Amanda Applegate

I have written many times about the importance of assembling the right team when acquiring an aircraft. This team typically includes the buyer, an aircraft broker, escrow agent, lender, aviation attorney, tax advisor, insurance broker, and a management company or flight department. One essential, but sometimes overlooked, member of this team is the technical representative. Too often, the technical representative is not brought in until the pre-purchase inspection. In reality, their role should begin much earlier – at the very start of the acquisition process. A technical expert can provide critical insights throughout the transaction, from market analysis to delivery.

Partnering with a technical representative at the outset allows for a more informed aircraft selection. Working alongside the broker, the technical expert can help evaluate aircraft options – not only based on mission and budget, but also through an early review of aircraft records. This initial technical review helps identify potential performance issues, maintenance concerns, or damage history – factors that should be understood before signing a purchase agreement. If the agreement is signed early, it should allow the buyer to terminate the transaction without penalty after this preliminary document and visual review, should the findings warrant it.

Once a specific pre-owned aircraft is selected, the technical representative plays a critical role in defining the scope of the pre-purchase inspection. Their deep knowledge of the aircraft type and familiarity with its maintenance history enable them to develop a focused, meaningful inspection plan. Key considerations include: (i) recent maintenance and inspection history, (ii) the facility where prior work was performed, (iii) known issues specific to the aircraft model, (iv) standard pre-buy checklist items, and (v) upcoming maintenance requirements. The agreed inspection scope should be attached to the purchase agreement as an exhibit to avoid disputes later.

The purchase agreement should outline the delivery conditions; requirements the aircraft must meet before the buyer is obligated to close. These conditions must be reviewed (and ideally negotiated) by the technical representative. Their prior document review and inspection planning will inform what conditions are reasonable and necessary. For instance, if upcoming inspections are due within 30 days of closing, the technical representative may advise including a delivery condition requiring the seller to complete them prior to closing.

Once the pre-purchase inspection begins, the technical representative should have a significant presence at the inspection facility, actively overseeing the process. Their role is to monitor and verify that inspection items are completed properly, communicate with the seller regarding real-time resolution of discrepancies and keep the buyer’s team updated on the status and major milestones. Other team members will be working on items such as hiring a management company, financing the aircraft, locating hangar space and hiring crew. The technical representative’s consistent presence helps ensure transparency and avoids costly surprises later in the process.

At the end of the inspection, the facility will issue a final report. Based on the findings, the buyer must decide whether to proceed and identify any discrepancies that the seller must resolve under the purchase agreement. This is where well-crafted delivery conditions, reviewed early by the technical representative, play a critical role in determining which discrepancies the seller is obligated to fix.

Another key area where technical guidance is invaluable is in determining which maintenance programs should be included or added to the aircraft at the time of purchase. Depending on the planned use by the new buyer and where the aircraft is in its life cycle, the programs that had been selected and active on the aircraft may not be the best options for the buyer. The technical representative can help determine which programs to keep, modify, or add, especially since program offerings and terms evolve over time.

Some people in the industry believe that technical representation is unnecessary when purchasing a new aircraft. I disagree. Even new aircraft acquisitions benefit from expert oversight; starting with model selection, continuing through the manufacturing process (with milestone inspections), being part of the aircraft acceptance process and helping with program and subscription options that are offered as part of the purchase process.

Your technical representative may be an employee of your flight department, a representative of your management company, or an aircraft consultant/broker company. But if your team lacks someone with specific experience in the aircraft model being acquired, you should bring in the right expert. In my experience, the cost of engaging a qualified technical representative is never something the buyer regrets.

For decades, I have been concerned about the fact that we have an owner-based aircraft registry system in the United States as it is too easy to learn who owns an aircraft and subsequently track it. I was always concerned it would take a tragic event before any changes were made. However, I was encouraged when the Federal Aviation Administration (FAA) Reauthorization Act of 2024 mandated changes to allow for data privacy. The implementation of the mandated changes started on March 28, 2025.

