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RV Build under LLC?

huzilulu

Member
Hey Guys

I had a question concerning the build/registration of an RV: in order to protect oneself/assets, a common route taken is to register the plane under an LLC... However, does this apply to the build/builder? Since I am about to start my build, would it be better to first get an LLC and then build 'under' it, so that the liability would always fall to the LLC? Or am I still considered the manufacturer (as an individual) even if the LLC owns the aircraft?

I am concerned with how the FAA will issue the EAB (in terms of owner name, manufacturer, etc) if I buy the kit/build it under an LLC... Thanks!
 
I am not a lawyer but I have slept in a Holiday Inn Express.

The EAA reports that an Experimental Aircraft builder has NEVER been successfully sued.

The FAA allows Amateur Built aircraft to be build, registered, and flown when built by individuals for education and recreation.

I would NOT want to push my luck and have an amateur built experimental aircraft built by an LLC and run into issues getting it registered, getting a special airworthiness certificate, and flown just because it was built by an LLC.

Others that have more than I that are concerned about getting sued and losing what they have may be able to add more info than I can. It is my opinion that you cannot get blood out of a turnip. Suing me successfully would not get much for the other person. Losing my health, mind, and physical ability are what I have that are most valuable.
 
CFR ? 21.191Experimental certificates.
Experimental certificates are issued for the following purposes:
...
(g) Operating amateur-built aircraft. Operating an aircraft the major portion of which has been fabricated and assembled by persons who undertook the construction project solely for their own education or recreation.

From FAA Order 8130.2J 15-1 c.
https://www.faa.gov/documentlibrary/media/order/faa_order_8130.2j.pdf

Builder?s Education or Recreation. An aircraft manufactured or assembled by a
business does not meet the education or recreation requirements of ? 21.191(g). Prototype
aircraft built to prove the design for sale as an amateur-built kit are not produced by persons
?solely for their own education or recreation? and, therefore, are not eligible for an experimental
airworthiness certificate under ? 21.191(g).

Draw your own conclusion, but I don't think a LLC can be the manufacture of an amature built experimental.
 
I registered the owner of my -7A as a corporation when I completed it. I'm personally listed as the builder, but, looking back, would have liked to have had the builder listed as the same corporation to which it is registered. There's not much guidance out there on these types of things.
 
I am not a lawyer but I have slept in a Holiday Inn Express.

The EAA reports that an Experimental Aircraft builder has NEVER been successfully sued.

The FAA allows Amateur Built aircraft to be build, registered, and flown when built by individuals for education and recreation.

I would NOT want to push my luck and have an amateur built experimental aircraft built by an LLC and run into issues getting it registered, getting a special airworthiness certificate, and flown just because it was built by an LLC.

Others that have more than I that are concerned about getting sued and losing what they have may be able to add more info than I can. It is my opinion that you cannot get blood out of a turnip. Suing me successfully would not get much for the other person. Losing my health, mind, and physical ability are what I have that are most valuable.

Gary,

Do you know where to find this report?
 
Hey Guys

I had a question concerning the build/registration of an RV: in order to protect oneself/assets, a common route taken is to register the plane under an LLC... However, does this apply to the build/builder? Since I am about to start my build, would it be better to first get an LLC and then build 'under' it, so that the liability would always fall to the LLC? Or am I still considered the manufacturer (as an individual) even if the LLC owns the aircraft?

I am concerned with how the FAA will issue the EAB (in terms of owner name, manufacturer, etc) if I buy the kit/build it under an LLC... Thanks!

If you think an LLC will protect your assets, you should speak to an aviation attorney. Hint - it won't.

https://www.perkinsthompson.com/hidden-risks-of-personal-liability-for-llc-owners/

You need a good amount of liability insurance on the plane for that. And if you plan to fly with anybody besides family, you need to remove the passenger liability limits ( called a "smooth" policy ). It isn't cheap if you can even get it.
 
