December 24, 2000 Eye of Experience #35: Safely Selling Your Airplane

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by	Howard Fried

About the Author ... Howard Fried started flying with the Army Air Corps in WWII, where he served both as a multi-engine instructor pilot and in combat piloting B-17s. After a stint teaching sociology and on-the-air and management jobs in the radio business after the war, he turned to teaching flying again full-time. Over 40,000 general aviation hours later, he is still instructing and running his own flight school. Along the way he administered over 4,000 flight tests as a Designated Examiner until victimized by rogue FAA officials. He has authored two popular flying books aimed at student pilots and instructors, Flight Test Tips and Tales and Beyond The Checkride, and a series of audio tapes, Checkride Tips from Flying's Eye Of The Examiner.

Everybody knows about "buyer beware," but how about seller beware? Much has been written on the subject of protecting oneself when purchasing an aircraft (see Rick Durden's excellent AVweb column or Brian Jacobson's comprehensive book on the subject, Purchasing & Evaluating Airplanes), but I have yet to see anything on the subject of protection for the seller, both physical and financial protection.

The reader who suggested this column was inspired by an event that occurred about a year ago in New Mexico. Our reader, Mr. Terrance L. Connors, wrote, "I wish there were more information on how to SELL an airplane. I believe that buyers can certainly take advantage of sellers. Two years ago an Arizona seller was shot and killed, his aircraft hijacked, and his body dumped near Albuquerque. I would like to see somebody write an article on how to sell an aircraft, and how to do it safely — both in the physical and the financial sense."

Mr. Connors then goes on to quote the Albuquerque Journal of January 18, 1999:

Christensen's body was later found near Cuba, New Mexico, and Keesee has since been convicted and sentenced to life in prison.

Obviously this was an extreme case, but nonetheless there are several things a seller can and should do to protect him/herself when selling an airplane.

Personal Experience: Buying

Over the years I have bought and sold a substantial number of airplanes. Permit me to cite an example of each — buying and selling. First, an example of what can happen when buying an airplane sight unseen.

Several years ago I bought for my flight school a one-year-old Skyhawk. It was offered at a super bargain price by a dealer located at a distant city in my state. He had bought it from a dealer in a far distant state who had acquired it as a wreck from a club in still another state. (It had suffered ground damage in a windstorm.) The dealer with whom I dealt was an automobile dealer who dabbled in airplanes as a broker and dealer. Please understand, I have no hesitation in buying an airplane that has suffered major damage if it has been properly repaired. The records indicated that it had been so repaired. This airplane was, at the time, the pride of our fleet. It was our newest airplane and the only one on our Part 141-approved single-engine ATP curriculum.

After a couple of months and two 100-hour inspections — during which time it always seemed to be slightly out of rig — the airplane went to the FAA for an CFII (Certified Flight Instructor-Instrument) check ride. At the conclusion of the ride (which the applicant passed), the Operations Inspector who administered the flight check stopped by the desk of an Airworthiness Inspector (maintenance type) and asked that inspector to take a look at the airplane. That guy gave the airplane a cursory once-over and called me. Since an FAA Inspector had just flown in the airplane, he couldn't very well ground it as unairworthy or send it home with a ferry permit. However, he did ask me to let him know when it would next be opened up for inspection so that he could give it a thorough examination. I advised him that it was scheduled for a 100-hour inspection in a few days. Shortly thereafter, when our Chief Mechanic had the airplane opened up for inspection, the FAA Airworthiness Inspector showed up. With a flashlight and a mirror he examined the interior of one of the wings and discovered that during the repairs, rather than replacing several ribs, the mechanic who did the work merely riveted the bent ribs in place. He also found faulty repairs to one of the flaps and an aileron. He grounded the airplane, requiring that the wing be replaced and the flap and aileron be repaired again, this time properly.

We called the shop where the bad work had been done and were advised that if we would bring them the airplane (some 1,200-odd miles away) they would be happy to redo the repairs for the cost of parts and labor! Our attorney (my wife was our corporate counsel) wrote them a "lawyer letter" threatening suit if they refused to put the airplane in airworthy condition. Meanwhile, we had found a wing (after the airplane had been out of service for several months) and we offered to absorb the cost of labor, paint, etc., if they would only pay for the wing. They flatly refused, claiming that we "had brought forces to bear that had better been kept out of the affair." They were under the impression that we had sicced the FAA on them, when in fact it was the other way around. The local FSDO had informed me (off the record) that if the shop that performed the faulty repairs would stand behind their work and do the right thing, they would suffer a slap on the wrist; otherwise certificate action would be taken against the mechanic who did the work and the IA who signed it off.

In view of the adamant refusal of the shop that did the bad work to do anything for us, we had no course but to go to court. This posed a problem. We could go 1,200 miles to sue the shop, or 110 miles to sue the dealer and have him bring the shop in as a third-party defendant. There was, however, a third possibility. If the damages, exclusive of costs, exceeded $10,000.00 we could sue in federal court and make them come here to defend. So we ran the costs up, including the loss of revenue while the airplane was grounded, to over $30,000. We went to court without having to leave home.

