Your Refurb: The Pre-Buy Exam

Whether you're buying an airplane to refurbish or one that's just been refurbed it's essential that you subject it to a pre-buy exam by a mechanic you chose.

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In our series on the growing world of aircraft refurbishing, we’ve looked at every phase of a total refurb from avionics to interiors and from engine replacement to paint. In this article we’ll deal with what is either the start or finish of a refurbishment—buying an airplane you intend to refurb or one that has just come out of refurbishment.

While refurbs are becoming an increasingly popular way to become the owner of an airplane that has most of the attributes of a new one at less cost, the rules regarding protecting yourself when buying a pre-owned airplane are the same whether you’re buying it for a refurb or because it was refurbed. And those rules boil down to one inviolable law—have a pre-buy examination of the airplane conducted by a mechanic you select who has had no connection with the airplane or the seller in the past.

As a lawyer, some of the most frustrating matters I’ve dealt with have involved airplane owners who bought without having a pre-buy conducted—or had one done by the seller’s mechanic—and then discovered that they’d bought junk and wanted their money back. One buyer thought he’d gotten a tremendous deal on a light twin—when he took it in for the first annual it was discovered to have extensive corrosion. It took three years and cost him half of what he’d paid to buy the airplane to fix the corrosion—and it was only one of the many things wrong with the airplane. The buyer of a Cessna 150 with a “fresh annual” took it in for its next annual the next year and found out the wrong engine was installed—and had to be replaced. A 172 had had a wing replaced (no logbook entry) and the “little bit out of rig” problem became so bad that it had to be replaced again. One buyer didn’t have a pre-buy done because the seller was an A & P mechanic so “the aircraft had to be in good shape.” The list of illegal parts installed and improper repairs that had been done that was provided to the buyer by the shop doing the next annual ran two pages. Almost invariably, the seller was in another state and trying to prove the seller knew the airplane was in rotten shape would be so difficult, not to mention expensive—or the seller had disappeared or was bankrupt. Too often the buyer was stuck with his or her money pit.

The idea behind a refurb is to wind up with an airplane that has the equipment and is in the condition you desire because you want an airplane made for why you fly. That means answering the question: How much am I willing to pay to get an airplane that has that equipment and in that condition? That’s where the pre-buy examination comes in—you are hiring a mechanic knowledgeable about that type of airplane to examine it and give you an educated estimate as to how much more it’s going to cost you to get that particular airplane to where you want it. If you are buying the airplane for a refurb, chances are you’ll have the shop that’s going to do it do the pre-buy, so you’ll get a solid handle on the cost of the refurb or you find out that the airplane needs so much extra work that you should walk away from the deal. If the airplane’s just come out of refurb, your independent technician does the quality control check and, if anything isn’t up to snuff, gives you leverage to have the work redone at no cost to you.

Although this article is primarily about the pre-buy examination, there are caveats to keep in mind during your search for the right airplane to refurb: Accept that there are no undiscovered, fabulous deals just waiting for you to uncover—an airplane half-way across the country priced well below others you’ve considered has something badly wrong with it. If it were in good shape for that price, a local would have snapped it up. Also, “fresh annual” and “fresh overhaul” are red flags—consider them traps for suckers. If you were going to sell, how much would you spend on maintenance?

Among the more common AVweb reader letters that get forwarded to me are from pilots who have bought an airplane with a fresh annual as part of the deal and either something expensive failed within months, when it went into the shop for a refurb all sorts of horrible things were discovered or it wouldn’t pass its next annual because it had illegal parts installed or there are extensive, and expensive, repairs needed. They thought they’d gotten a good deal on an airworthy airplane, only to discover, in some cases, that they were just lucky it kept flying long enough to make it to its first visit to the shop. If you do pursue such an airplane, it would be wise to assume the annual is worthless and that the overhaul won’t come close to making TBO—and make a purchase offer accordingly.