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LLC as registered owner

When I contacted an attorney with this question it pertained to an RV to be owned equally by three persons.

The answer I received was that the LLC would not protect me from liability if I was the pilot and caused some injury etc but it would protect me if the other owners were in a wreck and caused injury etc.

Basically, an LLC can not protect if you do something . That's the way I remember the answer although I may not have explained it legally perfect.
 
The better question is if you sold the LLC and all it?s assets (the plane) could the llc (the new buyer) perform condition inspections?
 
The better question is if you sold the LLC and all it?s assets (the plane) could the llc (the new buyer) perform condition inspections?
That is exactly the thought/question I had. If the LLC is the builder is the Repairman's Certificate issued to the LLC?
 
An LLC will help to protect you in a law suit if you own the airplane with another person(s), have a properly organized partnership/shared ownership arrangement/contract, and your partner has an accident. You should be protected, if set up properly, from litigation in this circumstance. If you are the sole owner of the airplane, an LLC may have advantages tax-wise, but it will do nothing for you in terms of a liability lawsuit exposure if you have an accident and are found at fault/negligent in any way. After selling an EAB airplane you didn?t build, you should be free from liability exposure, provided you weren?t negligent in some way relative to the airworthiness of the airplane while you were the owner.
 
I have never heard of an amateur built plane being LLC... until now. Experimental can't be used for commercial aviation. Not sure about building and registering under LLC fits into not being sued. Not a lawyer, but I doubt LLC is a force field to avoid personal liability and lawsuits for a plane you actually built and fly. My opinion:

A) If you are the pilot, screw up, hurt people or damage property;
B) Built, sold, flew a dangerous built plane knowingly; liable regardless of LLC.

We are in the age of not taking responsibility. Nothing wrong with indemnifying yourself within the legal system, but suggest not being at risk of being sued for your aviation activities by being safe. People with large assets often put those assets in other names OR buy good INSURANCE. Even people within a corporation can be convicted for criminal activity. Personally I think it is cool and one should take pride in having your name on a planes data tag as manufacture...
 
The builder (manufacturer) of the airplane has liability exposure until after the statute of repose, which I think is 17 years, but not sure about that. The manufacturers name is on the registration and aircraft data plate. If you built the airplane and somehow listed your LLC as the manufacturer - not sure that?s even possible - I think builder negligence will still come back to you. However, as others have said, there probably hasn?t been a successful lawsuit filed against the manufacturer of an amateur built airplane.

I had an LLC partnership on my last airplane, an RV8 that I built. My name is on the data plate as manufacturer, and the owner was listed as our LLC. This would protect me from liability exposure in the event my partner had an accident that hurt persons or property that was caused by his negligence. If the accident was caused because of faulty construction or maintenance that I performed, then I am still potentially exposed, but not because of his bad decisions/skill as a pilot.
 
Unless Bill Gates made the plane, attorneys aren't going to want to sue you because there's not enough money in it for them.

i.e. Deep Pockets
 
Maybe there?s not yet been a successful suit......

...but the cost of a successful defense can easily empty one?s pockets, shallow or deep.
The main benefit of insurance is the coverage for legal expenses.
 
Precisely my concern

...but the cost of a successful defense can easily empty one?s pockets, shallow or deep.
The main benefit of insurance is the coverage for legal expenses.

So where would one buy insurance to cover themselves as the manufacturer of the airplane in the event you choose to sell the plane? I'm not sure that's available and if it is, probably not affordable.

I bet Van's spent a pretty penny defending themselves over several years on the RV-10 lawsuit. As you said, the cost of defending yourself, regardless of outcome, could bankrupt you.
 
...I had a question concerning the build/registration of an RV: in order to protect oneself/assets, a common route taken is to register the plane under an LLC...

For the new RV, I plan to register the owner as an LLC to potentially shield a future buyer from sales or use tax in his state. Hopefully any sale is after 20+ years of me flying it! Will be up to the purchaser to make an informed decision on his own taxes.