The owner of the business that did the repairs, the mechanic who did the actual work (such as it was) and the IA who signed it off showed up here to defend the suit. By the bye, we still had the wing with the bad job and under the "best evidence rule" my wife wanted to drag it in to the courtroom, but with the testimony of the FAA Inspector, the Judge stipulated that the repairs were not proper. (Can you just visualize dragging a Cessna wing up to a third-floor courtroom?) After we made our proofs on the subject of the bad repairs, we started in on the money damages we had suffered. In addition to our out-of-pocket costs, we offered testimony of students to demonstrate loss of revenue due to the grounding of the airplane.

The defendants, the owner of the shop, the mechanic, and the AI (whose business was located 100 miles from the shop and who had never seen the job) cornered us at each break in the proceedings and offered to settle, each time upping the ante. Just prior to the time the matter would go to a decision by the judge, the offer came up to an acceptable amount, and we settled it out. Later, the IA was heard to remark (in the court corridor), "That's the last time I ever sell my signature for $25.00." So much for buying an airplane without having your own mechanic perform a pre-purchase inspection (although in this case, the bad repairs would probably not have showed up).

Personal Experience: Selling

Now for an example of an unpleasant selling experience: I owned an airplane which I had leased to my flight school and which was doing quite well on the school line. Like all airplane owners I am constantly getting letters and cards from dealers wanting to buy one or another of my airplanes. Just as consistently they go into the round file. However, I kept getting phone calls from a guy some 250 miles away wanting to buy this particular airplane. Rather than being a dealer or broker, he gave the impression that he was a private individual. The fair market of the airplane was $63,000.00, and one day the guy called and said, "If I show up with $60,000.00 can I have the airplane?"

My response was, "I wouldn't take a penny less than eighty." Since I had no desire to sell the airplane, I thought this would get rid of the guy for keeps, and he would quit bothering me with phone calls. Imagine my surprise when he called back the next day and said, "OK, I'll give you $80,000.00" At this point two factors came into play. One, I felt sort of trapped, since I had implied that I would accept $80,000.00 for the airplane, and, two, I learned long ago, that although I was quite fond of that airplane, I never let sentiment get in the way of my pocketbook when dealing with an airplane. So I said, "OK, you can have it for eighty grand."

He next informed me that he was shopping for a friend located some 1,100 miles away. In my naiveté I was still not realizing that the guy was a broker. (Back when I was a youngster of 50 years, my wife used to say that I was the most naïve fifty-year-old man allowed to wander around on the face of the earth.) The "friend," the real purchaser of the airplane, was not a pilot, but he operated a "flying club" with an extremely large membership, and quite a fleet of airplanes. This guy, the real buyer, showed up the next day, arriving by carrier. He rented a car and drove to our location to look at the airplane. He found it up on jacks in the middle of getting a 100-hour inspection. Since our chief mechanic was an IA, we always had him sign off 100-hour inspections as annuals. The month was September, but even though the airplane did not require an annual inspection until the following May, I told the buyer that it was getting a 100-hour inspection and would have a fresh annual. The guy looked at the airplane, examined the paperwork, and left. He was on the ground for less than three hours.

The next day I received by fax from his company, the "flying club," a purchase order describing the airplane, the terms and including a fresh annual inspection. The purchase price was wire transferred to my bank and the deal was done. I had agreed to deliver the airplane for expenses in about a week and a half. The following day I received a phone call from the broker who had handled the deal. (By then I had woken up to that individual's actual status.) This guy informed me that his "friend" needed the airplane immediately, since the one he had of the same make and model had just been grounded with a blown engine. Although it involved a good deal of schedule shuffling and inconvenience on my part, I agreed to deliver the airplane two days hence, instead of the following week. I told our mechanic to button it up as-is with the inspection not quite finished, that I was delivering the airplane in two days to the buyer 1,100 miles away. He did so, and I flew the airplane to the buyer's location. When I got there, I found that the buyer was out of town, but I dropped off the airplane with all appropriate paperwork. After spending the night in a hotel, I returned home by carrier, thinking it was all over. Boy! Was I ever mistaken!

The following day, I received a call from the buyer stating that he would have his mechanic complete an annual inspection and send me the bill! I said, "No you won't. You wanted the airplane immediately and I accommodated you at some inconvenience. It doesn't need an annual for another eight months." I then offered him three choices: One, he could keep the airplane as is; two, he could bring it back and my mechanic could complete the inspection; or three, he could bring it back and I would give him his money back. (Remember, I wasn't anxious to sell the airplane in the first place.) He reminded me that I had signed a purchase order calling for a fresh annual. He then hung up on me.

That evening I consulted a very prominent attorney in his state, a friend of mine with a nationwide reputation. The next day I got a call from the broker who had handled the deal. He told me it would cost me a lot less to pay the buyer's mechanic for an annual than to defend a lawsuit in the distant state where the buyer resided. I told him that I had already consulted a lawyer in the buyer's state who was willing to represent me for nothing, closed by mentioning the attorney's name, and said, "Now, do you want to play games with me?"

I sent the buyer a bill for the expenses incurred in delivering the airplane, which he never paid. On the other hand, I never heard from him again.

Lessons

Did I learn from these experiences? You bet I did! (And from numerous others as well.) The primary purpose of the Eye of Experience column is based on the fact that human beings learn from experience, and it is much easier to gain wisdom from the experience of others than to have to suffer through each event ourselves. It is my fondest hope that you, my readers, learn from the experiences of which I write, both others and mine.

Usual Boilerplate: If you have a comment regarding this column, please post it here rather than sending it to me by direct email. That way others may benefit from your input.