I'm about to be a partner in a plane. What kind of paperwork do you suggest? I will be basically taking over the current plane payments plus upkeep. BTW current owner not a pilot yet so I will be the only one flying it.
Should I get a lawyer to draft the papers?
What am I not thinking about that could bite me?

Thanks in Advance.

DON'T DO IT.....

74gcbc/76185 wrote:DON'T DO IT.....

X2brazillion

Don't for a minute think since your the one flying it will work in your favor.RUNNNNNNNNNNNNNNNNN

I have had a couple partners over the years,the best one was stressful. If you need a lawyer, or worried about it RRRRRUUUNNNNN

And if your making the payments plus up keep why in the hell would you want a partner

I was in a 4 way partnership in a 182 back in the late 80's early 90's and it worked great. I bought my share from a guy getting out for about $7500. Each of us had a duty or function. One guy was a CFII and he handled the schedule and would give dual time, BFR's and such at operating cost only. One is/was a CPA (still is my business & personal) he made sure the bills got paid and billed us for flight time and fixed costs. One was in charge of making sure the plane & hangar was kept tidy or cleaned, although after each of us flew it was a given you cleaned the plane out and wiped down the leading edges of the wings and windshield made sure it had a reasonable amount of fuel in it, ect. My job was to make sure the maintenance and any squawks, annuals and such were taken care of and we did owner assisted annuals (saves a shitload of $).

We figured the fixed costs and divided by 4 and added $50 for maintenance costs or reserve per month. Fixed costs were hangar, insurance and payment (when I bought in we had 7-8 payments left I think). Hanger back then was $250 per mo. insurance was $2400 a year for 4 guys was $50 per month and I think the payment was in the $300 range per month divided by 4. I think our fixed costs per month each was around $225 each and when we paid the plane off it came down proportionally (thinkin -$75) We kept a log in the plane and charged ourselves $40 per hour to fly it that included fuel and we each had a Chevron credit card, fuel was costing about $1.75 a gallon back then so we figured half went to fuel and half went into a maintenance fund.

I got my instrument rating in that plane and we never had any conflicts scheduling or personal. We are all still friends. At the end of the month the CPA would make a copy of the flight log and figure our fixed + operating costs and send us an accounting ledger that showed all expenses, billing and payments. The books were always open and honest. I would do another partnership like that one. We didn't use no stinking lawyer, we each were on title as co-owners. Any time a new owner came or went we submitted new paper to FAA reflecting all owners name.

Glidergeek wrote:I was in a 4 way partnership in a 182 back in the late 80's early 90's and it worked great. I bought my share from a guy getting out for about $7500. Each of us had a duty or function. One guy was a CFII and he handled the schedule and would give dual time, BFR's and such at operating cost only. One is/was a CPA (still is my business & personal) he made sure the bills got paid and billed us for flight time and fixed costs. One was in charge of making sure the plane & hangar was kept tidy or cleaned, although after each of us flew it was a given you cleaned the plane out and wiped down the leading edges of the wings and windshield made sure it had a reasonable amount of fuel in it, ect. My job was to make sure the maintenance and any squawks, annuals and such were taken care of and we did owner assisted annuals (saves a shitload of $).

We figured the fixed costs and divided by 4 and added $50 for maintenance costs or reserve per month. Fixed costs were hangar, insurance and payment (when I bought in we had 7-8 payments left I think). Hanger back then was $250 per mo. insurance was $2400 a year for 4 guys was $50 per month and I think the payment was in the $300 range per month divided by 4. I think our fixed costs per month each was around $225 each and when we paid the plane off it came down proportionally (thinkin -$75) We kept a log in the plane and charged ourselves $40 per hour to fly it that included fuel and we each had a Chevron credit card, fuel was costing about $1.75 a gallon back then so we figured half went to fuel and half went into a maintenance fund.

I got my instrument rating in that plane and we never had any conflicts scheduling or personal. We are all still friends. At the end of the month the CPA would make a copy of the flight log and figure our fixed + operating costs and send us an accounting ledger that showed all expenses, billing and payments. The books were always open and honest. I would do another partnership like that one. We didn't use no stinking lawyer, we each were on title as co-owners. Any time a new owner came or went we submitted new paper to FAA reflecting all owners name.

Good for you GG...sounds like it worked great. Almost got into a partnership in a TriPacer....my brother is an IA and told me where to look for certain things..saved my ass. This guy who wanted a partner just wanted someone to pay for a new engine because it wouldn't pass.
X4!!!..if you can at ALL manage it, buy your own plane..you will be happier in the end, instead of taking it in the rear end!
HC

Over the years I've owned 14 airplanes and two of those were with partnerships, but with friends. Most likely not the smartest way, but they were done with only a handshake and they worked out great. We each owned our main airplane and the partnership planes were both for second planes.