On March 28, 2025, the FAA provided notice that it had implemented Section 803 (Data Privacy) of the FAA Reauthorization Act of 2024 through changes made in the Civil Aviation Registry Electronic Services (CARES). Private aircraft owners can now electronically request that the FAA withhold their private aircraft registration information from public view on public FAA sources and websites for noncommercial flights. This private information includes name, address, email address and telephone number that are usually included on the aircraft registration application.

To complete this request, aircraft owners will need to establish an account on the CARES website. The website is https://cares.faa.gov/home. On the home screen there is an orange banner that describes the new privacy feature and step-by-step instructions are available.

As with things that are new, there will be a transition period where we learn how to use this process and understand its implications. For example:

• When the request is made, who is considered a private aircraft owner?
• Can the management company/operator submit the request on the aircraft owner’s behalf?
• What needs to be included in the request?
• Are there still ways for title companies to access the data in order to prepare title searches?

The FAA will publish a request for comments on the Federal Registry to seek input on these changes. Before we can understand the impact of the changes, we need to fully understand what data is redacted and if the redacted data can be accessed by certain stakeholders, including lenders and title companies. Interestingly, the FAA also states on their website they are evaluating whether to default to withholding the personally identifiable information of private aircraft owners and operators from the public aircraft registry and provide a means for owners and operators to download their data when needed.

There are still a great number of unknowns with the changes, but the system is currently active and requests by private aircraft owners to withhold private aircraft registration information from public view can be made now.

Last month we explored purchasing a foreign registered aircraft and the necessary steps to move the aircraft onto the United State registry. This month we will examine the steps when an aircraft owner is selling their aircraft to a buyer who will be moving the aircraft from the United States registry to a foreign registry. While each country is different, certain key factors should be considered when an aircraft is being deregistered from the United States registry and registered elsewhere upon closing.

1. Export Certificate of Airworthiness The buyer will likely require, under the aircraft purchase and sale agreement (the “APSA”), that the seller deliver the aircraft with an export certificate of airworthiness. The cost of this should be borne by the buyer. The inspection facility will be responsible for producing the export certificate of airworthiness. As such, when selecting the inspection facility, it is imperative to understand the inspection facility’s experience with the types of inspections necessary to produce an export certificate of airworthiness. In addition, when the export certificate of airworthiness is issued, there may be exceptions listed on the certificate. As a seller, you do not want to be obligated to pay to resolve any exceptions. Therefore, if the buyer is allowed to resolve any exceptions prior to closing, necessary protections need to be built into the APSA.
2. Aircraft Improvements Prior to Closing Under the APSA it must be clear that the aircraft is being sold as a United States registered aircraft. Any modifications to the aircraft that may be necessary in order for the aircraft to be registered in a foreign jurisdiction are (i) completed after the sale occurs and (ii) at the expense of the buyer. However, circumstances and/or negotiations of the APSA may not allow for the foregoing limitations. If certain modifications are permitted prior to closing, protections for the seller (in the event the closing does not occur) need to be included in the APSA. Furthermore, prior to seller committing to such obligations, it is important to understand the amount of time any modifications will take and parts availability, as the timing of closing could be delayed as a result of the modifications. As an example, I have been involved in several transactions where the parts necessary to convert the aircraft were not readily available and such delay impacted the closing date.
3. Customs Export Aside from the deregistration process with the United States registry (FAA), there is a customs export process that must be accomplished with a United States customs broker. Seller has a duty to make sure the aircraft is property exported from the United States. The APSA should designate who hires and pays the United States customs broker, what role the parties will assume in the export process and, if possible, identify the specific customs broker.
4. Closing Location The closing location of the sale will be important to both parties and will be negotiated and documented in the APSA. Generally, as a seller you do not want to have the aircraft moved outside of the United States to a foreign jurisdiction prior to closing due to the risks of not closing and unfamiliarity with the closing process and tax consequences in a foreign jurisdiction.
5. Funding Another consideration to clearly document in the APSA is the timing of the deregistration and release of funds. A seller would not want to go through the process of deregistration of the Aircraft before receipt of funds. Conversely, the buyer would not want to release funds before the aircraft is deregistered. Having a reliable and knowledgeable escrow agent and clear closing process set forth in the APSA, including irrevocable escrow instructions, can often help bridge the gap between the parties’ desires.
6. Title A seller of a United States registered aircraft, that will be deregistered and transferred to a foreign jurisdiction as a part of providing clear title, may be asked to provide complete chain of title documentation (back to birth bills of sale) and a legal opinion on title. Prior to committing in the APSA to provide complete chain of title back to the original manufacturer, the seller shall ensure this is something that can be obtained. If the aircraft has always been registered in the United States, a complete chain of title will be available through the FAA registry records. However, if the aircraft has previously been on a foreign registry, the documentation may not be in the possession of the current seller.
7. Invoice For the registration process and import process in a foreign jurisdiction, an invoice for the sale of the aircraft may be required. This is not a standard document in a domestic sale of a pre-owned aircraft. As a result, seller should confirm if buyer is going to require an invoice. If an invoice is required, the form of the invoice should become an exhibit to the APSA and finalized as part of the other closing documents just prior to the sale.