As an example, below is copied from the Florida Dept of Revenue, Sales and Use Tax on Aircraft Owners and Purchasers.

Aircraft bought and used outside Florida for more than six months are generally exempt when brought
into Florida, if both of these conditions are met:
? The owner has owned the aircraft for more than six months.
? The owner has used the aircraft in another state or states, U.S. territory, or District of Columbia
six months or longer before bringing the aircraft to Florida.​

Ownership of the Aircraft won't change and will be more than six months but ownership of the LLC that owns the Aircraft will.
 
As previously mentioned my-7 has an LLC named as the manufacturer, this was done on the recommendation of my DAR. Additionally the FAA issued a Repairman Certificate for my aircraft. How this will protect me down the road is anybody's guess, however I do not see it as a detriment. I know of several people who have "scrapped" perfectly good airframes for liability reasons instead of selling their aircraft.
 
Thanks for all the replies.... While I intend to own the plane a long time, I would like to protect certain assets if/when the plane is handed down to its next owner/my kids/when they might sell it... an LLC that is the builder/repairman cert holder would certainly be helpful...

Thanks again guys!
 
Thanks for all the replies..... an LLC that is the builder/repairman cert holder would certainly be helpful...

Thanks again guys!

As Gill mentioned above, the faa will not issue a repairman certificate to an LLC. Only to an individual, and it?s not transferable. Just like a pilot license.
 
As previously mentioned my-7 has an LLC named as the manufacturer, this was done on the recommendation of my DAR. Additionally the FAA issued a Repairman Certificate for my aircraft. How this will protect me down the road is anybody's guess, however I do not see it as a detriment. I know of several people who have "scrapped" perfectly good airframes for liability reasons instead of selling their aircraft.

Did they issue the repair mans certificate to you personally or to the llc?
 
I think it goes to the 'built for recreation & education' thing that only a person or group of persons can be stated as the the manufacture of an EAB.

Canada also only allows people & not corporate entities to apply for a CofA for amateur builts.
But corporate entities can own & register them.
 
Registering your plane under an LLC when you're unsure of what protection that affords seems odd.

Same with the folks who scrapped whole planes from some nebulous concern about liability.
 
Same with the folks who scrapped whole planes from some nebulous concern about liability.

Probability low, but not zero. Ask the guy who built the long EZ, sold it to B, who sold it to John Denver. When the estate sued, he must have had legal bills before he was removed from the suit, not to mention the worry.
 
Probability low, but not zero. Ask the guy who built the long EZ, sold it to B, who sold it to John Denver. When the estate sued, he must have had legal bills before he was removed from the suit, not to mention the worry.

Yes yes, anyone can be sued for anything...
 
Registering your plane under an LLC when you're unsure of what protection that affords seems odd.

I'm looking into LLC registration, but only as a way of obfuscating ownership information on places like Flightaware. I really don't like that any fool with an internet connection can look up tail numbers and see the owner. An LLC would at least make it a little more difficult to figure out.

There may be tax benefits as well, but if so I don't know what they are (yet).
 
I'm looking into LLC registration, but only as a way of obfuscating ownership information on places like Flightaware. I really don't like that any fool with an internet connection can look up tail numbers and see the owner. An LLC would at least make it a little more difficult to figure out.

There may be tax benefits as well, but if so I don't know what they are (yet).

I could see that, at least it sounds like you'll be fully informed before making that significant decision.
 
I'm looking into LLC registration, but only as a way of obfuscating ownership information on places like Flightaware. I really don't like that any fool with an internet connection can look up tail numbers and see the owner. An LLC would at least make it a little more difficult to figure out.

There may be tax benefits as well, but if so I don't know what they are (yet).

I use a Montana LLC for all of my vehicles ownership for both of these as well as for registration / insurance reasons. They do limit some exposure and since that state doesn't have sales tax along with much cheaper registration costs it saves there too. ;)

The other thing that has not been mentioned here is putting assets into a trust.

