Do you know how to easily become a millionaire? Being a billionaire and buying a plane... The popular joke is often not far from the truth. The plane is economically demanding to operate and not worth it for everyone. Its purchase is extra complex process, which requires careful preparation, knowledge of legal aspects and different types of contracts. Read what to look out for when buying a plane, private jet or helicopter.

Start with a thorough inspection

Finding the ideal aircraft can be challenging – you need to consider its technical condition, range, equipment and operating costs. In addition, the whole process is often accompanied by emotions and joy during the first inspection, so it is good to have someone on hand who will act rationally. 

I definitely deliver to use the service qualified air broker, which will work just for you. It will help you find the right aircraft and explain its advantages and disadvantages.

Have you already chosen? Great. Before you start shopping, you need to do your due diligence due diligence. This inspection includes checking the technical condition of the aircraft, its history, previous damage and repairs, as well as the legality, completeness and correctness of all documents required for the operation of the aircraft and its registration in the air registry of the country where it will be registered. 

Also keep in mind that aviation regulations differ from country to country, for example with regard to the country of origin of the aircraft and the sanctions imposed on Russian machines. Registering an aircraft in Austria can be a problem in the Czech Republic.

It is wise to secure the services of experts who can assess the technical condition of the aircraft and advise on its evaluation. Our lawyers they are happy to see to it that the legal purity of the aircraft is ensured.

What kind of contract can you make?

When buying an airplane or helicopter, you may come across several types of contracts. Each has specific conditions, and only careful drafting of the contract will ensure a smooth transaction and protection of your interests.

Purchase contract

A basic document which specifies the terms of sale, description of the aircraft, purchase price and payments, is a contract of sale. It should contain clauses on guarantees and the mechanism of handing over the aircraft and regulate situations where, due to legal or technical defects, the buyer may not take over the aircraft or return it to the seller. Conditions are often negotiated that must be met in order for the seller to hand over the aircraft and the buyer to take over. The so-called bill of sale, which is a document that documents the transfer of ownership to the aircraft and serves as a basis for registering the aircraft in the relevant aviation register.

Due diligence agreement

This contract allows the buyer to perform the necessary inspections and checks on the aircraft without committing to a purchase if major problems are found.

Leaseback agreement 

The buyer often does not finance the purchase of the aircraft from his own funds. In that case, the plane the financing entity buys, such as a bank or a leasing company. A leaseback agreement is then concluded between the buyer and the financial institution, on the basis of which the buyer uses the aircraft and ensures its maintenance.

Pledge agreement 

We prepare a pledge agreement in a situation where the financial institution is not the owner of the aircraft, but the buyer will provide credit for its purchase. The bank secures repayment of the loan by pledging the financed aircraft or other property.

Brokerage Agreement 

Buying an aircraft is a specific process that requires a detailed knowledge of the market. Very often it is appropriate authorize an intermediary (broker), who is well-versed in the aircraft market, especially those that have been flown. For an agreed commission, the broker will find the aircraft and ensure supervision of the entire transaction.

What must the contract contain? 

Each contract must specify all the requirements in detail. What must not be omitted? 

• Aircraft identification – serial number, model, year of manufacture.
• Price and payment terms – including deposits and payment methods. The aircraft is often the subject of financing by the seller's bank, so the terms of disbursement of the loan for the aircraft and its release for sale are resolved in the purchase contract. The security of all participants will be strengthened by depositing the money for the purchase price in escrow, either with a specialized company or, for example, with our law firm.
• Handing over the plane – when and where the aircraft will be handed over, conditions of handover. 
• Warranties and Responsibilities - what guarantees related to the technical condition and legal title does the seller provide.
• Agreement on withdrawal from the contract – conditions under which the buyer can withdraw from the contract.

What to look out for when buying an airplane

When buying an airplane, you should pay attention to several key aspects that can influence your choice and save you from unpleasant surprises. 

Secure the right to a thorough inspection of the aircraft to reveal any hidden defects. In the contract, specify in detail which defects are the responsibility of the seller and which are not. Beware of corrosion, which almost always appears on older aircraft and needs to be removed.

Review all legal obligations associated with the aircraft, including leases and liens. It is also important to verify that the aircraft meets all requirements in terms of serviceability and has passed the mandatory technical inspections, of which there are many for aircraft.

Ensure that the transaction complies with all relevant national and international aviation regulations. This is significant nowadays, for example, with regard to the international sanctions imposed on Russia, its people and companies in connection with the Russian-Ukrainian conflict.

Vych & Partners will guide you through the entire process

Buying a private jet or helicopter is a significant investment that requires professional legal advice. At the Vych & Partners, s.r.o. law office, we offer comprehensive services in the field of aviation law – from due diligence and preparation of purchase contracts to aircraft registration in the air registry to representation in court cases. 

We recently for our clients arranged for the purchase of a private jet from abroad to the Czech Republic. We also participated in the purchase of an aircraft from the Czech Republic and its export (overflight) to South America. 

In both cases, we performed a thorough review of the purchase contract for the client. We had to adjust in detail the process of carrying out the pre-sale technical inspection, the conditions for handing over the aircraft and, above all, the conditions for settling the purchase price. We also helped clients with the formalities associated with a change of ownership at the Civil Aviation Authority.

Thanks to our experience and expertise, your jet investment will be safe and compliant with applicable legal standards. Contact us today and ensure a smooth and hassle-free transaction.

JUDr. Ing. Jan Vych, attorney and partner