Seller Resistance

The good news is that honest sellers don’t object to a pre-buy examination. Most expect it and will cooperate in coordinating it. You, the buyer, will bear all of the costs, including ferrying the airplane, if needed. Realistic sellers recognize that a pre-buy helps protect them if the buyer later suffers buyer’s remorse and tries to take some action against the seller for misrepresentation of the airplane.

If a seller resists a pre-buy it’s usually a sufficient reason to walk away from the airplane. The times I’ve seen a seller resist for good reason involved logistics, notably where the buyer demanded that the seller fly the airplane a long ways without agreeing to pay the cost of getting it there and back if it didn’t pass the exam.

Once you’ve found an airplane that looks good enough to consider buying for a refurb, a number of things happen—although the sequence may vary: Getting photos of the exterior and interior (in the world of cell phone cameras you should get pictures of everything—assume that any area not photographed is in bad shape), getting copies of the last few years of logbook entries and oil analysis results, as well as printouts from the engine analyzer, getting the aircraft file from the FAA, negotiation on the price, flying the airplane and a pre-buy examination. A rule of rule of thumb is to agree on a price that is subject to a pre-buy examination. You and the seller may then want to agree on what will happen as a result of the pre-buy. Under what conditions can you walk away? If there are squawks and an estimate for repairs, who pays for the repairs if you go ahead with the deal? If you haven’t flown the airplane, you’ll want to do so at some point prior to the exam (or arrange to have someone you trust do the test flight). Don’t pass on a test flight—a ground inspection, no matter how careful, can’t uncover some potential faults, such as the airplane being badly out of rig.

In anticipation of the pre-buy examination you should order a copy of all of the aircraft’s records on file with the FAA—that means everything that has been recorded with the FAA regarding the airplane—all ownership and loan paperwork and all Form 337s (Major Repairs and Alterations). It will come on a CD. While you’ll get a title search done to confirm that the airplane is free of liens, the paperwork package gives you a head start on the subject and it lets you start doing your due diligence to find out if there is a damage history that has not been disclosed. Generally, big fixes required after an accident or incident require filing a Form 337. However, a certain percentage of owners and their mechanics don’t bother doing so in hopes of not losing resale value on the airplane. The absence of a 337 for a big repair is not proof of the absence of damage history.

If the airplane has a lien or liens on it, do not close any sale until you have positive evidence that all liens have been released. Every once in a while I’ll get a call from an aircraft owner who is being pursued for payment on a lien that’s 20 or 30 years old. Usually it was from a loan made by a bank or savings and loan that went under and its assets were bought by another bank. Some young new hire in the loan department of the current bank had been assigned to go through old records and find out if there are any uncollected loans and came upon an unpaid (or unreleased) loan from years back and traced down the current owner for payment. It’s a huge—and often expensive—pain in the whatsis for the current owner. The records say the airplane was collateral for an unpaid loan and the bank wants its money or the airplane.

Any unreleased lien on an airplane you are buying is a deal killer. Walk away.

The Examination Itself

A pre-buy is not an inspection. Let’s make it clear. Around airplanes, the word “inspection” has specific meanings, especially when the FARs are involved. The FAA does not recognize the term “pre-buy inspection.” Examination is more descriptive of what’s being done. Further, the results of a pre-buy exam should never be recorded in an aircraft or engine logbook. It is an examination of the aircraft and its logs to get information about its condition so you can make a decision as to whether you want to buy it. That’s it. It is not a prediction or guarantee of future airworthiness. It’s a snapshot of the condition of the items on the airplane examined then and there. It is a tool for you and your mechanic to use in making the decision whether to buy the airplane.

The exam should be conducted by a mechanic you chose—and who knows the type of aircraft well. Knowledge and experience in type does matter—a mechanic who primarily works on Cessna, Cirrus and Piper is not likely to know the inner secrets of Mooneys. A good way to locate a mechanic is through the type club for the model. Having joined the type club and learned all you can about the marque early in your search benefits you in several ways—learning what to look for and look out for as ammunition for your search and negotiation, getting to know people who are knowledgeable that may be able to help you during the purchase process and as an owner and the chance that a club member may be selling a good airplane.