670x wrote:I'm about to be a partner in a plane. What kind of paperwork do you suggest? I will be basically taking over the current plane payments plus upkeep. BTW current owner not a pilot yet so I will be the only one flying it.
Should I get a lawyer to draft the papers?
What am I not thinking about that could bite me?

Thanks in Advance.

It does seem a bit odd of an arrangement and I, also, don't see the advantage if you are making all the payments and doing all the flying. If you know the guy well and are comfortable dealing with him, then it might not be a bad situation. But, as the folks above have said, be careful. Make sure you do a thorough pre-buy.

That said, I was in a 3 person partnership for the last few years and it worked out pretty well. Still, if I was going to do it again I wouldn't go beyond one additional partner. Right now I have my own airplane and am enjoying the benefits (and costs) of single ownership.

What ever you do, make sure the agreement clearly spells out what to do if a partner defaults on responsibilities or payments. Make sure there is a way you can sell your share or, more importantly, buy the other partner out at a fair price (be specific on how this is determined). That will give you options should the guy be a deadbeat and won't trap you into an airplane you can't sell or buy outright. It's better to not get trapped into such an arrangement but make sure there is an out.

You have a few options if you decide to go for it.

1. Straight Partnership. Probably the easiest to set up but offers the least protection. AOPA has a great template. The partnership I was in, for the most part, used that.

2. Set up an LLC. Probably want someone to look over the paperwork. The LLC owns the airplane and the members own a percentage of the LLC. If you sell, you're not selling the airplane portion, you're selling your LLC percentage. May be tax advantages. Certainly less hassle having to re-register the airplane. Offers partners more protection against actions by the other partners. Watch out for certain business registration fees. Can be set up in any state but out of state you will need, oh what do they call it, someone who can be served papers in case of a lawsuit. Companies offer that service... for a fee. The people I bought my current airplane from had it set up as an LLC. They were kind enough to give me a copy of their operating agreement. Unfortunately not electronic so I'd have to make copies, and will be happy to, if you decide to go that route and wish to use the template as a guide. Don't know if AOPA legal services will help you with this or not.

3. Set up a full fledged corporation. Definitely need an attorney to set up and a lot more paperwork to keep running. Offers the most in the way of legal protections and tax advantages but unlikely worth the effort.

Craig

Sometimes less airplane is a way better deal, than more airplane with strings attached. Be like co-owning the family car with your neighbors down the block.

Gump

Partnerships work in one of two ways:

One - Your partner is a good friend who is a mature sort of guy and things are great!

Two - Your partnership is sort of like flying in a plane with the full fuel tanks on fire, you have used up 2,999 ft of your 3,000 ft runway, and except for 10 feet the entire earth's atmosphere is above you!

I, fortunately, have number one. We have an LLC as Craig described and it works great.

Good advice thanks. I'm planning on buying the plane outright and I had the finacing approved before a legal matter ate up my down payment. I wish I could bill like a lawyer.
I figure 6 months or less and I can save the down payment back up. But in the meantime this would give me access to the plane. Plus it helps out the current owner who is a friend so I'm really not to worried about getting the shaft. In fact I'm more concerned with his liability if I have an incident.
I will check out AOPA's paperwork, that's what I was looking for.
Merry Christmas

What kind of plane?
AOPA!!Will walk you through it step by step.
It has been said a partnership is like a marriage. Real good or real bad or just ok. Best of luck to you.

Consider reading Geza Szuvory's book Aircraft Partnership, which is a thorough treatment of the subject. Includes all the forms, the financial analyses, operating agreements, etc. You can get it from Amazon for $25. ISBN-10: 0070633479
ISBN-13: 978-0070633476

If you and your partner read this book you'll both be on the same page.

Eric

A few years ago 3 of my friends were partnered up on a Pacer. One guy worked on a tugboat up in Alaska, 3 months on/3 months off, and owned two other airplanes. The second guy was a student pilot who wasn't pursuing his license, in fact he didn't even waht to fly the airplane- just tag along. The third guy was a flying fool, & had the best deal in town-- pay only 1/3 the fixed costs & could pretty much fly anytime anywhere & for as long as he wanted. A great deal for him, & the other 2 guys were happy with the arrangement too-- a real win/win situation.

Having read all linked threads...

What is the feeling regarding legally binding agreements v.s. documented "handshake" agreements (perhaps not legally binding)?

Is it possible to get a legal document together without lining a lawyers pockets? That AOPA template is long, and would need a lot of tweaking to fit, which means $$$$.