Consulting a good attorney is always in your best interests to know what truly is your best option for your personal situation.
 
I'm really surprised

As previously mentioned my-7 has an LLC named as the manufacturer, this was done on the recommendation of my DAR. Additionally the FAA issued a Repairman Certificate for my aircraft. How this will protect me down the road is anybody's guess, however I do not see it as a detriment. I know of several people who have "scrapped" perfectly good airframes for liability reasons instead of selling their aircraft.

I guess I'm the only one surprised that you were able to list an LLC as the manufacturer on an E-AB plane. I would like to do that as well, but I thought it violated the letter of the law. I'll ask my DAR what he thinks.

And to folks who think the liability issue is nebulous, I strongly disagree.
 
I use a Montana LLC for all of my vehicles ownership for both of these as well as for registration / insurance reasons. They do limit some exposure and since that state doesn't have sales tax along with much cheaper registration costs it saves there too. ;)

The other thing that has not been mentioned here is putting assets into a trust.

Consulting a good attorney is always in your best interests to know what truly is your best option for your personal situation.

My understanding that placing assets in a trust does not protect them from judgements, unless it is an irrevocable trust (revocable trusts are the typical instrument used to protect assets from death taxes and probate), which also means that you don't have access to it either; Only the trustee.

Larry
 
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My understanding that placing assets in a trust does not protect them from judgements, unless it is an irrevocable trust (revocable trusts are the typical instrument used to protect assets from death taxes and probate), which also means that you don't have access to it either; Only the trustee.

Larry

Back to "Talk with a good local attorney."

You can have an irrevocable living trust that you are both the trustee of and the initial named beneficiary of.
 
Back to "Talk with a good local attorney."

You can have an irrevocable living trust that you are both the trustee of and the initial named beneficiary of.

agree on need for lawyers opinion. Pretty sure that a grantor of an irrevocable trust can only draw income (no assets) from a trust as a beneficiary and that is limited, based upon need, such as helthcare, etc. They can't just take back assets when they want, like a revocable trust.

Larry
 
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Never Been Successfully Sued?

Depends on your definition of successful. Both the builder of John Denver’s airplane and the manufacturer of the fuel selector valve paid undisclosed out-of court-settlementa. Vans and FlowScan (the manufacturer of the fuel flow transmitter) paid undisclosed out-of-court settlements for the Oregon accident. Sorrell Aviation (Hiperbipe) was driven out of business by a lawsuit. But they were not “successfully sued.”
I dismantled an RV-9A for a couple when their attorney had a mild heart attack at the thought of them selling it. “You could lose your house” he said. We sold the seats to another attorney who insisted they’d gotten good advice. Suits happen all the time, he told me, then left before I could ask him to point me to some case law.
Nearest I can tell, there are plenty of suits, but they settle out of court before getting in front of a jury or judge and lots of $ changes hands.
We’re vulnerable.
 
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Depends on your definition of successful. Both the builder of John Denver’s airplane and the manufacturer of the fuel selector valve paid undisclosed out-of court-settlementa. Vans and FlowScan (the manufacturer of the fuel flow transmitter) paid undisclosed out-of-court settlements for the Oregon accident. Sorrell Aviation (Hiperbipe) was driven out of business by a lawsuit. But they were not “successfully sued.”
I dismantled an RV-9A for a couple when their attorney had a mild heart attack at the thought of them selling it. We sold the seats to another attorney who insisted they’d gotten good advice. Suits happen all the time, he told me, then left before I could ask him to point me to some case law.
Nearest I can tell, there are plenty of suits, but they settle out of court before getting in front of a jury or judge and lots of $ changes hands.
We’re vulnerable.

I think the quote is related to builders and not kit or parts suppliers. The John Denver builder is the only one that I have heard of getting heavily tangeled up in litigation. I do believe firmly that the lack of activity with builders is the fact that most builders do not have enough assets to warrant an attorney's time (most work of this type is done on contingency and they get paid out of the settlement). The first successfull case will likely be against a builder with decent assets. This is America; Its a when not if situation.