As discussed in Part 1, cross-border transactions are more complicated but with the right team behind the transaction they can result in the best outcome for both the buyer and the seller.

Occasionally, the best Aircraft on the market is one that is not currently on the United States aircraft registry, or the best offer a seller receives is from a buyer who plans to put the Aircraft on a registry other than the United States registry. As many parties are hesitant to participate in a cross-border transaction, this can sometimes result in an opportunity for the parties willing to participate in this more complex transaction.  The major differences to consider in cross-border transactions where a buyer is purchasing an aircraft on a foreign aircraft registry and placing it on the United State registry are summarized below. With the right team, it can be easily accomplished. In Part 2, we will explore selling a United States registered Aircraft to a buyer who plans to place it on a different registry.

1. The aircraft purchase and sale agreement (the “APSA”) should be a detailed road map of the transaction. It should set forth the chronology of the entire purchase process and identify who will pay for each step. In addition to all of the key concepts that should be in every APSA, the APSA for a cross-border transaction should specify: (i) which party pays for the correction of airworthy items necessary to allow the aircraft to be registered in the US; (ii) that seller must provide a complete chain of title evidenced by bills of sale back to the original manufacturer since not all countries have owner based registry systems; (iii) which party pays the cost of import into the US; (iv) which party has the responsibility for the export, import and customs documents; (v) which party will provide and pay for title searches or title opinions from the current jurisdiction where the Aircraft is registered; (vi) confirmation from current operator and Eurocontrol (if applicable) that there are no unpaid sums owed from the seller; (vii) when the full purchase price must be placed in escrow; (viii) when the deregistration process starts, how long the deregistration process takes, and when all the documents can be released for filing, (ix) who will handle the filings in the foreign jurisdiction since the US based escrow agent will not handle those documents, (x) when the funds are released to the seller; (xi) where the closing location will be, taking into account the tax considerations for the closing location (usually a local expert will need to opine on delivery location options if delivery is occurring outside of the United States).
2. The APSA should allow for a visual inspection. During the visual inspection, it is important for the buyer to have a designated airworthiness representative (“DAR”) present to determine if the aircraft would be considered airworthy in the United States in its current condition. This will likely require a detailed records review as part of the visual inspection. If the aircraft is not deemed airworthy, the DAR can assess what work will need to be done to meet the standards required for issuance of a United States Certificate of Airworthiness (“C of A”), and a repair facility can estimate the cost of these items. Understanding these expenses before incurring the pre-purchase inspection fees and before the deposit becomes nonrefundable is very important. It is useful to have the pre-purchase inspection take place in the United States so that the buyer can easily view the aircraft prior to purchase and eliminate some of the complexities with hiring a DAR internationally. If the pre-purchase inspection occurs within the United States, it is important to make sure the seller correctly imports the aircraft into the United States upon entry using a United States customs broker prior to the start of the pre-purchase inspection.
3. The Buyer needs to build an expert transaction team that includes an onsite technical representative at the inspection facility, the DAR mentioned above, a licensed and bonded United States Customs Broker, and aviation counsel. Aviation counsel can, among other responsibilities, coordinate and gather relevant information from local tax counsel, and local title counsel to insure that there are no tax issues with closing and that good title is being conveyed to the buyer free and clear of any liens or encumbrances that may have attached to the aircraft in the country of registration.
4. Following a satisfactory visual inspection and pre-purchase inspection, buyer will move towards closing the purchase of the aircraft. In order to commence the closing process, seller deregisters the aircraft from the current country of registration. Depending on how the APSA is drafted, the seller may also be required to provide an export certificate of airworthiness in favor of the United States.
5. The APSA should require that, immediately upon receipt of the notice of deregistration (in form acceptable to the FAA) and without any further requirements, the escrow agent will proceed with the remaining items of the closing process. This includes wiring the proceeds of the sale to the seller and filing the bill of sale and registration application with the FAA.
6. The FAA treats aircraft entering the United States from a foreign registry as a priority and a Temporary Certificate of Aircraft Registration (“Fly Wire”) is typically issued within one to two days following confirmation of deregistration and filing of the appropriate registration documents with the FAA. If the aircraft has been deregistered outside of the United States, the aircraft cannot be flown until issuance of the Fly Wire.
7. The Temporary Certificate of Aircraft Registration should be sent to the DAR who is ready to issue the Certificate of Airworthiness (“C of A”). Prior to issuing the C of A, the DAR will need confirmation that the aircraft has the new United States registration number on it and the transponders have been re-strapped.

