Before You Buy a Hangar, Put Everything In Writing
The law in most states requires that a contract for an amount exceeding $500 be in writing in order for it to be enforceable. This statute of frauds is in place to protect the buyer in a transaction gone awry, even in the sale of hangars. For some reason, though, hangar buying and selling often takes place via verbal agreements even though they involve the exchange of thousands of dollars.
Financial transactions can be confusing. Similar to buying a house, the details of a purchase should be put in writing. Misinterpretations can be dramatically reduced when the specifics are put into writing. When the buyer and seller each know one another’s expectations, a fair shake, er, becomes legally binding.
So what is a purchase agreement?
According to the website, legalmatch.com, a purchase agreement is the legal document you need which outlines the different conditions and terms that are related to the sale of goods, in this case your hangar. It creates a legally binding contract between the buyer and the seller.
Some information that should be contained in a basic purchase agreement may include:
- Information regarding the buyer and seller, including names, phone numbers, and addresses:
Who is selling the hangar and who is buying it? Sometimes a hangar is registered in the name of a corporation or an LLC. Keep in mind that an individual representing a company of this type as the seller should not be listed as such on a purchase agreement.
- Contact information for any witnesses or co-signers:
You never know who you might have to pull into court later to defend your rights as a buyer or seller.
- The type of sale and the product or goods involved:
If any other items (like personal property inside the hangar) are included in the purchase, make sure those are documented in the agreement as well.
- A description of the hangar, identified and properly documented:
Simple as it may sound, the purchase agreement should include a detailed description of the hangar being sold/ purchased. Make sure the contract includes the lot number and location.
- Price and quantities for the sale:
This can be much more complex than just the dollar amount of the purchase price. It should include deposits, earnest money as well as how that money will be held, refunded or applied to the sale price. What assurances do you have from the seller concerning the money you have applied?
- The date of the agreement and terms related to duration:
Your purchase terms should not be a guessing game. It is important for both parties to have in writing, the terms of the sale.
- Terms for taking ownership:
Will an inspection be required before taking ownership? Who will perform the inspection and when will it take place. Who pays for it?
- Dates covering the fulfillment of various conditions and requirements:
Let’s say you are buying a hangar with the condition that a leak in the roof is fixed or the rummage and rubbish that has been piling up in the corner of your new hangar needs to be removed before you can take possession. Put it in writing so that you aren’t stuck shoveling it out or paying somebody to do it.
You also want to be sure that the property is not under lien. You do not want to be stuck having to pay the seller’s obligations that have nothing to do with your financial transactions.
- Whether the agreement can be amended or revised in the future:
Is the sale firm? What can and can’t you negotiate a few weeks after the sale or several months down the road? Is your purchase under warranty? Put it in writing!
- Whether litigation is an option in the event of a legal dispute:
Will your hands be tied when you try to address problems that arise? Some restrictions on buyers aren’t worth the hassle and it is important to know about them ahead of time.
But what if you know the seller?
The airport community is often close-knit. It’s not uncommon to get to know other pilots and hangar owners because you see each other at the airport every weekend. Many a buy, sell and trade takes place between aircraft owners who share a passion for aviation. The friendships and acquaintances you make at the airport often make business transactions seem casual… until something goes wrong.
Before you buy a hangar, put everything in writing!
Again, when you are dealing with expensive personal property, you will want a record of the sale and more than just a cancelled check or a bill of sale you might have for an inexpensive used car you buy on craigslist.
Casey Boatman is the owner and CEO of Caseyflies Media, a public relations, marketing, social media and advocacy resource for the airport, aviation and aerospace industry and is a frequent contributor to Hangar Network. You can reach Casey at firstname.lastname@example.org or on Twitter: @caseyflies.