Larry
 
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Another vote for "talk to your attorney." Here's two things I suggest you discuss with your attorney:

As I understand the LLC, it won't protect you from any personal negligence you do as an employee/officer/operator under the LLC. I looked into this when I started working as a CFI, but found out that since everything my company would do was to be done by me personally, the LLC wouldn't provide me any protection from litigation.

You'll also have to be 100% sure you don't pierce the corporate veil, or all that effort will be for not. Don't buy anything for the plane in your own name, don't sign for anything in your own name, etc., but only as a representative of your LLC. This will take new bank accounts in the name of the LLC to buy everything (including cash transactions at the OSH Fly Market) and strict discipline on your part to keep your business separate from your personal life.
 
From Scott Hersha?s post

?The builder (manufacturer) of the airplane has liability exposure until after the statute of repose, which I think is 17 years, but not sure about that. The manufacturers name is on the registration and aircraft data plate.?

I?ve read about this protection for airplane manufacturers like Cessna, etc.
Is this applicable for experimental amateur built?
 
You are probably right

Then you're too easily scared and should probably scrap your plane instead of selling it :rolleyes:

Or maybe just prudent about managing risks. Suspect it's a personality defect of mine for 35 years in a career where one is expected to be risk averse.

As I said in a previous post, I'll give both planes to my son. No need to scrap them, although that is an option. He can sell them after I'm dead.
 
“The builder (manufacturer) of the airplane has liability exposure until after the statute of repose, which I think is 17 years, but not sure about that. The manufacturers name is on the registration and aircraft data plate.”

I’ve read about this protection for airplane manufacturers like Cessna, etc.
Is this applicable for experimental amateur built?

The writing of GARA makes it ambiguious whether or not it applies to AB aircraft builders. Clearly the intent of the law was to protect airframe and parts manufacturers (commercial entities) from reaching insolvency and ultimately destroying the GA industry. Judges often consider a laws intent when applicability of that law to the case at hand is unclear and no precedence exists. To my knowledge, no builder has attempted to defend themselves by using these provisions in court, so it is very unclear how a judge would rule on their applicability to an amatuer builder.

Larry
 
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Interesting reading about GARA on Wikipedia, the 18 year timeline and it also being applicable to parts manufacturers.

Precision Airmotive was successfully sued over a Marvel-Schebler carburetor in a Cessna 150 around 2009. They manufactured new Marvel-Schebler carburetors at the time. They didn’t even manufacture the carburetor in the named Cessna that was a 1960’s model, well past the 18 year mark.

Multimillion dollar successful lawsuit!
 
Interesting reading about GARA on Wikipedia, the 18 year timeline and it also being applicable to parts manufacturers.

Precision Airmotive was successfully sued over a Marvel-Schebler carburetor in a Cessna 150 around 2009. They manufactured new Marvel-Schebler carburetors at the time. They didn’t even manufacture the carburetor in the named Cessna that was a 1960’s model, well past the 18 year mark.

Multimillion dollar successful lawsuit!

It is important to note that the 18 year clock resets each time the part design is modifed. For example, if Marvel modified the carb model used in the 150 to utilize composite floats instead of the original brass floats in 1993 and that 150 had followed an SB requiring installation of the composite floats, I believe that would make the GARA law irrelevant in the referenced case. A high level explanation missing a lot of detail including proper legal interpretation on my behalf, but gives you some idea why GARA may not have applied in that case. It is not a simple and straight forward law.

If precision bought marvel, as opposed to buying their assets in bankruptcy which is unlikely given they still use the name, they picked up all of Marvel's future liability in the transaction. One of the reasons that quality due diligence is so important in corporate acquisitions. Someone must assess that liability risk and factor it into the value of the company.
 
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Very good points.

I don’t know the details to know if what you’re saying applies, but those specifics you point out could be related to it.

The part I do know that I was told, they had the deepest pockets!
 
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