The key items to remember in purchasing a foreign registered aircraft are: including all items necessary in the APSA; hiring a DAR, a licensed and bonded United States Customs Broker and an expert transaction team; understanding the costs of obtaining the C of A (and who pays those costs); and sequencing the buying process in a way to properly deregister, export, register and import the aircraft while, at the same time, avoiding unnecessary taxes. To be sure, the purchase process is more complicated in a cross-border transaction, however, if the transaction is managed properly, the benefits can make the purchase very rewarding.

Are you eligible to own an aircraft registered in the United States? The United States Code (or “U.S.C.”) enacted by the U.S. Congress establishes the ownership requirements for civil aircraft registered in the United States. A U.S. registered aircraft can be owned by (i) a person or entity who meets the definition of “Citizen of the United States” as set forth in 49 U.S.C. 40102(a)(15), or (ii) a person who is a resident alien, or (iii) a non-citizen United States corporation.

The most common ownership situation involves a person or entity that meets the definition of “Citizen of the United States” in 49 U.S.C. 40102(a)(15). Section 40102(a)(15) provides a definition for individuals, partnerships and corporations/associations (which also applies to limited liability companies). However, instead of owning an aircraft individually and subjecting oneself to the potential liability of such ownership, most buyers elect to put the aircraft into a business entity.

Many of my clients don’t think about the citizenship requirements for owning an aircraft because they are United States citizens and they assume that any partnership, corporation or limited liability company (“LLC”) formed in the United States will qualify. However, each type of entity has a specific test to see if it meets the statutory definition, and many entities that one would assume qualify to own an aircraft registered in the United States, in fact, do not.

Partnerships that own aircraft are rare because the citizenship test requires “a partnership each of whose partners is an individual who is a citizen of the United States.” The partnership must be comprised of individual United States citizens and if any of the partners are not individuals (i.e., a corporation or another partnership), the partnership fails the citizenship test. Since partnerships, especially limited partnerships, often have at least one corporate partner, they often fail the citizenship test. It is important to note that in the case of a limited partnership, the general partner and the limited partners must all be individuals.

Another perplexing ownership situation arises when the potential ownership entity is a multi-layered LLC. When an LLC owns an aircraft, an additional document called the statement in support of registration (“SSR”) must be filed with the FAA registry. The SSR is a statement that confirms that the citizenship test for an LLC has been satisfied. In addition to filing the SSR for the entity which will own the aircraft, an SSR must also be filed for every LLC within the ownership structure. This means that if the owning LLC is managed by an LLC or has any LLCs which are members, each LLC in the chain of ownership of the owning LLC, must file an SSR. Each layer of the LLC must meet the three-pronged citizenship test described below for the owning entity to be able to own an aircraft registered in the United States. An additional concern is that because each LLC within the owning entity as well as the owning entity must file an SSR, there is a significant loss of anonymity. Each layer of the structure is disclosed, and the information is available to the public.

