected deficiencies and signs annual, all this is done after a thorough logbook analysis, the only thing that the buyer and the seller agree upon before the sale is that the aircraft will be made available for the thorough inspection, analyzing logbooks is typically quick and inexpensive, the on site inspection can run up to $5k including travel, well worth it, typically another 10-30% of purchase price is spent within two years after sale is consumed in order to fix and upgrade the aircraft. I had an aircraft inspected at my hangar once, the deal with the seller was that he gets $1k for showing in case I do not buy the aircraft. I did not buy the aircraft because there was a lien on it that exceeded what I wanted to pay, lesson learnt: before you inspect check for lien on title and if found verify amount with seller before you put to much into the deal. Rule of thumb, Check 10 log book sets, inspect two airplanes, buy one if convenient, a dealer typically adds value to the process because he has done it before and does not want his name associated with an absolute train wreck

[MikeOH]

I've only purchased one airplane; handshake agreement, no contract paperwork, no deposit.  Seller flew the plane to the mechanic/MSC of my choice.

I did use an escrow to handle the money, title search and transfer.

Couldn't have been simpler and I've had no major issues in five years of ownership.

While I'm sure there was luck involved, I looked for a plane that had what I wanted (WAAS and A/P) but most importantly had been flown consistently: the PO had flown 100 hours a year for the 13 years he owned it.

[RobertGary1]

I guess I was fortunate when I bought my Mooney aopa still had a title service 

[midlifeflyer]

When I work on a contract for a buyer, the thing I look for is a pre-buy walk-away as similar to those typically found in residential real estate contracts as the seller will accept. Led to some interesting negotiations, especially with some higher priced aircraft  

Of course, that requires understanding what one is reading, which is no guarantee. When handed a contract to review, I can usually tell on a first quick read through if it was a cobbled copy and paste by someone who had no idea what it said*.  I had one case which went to litigation involving the AOPA sample. Buyer and seller removed a paragraph because they figured it didn't matter. Dispute would have been resolved by it.

(* you might be surprised by the number of broker-supplied contracts that fall into that category)

[jetdriven]

I've had clients supplied a contract written by a broker and it's so one-sided they'll probably be better off with no contract at all.