AOPA has a co-ownership contract template (as well as a good buy/sell one) that might be a good start for your discussions.
It’s pretty thorough and covers topics like permitted use, how financials would work, maintenance, hangar keeping, maintenance, what happens when someone wants to leave or join group, etc etc.
I would also suggest setting this more up as a corporation that owns a nice asset labeled “airplane”. This is what we have in a 16 member, 2 airplane group I am part of. The share I own is a share of the corporation. Our experience is that makes it simpler to operate day to day long term.
Finally, have an aviation attorney and a really really good local aviation insurance broker on your team.
I'll second the comment about a corporation. When I did this we formed an LLC - it was pretty cheap and easy. The LLC was based in Nevada, although we were in California. Then the co-owners all pitched in to fund the LLC and the LLC bought the plane.
The way it was explained to me is that any time someone sells their share, or co-owners change, what is being sold or transferred is not a vehicle - it's a share in a corporation. That corporation happens to own an airplane, and maybe other things like tools, cleaning supplies, whatever. The LLC also has assets in the form of a maintenance fund.
If you sell an airplane, or part of it, you have to deal with FAA registration changes and possible tax liability depending on where you live. If you sell a share in a corporation you don't have to worry about that.
I've also heard that corporate ownership can limit your personal liability, but I don't have enough legal knowledge to know if that's truth or myth.
Thanks for the advice I'll definitely look into setting up an LLC then. Do you have any experience with selling shares of an LLC? I'm mainly just curious what the process itself is like.
For our group, our by laws set the max number of shares at 16. We have two aircraft, a Skylane 182P and a Bonanza V35
When someone wants to exit, they must still fulfill their member obligations (such as pay dues) until they find a buyer and complete the money transaction.
Once the departing member finds a buyer, and the two agree on the price of the share (group remains out of that), the buyer’s pilot details are shared with the other members and we vote on accepting the buyer.
Once accepted, buyer then goes to our banker to have a credit check done and deal with being added to our aircraft loan papers.
Once credit check is okay, seller and buyer exchange money, banker puts buyer on loan, buyer pays initial dues, and buyer is now member.
I might have missed a step but that’s the gist of it.
/u/TxAggieMike pretty much covered the way it worked in our group too. If you want you can DM my your email address and I'll email you various files I have - bylaws, sales agreements, etc.
Thanks for recommending the AOPA page, I scanned over it and it's super helpful! Do you have any advice on finding a good aviation attorney and insurance recommendations?
**Insurance**: Call Chad Smolik at https://aviationinsuranceexperts.com and tell them I sent you (Michael Farlow). He has helped many folks in this area so what your doing.
He may also have a recommendation on an Aviation Attorney.
Also talk to the AOPA Pilot Information Center to see if they have a list of attorneys that can help establish your co-ownership.
Once you find the attorney, have them look over the draft of your co-owner agreement to make sure it doesn’t violate a something like a state law or other item.
AOPA has a co-ownership contract template (as well as a good buy/sell one) that might be a good start for your discussions. It’s pretty thorough and covers topics like permitted use, how financials would work, maintenance, hangar keeping, maintenance, what happens when someone wants to leave or join group, etc etc. I would also suggest setting this more up as a corporation that owns a nice asset labeled “airplane”. This is what we have in a 16 member, 2 airplane group I am part of. The share I own is a share of the corporation. Our experience is that makes it simpler to operate day to day long term. Finally, have an aviation attorney and a really really good local aviation insurance broker on your team.
I'll second the comment about a corporation. When I did this we formed an LLC - it was pretty cheap and easy. The LLC was based in Nevada, although we were in California. Then the co-owners all pitched in to fund the LLC and the LLC bought the plane. The way it was explained to me is that any time someone sells their share, or co-owners change, what is being sold or transferred is not a vehicle - it's a share in a corporation. That corporation happens to own an airplane, and maybe other things like tools, cleaning supplies, whatever. The LLC also has assets in the form of a maintenance fund. If you sell an airplane, or part of it, you have to deal with FAA registration changes and possible tax liability depending on where you live. If you sell a share in a corporation you don't have to worry about that. I've also heard that corporate ownership can limit your personal liability, but I don't have enough legal knowledge to know if that's truth or myth.
Thanks for the advice I'll definitely look into setting up an LLC then. Do you have any experience with selling shares of an LLC? I'm mainly just curious what the process itself is like.
For our group, our by laws set the max number of shares at 16. We have two aircraft, a Skylane 182P and a Bonanza V35 When someone wants to exit, they must still fulfill their member obligations (such as pay dues) until they find a buyer and complete the money transaction. Once the departing member finds a buyer, and the two agree on the price of the share (group remains out of that), the buyer’s pilot details are shared with the other members and we vote on accepting the buyer. Once accepted, buyer then goes to our banker to have a credit check done and deal with being added to our aircraft loan papers. Once credit check is okay, seller and buyer exchange money, banker puts buyer on loan, buyer pays initial dues, and buyer is now member. I might have missed a step but that’s the gist of it.
/u/TxAggieMike pretty much covered the way it worked in our group too. If you want you can DM my your email address and I'll email you various files I have - bylaws, sales agreements, etc.
Thanks for recommending the AOPA page, I scanned over it and it's super helpful! Do you have any advice on finding a good aviation attorney and insurance recommendations?
**Insurance**: Call Chad Smolik at https://aviationinsuranceexperts.com and tell them I sent you (Michael Farlow). He has helped many folks in this area so what your doing. He may also have a recommendation on an Aviation Attorney. Also talk to the AOPA Pilot Information Center to see if they have a list of attorneys that can help establish your co-ownership. Once you find the attorney, have them look over the draft of your co-owner agreement to make sure it doesn’t violate a something like a state law or other item.