Need advice on a sale

I have a very close friend who is selling his airplane and wants to build an RV10. He has a proposal from a potential buyer for a "Dry Lease". As I understand it the buyer/lessee puts up a deposit, pays a monthly rent, takes control of the aircraft, including insurance and maintenance and exercises his right to purchase at the end of 12 months or renews the lease or returns the aircraft. Lease payments go towards purchase price.

I'm not that familiar with this type of transaction. Does anyone know the good, bad or ugly side of such a transaction?

I'm hoping to help with the RV10 if and when he sells his current airplane.

thanks

Dry Lease

Recommend Contacting AOPA / EAA headquarters before doing this.

Build9A said:

I have a very close friend who is selling his airplane and wants to build an RV10. He has a proposal from a potential buyer for a "Dry Lease". As I understand it the buyer/lessee puts up a deposit, pays a monthly rent, takes control of the aircraft, including insurance and maintenance and exercises his right to purchase at the end of 12 months or renews the lease or returns the aircraft. Lease payments go towards purchase price.

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I'd run away from this, as described, because a fixed monthly rent may or may not cover dynamic expenses. How many hours will be flown? Who covers the hourly cost associated with engine and prop overhaul, for example? Who covers the wear & tear associated with normal use (i.e. tires) if they are not replaced during the one year period?

Not according to the FARs

Build9A said:

I'm not that familiar with this type of transaction. Does anyone know the good, bad or ugly side of such a transaction?

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The short answer is in Part 91.319:

"No person may lease an aircraft that is issued an experimental certificate under 21.191 of this chapter, except in accordance with (e) 1 of this section."

The reference to (e) 1 has to do with towing gliders.

John Clark
RV8 N18U "Sunshine"
KSBA

The leased airplane is not experimental?

John,
I think the airplane he wants to lease is not an RV - probably type certificated airplane.

John Clark said:

The short answer is in Part 91.319:

"No person may lease an aircraft that is issued an experimental certificate under 21.191 of this chapter, except in accordance with (e) 1 of this section."

The reference to (e) 1 has to do with towing gliders.

John Clark
RV8 N18U "Sunshine"
KSBA

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This sounds a little like what a guy I know did when he bought his Mooney TKS-B. I think he put half the purchase price down and 12-months later could return it or buy it. In my friends case, he wanted to see how much he'd really fly it before jumping all the way in. He ended up buying it, so it all worked out. Not sure what would have happened if he returned it? Would the original owner refund the down payment less $xx/hr? Just another datapoint. -Jim