Both corporations and LLCs face a three pronged citizenship test under Section 40102(a)(15). First, the corporation or LLC must be incorporated or formed and existing under laws of the United States or any state, the District of Columbia or a territory or possession of the United States. Second, all of the following management tests must be satisfied: (i) the president must be a United States citizen, (ii) at least two-thirds of the managing officers/managers must be United States citizens, and (iii) at least two-thirds of the directors must be United States citizens. Finally, at least 75 percent of the voting interests (corporate shares or LLC membership interests) must be owned or controlled by citizens of the United States, and the entity must be under the actual control of United States citizens.

Another way to own an aircraft registered in the U.S. is as a resident alien. The resident alien applicant must check the appropriate box on the FAA aircraft registration application and provide the FAA with his/her alien registration number. It is important to note that while a resident alien may own an aircraft individually, the resident alien does not satisfy any of the management or control requirements for a corporation/LLC or partnership. For example, if the sole member of the LLC is a resident alien, the LLC does not satisfy the citizenship test.

There are two main exceptions to the citizenship requirements. First, the regulations allow for the ownership an aircraft registered in the U.S. by a noncitizen U.S. corporation under 49 U.S.C. 44102(a)(1)(C). An aircraft can be registered by a corporation that does not qualify as a U.S. citizen if it is incorporated in one of the United States and the aircraft is based and primarily used in the U.S. This is commonly referred to as “based and primarily used registration.” The non-citizen United States corporation applicant must check the appropriate box on the FAA aircraft registration application and list an address where records are available for inspection.

Second, if a prospective aircraft owner cannot satisfy the citizenship requirements, the most common way to register an aircraft in the United States is through the user of an owner trust. Owner trusts serve two main purposes: (i) allowing a person or entity that does not meet the U.S. citizenship requirements to own a U.S.-registered aircraft and (ii) preserving confidentiality. Several well-known and often-used websites allow the public to track the movements of most general aviation aircraft on an Instrument Flight Rules (“IFR”) flight plan. Since Federal Aviation Administration (“FAA”) aircraft registration information is a matter of public record, it’s relatively easy to find out who owns any given aircraft, and then monitor their travels. This information can be used by the media or business competitors to the disadvantage of the aircraft owner.

Owners concerned about confidentiality can protect their anonymity by registering the aircraft with an owner trust. Under an owner trustee ownership structure, the trustee takes title to the aircraft and gives the beneficiary or “trustor” the right to operate it. Some aircraft owners create the trust agreement with an existing entity. However, if the trustor can be traced back to the underlying owner of the aircraft, the goal of confidentiality has not been achieved. If anonymity of the ownership is the objective, then the trust should be independent of any entity that can be linked back to the underlying owner. David Wall of TVPX Aircraft Solutions, Inc. states, “Over the past several years we have seen an increasing number of clients choosing a trust structure to help provide an additional layer of confidentiality, especially in the finance and technology sectors.”

Regardless of whether the owner trust is being used to resolve citizenship issues or to protect confidentiality, the structure of the trust is the same. When the aircraft is placed in trust, legal title to the aircraft is registered in the name of the owner trustee as the owner of the aircraft while the trustor retains a beneficial interest in the aircraft. Title 14, Section 47.7 of the Code of Federal Regulations (“CFR”) codifies the requirements for aircraft registration in the name of owner trustees.

In 2013, the FAA issued a Notice of Policy Clarification for the Registration of Aircraft to U.S. Citizen Trustees in Situations Involving Non-U.S. Citizen Trustors and Beneficiaries (“Clarification”) 78 Fed. Reg. 36412 (June 18, 2013). Under the Clarification, the FAA requires that all operating agreements that transfer possession and use of an aircraft held in trust from the owner trustee to the trustor be submitted to the FAA in conjunction with all other instruments submitted for registration purposes pursuant to 14 C.F.R. § 47.7(c)(2)(i).