Discuss the nature and extent of the exam with your mechanic when you retain him or her. How deep do you want to dig? What needs to be looked at to find evidence of undisclosed damage that may not have been repaired correctly? Set it up so that if your mechanic finds what may be a show stopper that he or she comes to a halt right then and tells you so you can make a decision. If you aren’t going to buy, there’s no reason to continue.

Set aside a full day for a pre-buy for non-pressurized piston singles and twins—it may take less—the idea is not to be hurried. Anyhow, you’ve got to allow a few days to get the oil sample you’ll take analyzed.

Once the day comes, the first step is to go through all of the originals of the logbooks (this is one time originals matter—if you buy, you’ll make electronic copies and keep the originals locked up because their loss knocks 10 to 20 percent off the resale value of the airplane). If the seller has told you that all the logs exist and then there proves to be any kind of hassle regarding production of any of the logbooks at the beginning of the inspection, be spring-loaded to walk away. If the logs aren’t all there, ready to go, it’s a major issue. It doesn’t happen often, but I’ve seen situations where sellers, knowing some of the logs are missing, will produce a few right away and then start making excuses and finding one here and one there, hoping the buyer will let it go without realizing the set is not complete. Don’t fall into the trap. The logs are either all there or they are not. If they aren’t, it should have been disclosed up front and the purchase price should have reflected that logs were missing.

There are numerous, good checklists for pre-buy exams, especially those compiled by type clubs. One size does not fit all. Once the logs pass muster, your mechanic should follow the checklist you’ve agreed upon. In my opinion, that includes a borescope exam of the engine, not just a compression check. You’ll also overnight the oil sample for analysis. The good companies will call or email you with the results the next day.

Your mechanic should make a running list of squawks. Assuming no big deal-breaker is found, he or she should then give you an estimate to fix each one. You and your mechanic then have time to discuss how things look overall and in detail.

If something is on the equipment list for an airplane you are considering, it must be in the airplane. At a very basic level, that includes the tow bar and baggage net. If there is an empty or plugged instrument hole—for instance, the equipment list says the airplane has a carb temperature gauge and there is no 337 for its removal—the gauge has to be there or a 337 has to be filled out. Some sellers don’t seem to understand that if the prop on the airplane isn’t of the sort approved on the Type Certificate Data Sheet, the airplane is not airworthy. Don’t agree to buy an airplane that isn’t airworthy because it has unapproved parts on it. You may be the one who comes up against buyers who weren’t as foolish as you were, and discover that it’s unmarketable unless you can find another sucker. And, in doing so, your sucker may turn around and sue you for fraud because you knew the airplane was illegal and didn’t disclose it.

If things look good, contingent on the oil sample (and the seller may have given you the oil sample history), you and the seller go over the squawk list based on your agreement as to how the cost of repairs is to be handled and close the deal. You’re now the owner of a nicely refurbed airplane or ready to create one.

Conclusion

The Internet has helped buyers rapidly find airplanes as well as unscrupulous sellers come up with more ways to try to unload lemons disguised as trophy pieces. P.T. Barnum may be long dead, but he continues to be proven right on a daily basis in the used airplane sales world. Despite improvements in information technology, the rules of buying a used airplane for a refurb haven’t changed:

Join the owner’s association and get all the information you can before searching.

Don’t ever buy sight-unseen.

Get the chain of title and 337s before you commit to anything.

Be suspicious of anything that smacks of a seller who is the least bit hesitant to disclose everything about the airplane.

Have your mechanic do a pre-purchase examination and make any sales agreement subject to a pre-purchase examination.

Don’t get so emotionally involved with one airplane that you can’t walk away.

Rick Durden is an aviation attorney and the author of The Thinking Pilot’s Flight Manual or, How to Survive Flying Little Airplanes and Have a Ball Doing It, Vols 1 & 2.

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