The legalese of prebuys

Prices of older turbine airplanes are enticingly low these days, but there are some important caveats for prospective purchasers. One imperative is to have a prebuy inspection.

“A prebuy inspection is a must,” said Adam Meredith, president of AOPA Aircraft Finance Co. “I wouldn’t buy any aircraft without a prebuy, a title search, and a fair purchase and sale agreement—and no bank should allow you to finance an airplane without the prebuy and title search, either.

“Prebuys should be done by a shop that specializes in the type of airplane you’re buying.”

Typically, the prospective buyer pays to reposition the aircraft for the prebuy, and the seller pays for correcting any maintenance issues relating to airworthiness. Fixing any non-airworthiness items is usually up for negotiation.

That’s where the purchase and sale agreement comes in. This agreement is a binding legal document that sets down the sales price plus conditions such as the amount of time to complete the prebuy, who pays for what, and who pays to move the airplane among a list of items.

“As a participant in AOPA’s Legal Services Plan you’d have access to a panel attorney who can look over your agreement to make sure its provisions are balanced between buyer and seller and applicable to your state laws,” Meredith explained. “And there’s one more thing to remember. Ideally, banks want a fresh annual inspection out of a prebuy, unless one has been completed recently.”