It is important to note that selecting the entity to use for aircraft registration cannot be done in isolation. The ownership entity must not only meet the registration requirements, but it also must make sense from a tax planning perspective and be in regulatory compliance. If a sole purpose entity is formed to own an aircraft, additional planning must take place because, while a sole purpose entity can own an aircraft, it cannot operate an aircraft under Federal Aviation Regulations (“FAR”) Part 91. In order to operate under FAR Part 91, the primary business purpose of the company must be something other than owning an aircraft. Again, with ownership structure and operating planning, solutions are available. But remember that complying with U.S. citizenship requirements for owning an aircraft is only the beginning of formulating a plan which must also consider tax planning and operational compliance.

Aircraft ownership structure planning should be done well in advance of the scheduled closing date. Discovering immediately prior to closing that the purchasing entity cannot legally own an aircraft registered in the United States causes unnecessary stress and can delay the closing.

 

Every year as the summer draws to an end I do my best to prepare for the crush of 4th quarter closings. I expect 2024 to be a particularly interesting 4th quarter. First, in a presidential election year, transaction volume slows immediately prior to the election due to the uncertainty of the outcome. However, historical data shows that the transactions are only delayed, and the actual volume is not impacted over the course of the 4th quarter. Another interesting issue is that a larger number of older aircraft are continuing to fly while a larger number of newer aircraft are also being added to the private aircraft fleet. The increase in the number of units available for buying and selling will also increase the total number of units that are transacted. Additionally, as certain popular models continue to age, more systems, components and equipment on those aircraft are becoming obsolete. As a result, having a fully operational aircraft ready for sale is increasingly difficult and time consuming, especially as we continue to have supply chain issues with aircraft parts. Finally, finding available inspection slots is always difficult in 4th quarter. It may be more difficult than expected this year due to a compression of transactions after the presidential election and also due to the fact that some inspection facilities are limiting or eliminating pre-purchase inspection slots for older aircraft.

As we prepare for the remaining sales which will take place in 2024, certain items in the sales process can be completed in advance, resulting in a less condensed and more seamless sale. Some of these items should be done annually, regardless of if the aircraft is going to be sold, and are not a waste of money even if the aircraft is not sold.

1. Loose equipment and spare parts can be a part of the aircraft sale, sold separately, or retained. Since the Seller can decide what is being sold with the aircraft, a loose equipment list can be created in advance of the sale and anything that is not included can be priced and listed for sale separately or retained for future use.

2. When listing an aircraft for sale, an aircraft specification will need to be developed for advertising. Creating the aircraft specification and the photos of the aircraft can be done in advance of when the aircraft is listed for sale. Later, if it is decided that the aircraft will not be sold, most of these items can be reused whenever the sale happens.

3. The flight department or management company can review and organize the aircraft records to confirm they are complete and continuous.

4. A title search can be performed by an aircraft escrow agent. Upon receipt of the title search, the Seller can address any title issues in advance and thus avoid any closing delays.

5. If the aircraft has a registration number on it that the Seller would like to keep, a request to change the tail number can be filed before the aircraft is listed for sale. Depending on how long it takes to sell the aircraft, it is possible that the FAA will issue the 8050-64 prior to the sale, which would allow for a change in tail number prior to closing. Changing the tail number before the sale will allow the Seller to retain control over the preferred registration number and have the tail number available sooner for future use.

6. The Seller can schedule a pre-purchase inspection for the aircraft and oversee the inspection, then sell the aircraft with the inspection already completed. This allows the Seller to control the timing and the scope of the inspection. However, it does mean the Seller pays for the inspection instead of the purchaser. Though this may be a reasonable trade off to maintain control of the process.

7. Building the sales team in advance is also very helpful. The Seller can interview and decide who will broker the aircraft, oversee the inspection and handle the legal work for the transaction. When it is time to list and sell the aircraft, the team will already be in place and ready to move immediately.