An aircraft / airplane bill of sale form is a document used for facilitating the sale of a non-commercial, civilian-owned plane. Also known as an aircraft purchase agreement, it serves as a means of proof that a buyer paid a specific amount of money in exchange for ownership rights to the aircraft. This proof is a requirement for registering the aircraft, which the buyer (new owner) will need to complete after the transaction is complete.
The following are the steps involved in selling a civilian-owned fixed-wing or rotorcraft aircraft:
- Step 1 – Determine the Plane’s Value
- Step 2 – Use a Broker / List Online
- Step 3 – Negotiate the Price / Inspection
- Step 4 – Receive Funds & Complete the Bill of Sale
- Step 5 – Transfer the Aircraft
There are many variables that go into the pricing of a used aircraft. Similar to how the mileage on a vehicle is only one aspect of its condition, the number of flight hours a plane has doesn’t come close to painting the full picture of its value. Some of the factors that go into pricing a plane are:
- Engine hours – more engine hours, especially if the engine is close to needing its scheduled maintenance, will bring down the overall cost of the aircraft.
- Maintenance records – a well-kept airplane will almost always have records pointing to the scheduled service it has received.
- Equipment / technology – older planes may have outdated tech and/or features that need updating. While this isn’t always the case, planes that have had upgrades will almost always see a rise in their value.
- Airworthiness directives – these can be thought of as “recalls” for an airplane. Although instead of being issued by the manufacturer, they are issued by the FAA. The directives are known issues with the safety of the plane that needs to be corrected in order to be considered airworthy. If a plane has any outstanding directives, this will lower the plane’s worth.
- The market – A “buyer” or “sellers” market is a major factor in what a plane will sell for. If planes are in great demand (or more specifically, if the make and model are in great demand), the seller can expect to sell their aircraft for a much higher price.
For plane owners that aren’t experienced in the process of selling, it is recommended that they seek assistance from a seasoned airplane appraiser. According to the Aircraft Owners and Pilots Association, there are three (3) types of appraisal in varying intensity. Starting with the least invasive/most simple, they are1:
- Pricing Digest Valuation – this includes the “VREF” Aircraft value reference tool. This is an online tool that allows owners to enter their specific airplane manufacturer, model, year, and other factors to obtain a general “ballpark” value for their aircraft. Cost: Free
- Desktop Appraisal – This is a hired service that is done by an actual appraiser. Although the appraiser doesn’t view the aircraft in-person, they will analyze current market data and will factor in any aftermarket upgrades done to the plane. Cost: ~$500-600
- Physical (in-person) Appraisal – Similar to an actual pre-purchase inspection, a physical appraisal takes into every conceivable factor into the airplane’s worth. This type of appraisal is suggested for those that have unique aircraft or are selling exceptionally valuable airplanes (jets, for example). Cost: ~$2,000-3,000.
Because there’s no generally recognized certification for brokers of aircraft, a broker should have significant experience and a promising history of selling aircraft. A great quote from Flying Magazine2 is:
“Deciding not to work with a broker is a little like walking into a courtroom without an attorney. You can do it, but it isn’t necessarily wise.”
When interviewing a potential broker, it’s important to ask them questions relating to their methods of marketing the aircraft online, what their reach is (if you could sell the plane in another country, for example), if they’ve sold planes similar to yours, their qualifications, if they have experience working with any of your favorite lawyers/escrow agents, how the broker charges, the average time length for selling an airplane, and so on.
If the seller is interested in selling the aircraft on their own, popular online aircraft marketplaces include:
Once a prospective buyer has been found, negotiations will begin. If the buyer is seriously interested in purchasing, they will most likely request a pre-purchase inspection for the aircraft. Depending on the thoroughness of the inspection and the size of the plane, this can take anywhere from one (1) to several hours.
Because the bill of sale is a confirmation of the sale (and shows ownership), it should only be signed after the buyer has transferred the funds to the seller. However, the seller can complete the bill of sale ahead of time to make the signing process fast. To ensure the bill of sale can be used by the buyer for registration purposes, it should contain:
- The names and addresses of the buyer (“Purchaser”) and seller;
- If the aircraft is bought from a dealer, the dealer’s certificate number (#);
- The aircraft’s registration number (#);
- The full purchase price of the aircraft ($);
- The manufacturer, model, and serial number (#) of the aircraft;
- The full date of the transaction; and
- The signatures of the seller and buyer(s).
Once the seller has received the funds in-full for the agreed-upon purchase price, the parties should sit down and sign the contract. The buyer should be given the original bill of sale and an additional copy (for registering). The seller can make an additional copy for themselves if they so choose.
It is not a requirement of the FAA to have the bill of sale notarized. However, it may be required by the state in which the aircraft is being sold in. Additionally, having the bill of sale notarized adds legitimacy to the contract.
Once the aircraft has been successfully sold, the seller will need to do the following:
- Take the aircraft’s registration, complete the fields pertaining to selling, and mail it to the FAA. Note: The buyer will need to obtain a new registration by mailing AC Form 8050-1.pdf to the FAA’s office in Oklahoma.
- Remove the aircraft’s insurance.
- If the seller has an FCC radio license in the aircraft, this should be removed.
- Finally, the new owner should be provided with all of the logbooks and records regarding the aircraft. It’s important they have this to understand when the aircraft will need future scheduled maintenance.
Step 1 – Download
The bill of sale can be downloaded in the following formats:
Step 2 – Aircraft Details
The following will need to be entered regarding the aircraft:
- Make (e.g. “Cessna”)
- Model (e.g. “172”)
- Year built (e.g. “1990”)
- Aircraft serial number (e.g. “60-001”)
- FAA Registration Number (e.g. “N12345”)
Step 3 – Sales Information
The price the aircraft was sold for should be written on the first line. After the dollar sign ($), enter the numerical value for the sold aircraft (e.g. “$100,000”), followed by the value in words (e.g. “One-hundred thousand”). On the next line, the full name of the Buyer should be written, followed by the Buyer’s address on the proceeding line. The full date (e.g. “01/01/2030”) in which the aircraft officially sold should be written in the provided space.
Step 4 – Representation of Encumbrances
An “encumbrance” is a type of claim that could be against the aircraft. This can include a loan, restrictive covenant, or other restriction that is exists on the aircraft. If none exists, the field can be left blank.
Step 5 – Signatures
On the second (2nd) page, start by writing the day, month, and year that the bill of sale is being completed. The signatures of the Buyer(s) and Seller(s) will need to be written in the spaces provided next. The date of signing and printed name of each party should be written next to their respective signatures. Once all signatures have been written, the bill of sale will be complete. The buyer should be given two (2) copies (the original included). The seller can make an additional copy for themselves if they so choose.