November 25, 2013 – Newsletter
You are here to enrich the world and you impoverish yourself if you forget that errand.
Aircraft Escrow Closings – Communication with the Parties
While communication is a thread that runs through each phase of an escrow, it is important to understand the roles of each party to a transaction in order to understand completely which information is relevant to which party. Understanding each person’s interest in a transaction is the foundation for successful communication throughout the process. Holding up a closing, for instance, because the purchaser hasn’t supplied the escrow agent with an Aircraft Registration Application will infuriate a seller. A delayed closing because a lien release has not been submitted to escrow on the day of closing will bring down wrath on the escrow agent from both buyer and seller!
A buyer is interested in how much the plane will cost, if he needs financing, getting that in place, and the cosmetic appearance and airworthiness of the plane. Once all those issues are satisfactory to the buyer, he is ready to get the deal done and take possession of his aircraft.
The seller pretty much wants his money, and he wants his current lien-holder paid off as soon as possible so he can quit paying interest on his loan.
The new lender for the buyer will want evidence of insurance and all the loan documentation signed and in place before he wires funds to escrow: including advance copies of all documents which will pass free title to his customer and allow him to be in first lien position (both at FAA and the International Registry).
Myriad parties in addition to the seller, buyer, releasing lender and new lender are integral to aircraft closings:
- attorneys and accountants for each the seller and buyer;
- brokers for both the buyer and the seller, whose main focus is on the equipment, the inspection, the delivery and acceptance; and
- 1031 like-kind exchange companies – it is very important for the escrow agent to communicate directly with the like-kind exchange accommodator before the closing is consummated by the exchange of documents and funds in order to make sure all IRS rules are followed — mistakes can disqualify the buyer from tax benefits!
The Escrow Agent assumes the role of GREAT COMMUNICATOR and works for all the parties to accomplish a smooth exchange of cash for equipment!
BATI – FAA and IR UPDATES
Flight Standard District Offices (FSDO) are regional offices of the FAA and there are about 82 such offices nationwide. You may locate the office in your state by going to Registry.FAA.Gov/Airmen Certification Branch/Airman Certification. There you will find drop-down menus by State which tell you the location (including a map) of your
The following responsibilities are handled by FSDOs:
- To report a low-flying aircraft
- Accident reporting
- Air carrier certification and operations
- Aircraft maintenance
- Aircraft operational issues
- Aircraft permits
- Airmen certification (licensing) for pilots, mechanics, repairmen, dispatchers and parachute riggers
- Certification and modification issues
- Enforcement of Airmen and Aircraft Regulations
When you change the N-number on your aircraft, you take your aircraft logbook, your current airworthiness certificate, a copy of the executed Form 8050-64, and the registration certificate with the new N-number on it, to the FSDO to obtain a revised certificate of airworthiness under the new N-number. Before you journey to your FSDO for this airworthiness certificate, give them a call and make sure you are providing everything they need!
Please note: If you would like to highlight your firm or your aircraft in BATI’s pot-pourri section, please send us a photograph and text (sschroeder@BATI.aero) and we will try to work you in on future Newsletters!
BATI Pot Pourri
Highlighting Ron Herold this week…appraiser
Introducing Dr. Ronald Herold – Airplane-Appraiser.com
When you need to know the true value of your aircraft!
Ron possesses a life-long passion for all things aviation – he is a certified senior aircraft appraiser, USPAP Endorsed – you can reach him at firstname.lastname@example.org
3612 Hummer Road, Anandale VA 22033
Ron has 34 years of experience in general aviation aircraft – owning, renting, and maintaining numerous training and cross-country aircraft. He has logged over 3,000 hours of accident-free flying time (equals over 450,000 miles!).
Ron has, to date, appraised everything from a 1926 Fleet Model 2 to a Boeing 767 (2 of them). Most recently, he did a 1983 Gulfstream G-IV and a 1969 Comanche. He has done appraisals for donation purposes (read IRS approval for tax deductions) and has 3 planes hanging in the Smithsonian that he appraised for that purpose.
He has also done work for the IRS in evaluating the appraisals of others – in particular the Burt Rutan Global Flyer. He has provided expert testimony in matrimonial proceedings and in bankruptcy court.
Ron most enjoys doing off book appraisals (long out of production aircraft that cannot be looked up in VREF or Aircraft Blue Book). His services are offered nationwide and he often acts as a buyer’s agent in finding an aircraft or in support of a seller in finding a market for an aircraft.