Aircraft Partnership
Many people desire to own aircrafts or airplanes. Sole ownership may be out of the question—after all, airplanes can be expensive, but there are several ways to share the cost of airplane ownership and operations. While flying clubs offer additional benefits such as social programs, educational and training opportunities, and access to a variety of aircraft, the simpler, less structured concept of co-ownership may be just what you are looking for. Hence the formulation of an airplane partnership agreement.
Essentials of an airplane partnership agreement
- Commencement and term of agreement
An effective airplane partnership agreement clearly sets out the term. The term commences on the effective date and runs for so long as at least two (2) of the parties hereto shall own undivided ownership interests in the aircraft. Further, an efficient airplane partnership agreement contains the basis of the withdrawal of a Party. Upon a transfer by a selling party to one or more non-selling parties of the entire ownership interest of the aircraft the same may be considered withdrawal. The selling party shall be deemed to have withdrawn from this Agreement and shall no longer be party to this Agreement, but this Agreement shall remain in full force and effect for the benefit of the non-selling parties.
- Nature of ownership interests and relationship of the parties
- Nature of ownership interests.
Each party’s ownership interest in the Aircraft shall be an indivisible and undivided interest in the Aircraft, and shall be subject to the terms of an airplane partnership agreement. The parties will own and hold their respective ownership interests in the Aircraft as tenants-in-common. It is not the purpose or intention of the airplane partnership agreement to create. Further the agreement shall not be construed as creating, a joint venture, partnership, business organization, or other relationship through which any party may be held liable for the omissions or commissions of any other party. Moreover, the airplane partnership agreement is intended to constitute and be construed as a Joint ownership agreement.
- Waiver of partition rights.
Each party irrevocably waives any right it may have to demand the partition or sale for partition of the aircraft under the airplane partnership agreement.
- Restriction on alienation.
Each party agrees that the sole and adequate means by which it may divest its ownership interest. Further, the airplane partnership agreement involves the transfer of the interest in accordance with certain terms and conditions.
- Allocation of tax benefits and obligations.
Every party is entitled to its pro rata share of all tax benefits, if any, arising from its respective interest in the aircraft. This is attributed to the airplane partnership agreement. Each party shall be responsible for, and shall pay promptly when due, all Taxes which may be assessed or levied by any taxing jurisdiction. Such is as a result of the purchase, lease, use, storage, consumption, or other consumption by such party of such party’s undivided ownership interest in the aircraft. However, each party shall have the right to dispute or contest in good faith. This is done based on the party’s sole expense the amount of any taxes assessed or imposed directly against such party or its undivided interest in the Aircraft. Disputing taxes prompts the payment of such taxes in accordance with the terms of the airplane partnership agreement.
Sale of an interest in the aircraft
- Notice of Intent to Sell.
If at any time any party desires or intends to sell an aircraft, the selling party shall send out a notice. The notice is directed to the rest of the co-owners of the aircraft as per the airplane partnership agreement.
- Determination of fair market value
As soon as reasonably practicable after the date of any notice parties to a airplane partnership agreement shall determine the fair market value of the aircraft. This is done by mutual negotiation and agreement. In the event the parties cannot agree on the fair market value of the Aircraft the parties jointly select an established appraiser to do so. In the event the parties cannot agree on a single appraiser, the value is determined by averaging the fair market valuation appraisals of 3 e appraisers. The first is selected by the selling party, the second of whom shall be selected jointly by the non-selling parties, and the third by the first two appraisers.
- Non-selling party’s option.
Every non-selling party has the option, through notice to purchase all of the selling party’s interest. This is after the determination of the fair market value of the aircraft to purchase all of the selling party’s ownership interest. If more than one purchasing party elects to purchase the ownership interest in the aircraft, every purchasing party is entitled to a certain portion. Accorng to most airplane partnership agreements, the parties are entitled to purchase a pro-rata portion of the selling party’s undivided interest in the aircraft. The portion must bear the same ratio as each respective purchasing party’s then-existing percentage ownership interest in the aircraft.
The price at which the purchasing party may purchase the selling party’s ownership interest in the aircraft is often equal to 98% of the fair market value. This is multiplied by the selling party’s percentage ownership interest in the aircraft as per the airplane partnership agreement.
- Procedures for purchasing party or parties purchase of selling party’s aircraft interest shall also be included in the airplane partnership agreement. On the date of the closing of any sale of selling party’s interest in the aircraft to purchasing party or parties:
- The purchasing party or parties shall deliver to selling party the option price by wire transfer of immediately available funds. This shall be expressly provided for in the airplane partnership agreement.
- The selling party shall deliver all rights, titles, and interest to the selling party’s ownership interest in the aircraft. The airplane partnership agreement also provided that the party should be free and clear of all liens, to the purchasing party or parties in such location.
- The selling party shall also execute and deliver to the purchasing party or parties a form in the prescribed manner in the airplane partnership agreement. Other documents include a warranty bill of Sale in a form reasonably acceptable to purchasing party or parties, transferring all of selling party’s ownership interest in the aircraft to the purchasing party or parties.
- The purchasing party or parties shall also execute and deliver to selling party an aircraft delivery receipt in a form reasonably acceptable to selling party.
- The selling party is also required to promptly execute and deliver to the purchasing party or parties such other notices, statements, documents and instruments. The airplane partnership agreement also obliged the selling party to perform such other acts the purchasing party or parties. Such is as the party deems necessary to protect, preserve and enforce its acquisition and ownership of selling party’s ownership interest in the aircraft. However, the same should be within the ambit of the agreement.
Third party solicitation and sale of entire aircraft
The solicitation of third-party offers and sale of aircraft is also provided for in an airplane partnership agreement. If a non-selling party exercises its options, the selling party shall be free to offer its ownership interest in the aircraft. This is directed to third parties for purchase at its own expense. Such is subject to approval from the non-selling parties. Also, such approval should not be withheld unreasonably.
Comprehensive airplane partnership agreement.
Any acceptance of a bona-fide offers from a third-party for the purchase of an ownership interest or the entire aircraft is subject to certain conditions. The conditions in the airplane partnership agreement are contingent upon negotiation and execution of a comprehensive aircraft sale agreement. the parties shall jointly negotiate any such aircraft sale agreement in good faith. Every party pays pro-rata portion of all expenses of any sale of the entire aircraft. Also, as per the airplane partnership agreement, each party is entitled to a pro-rata share of the proceeds of any such sale. Such is according to their respective percentage ownership interests in the aircraft stipulated in the agreement.
Aircraft operations
The operation and use are also an important aspect to be included in the airplane partnership agreement. Each owner is required to operate the aircraft in accordance to the provisions of the agreement. Further, the parties are obliged to not operate the aircraft in commercial service, as a common carrier. Other banned uses include transportation for compensation or hire except to the extent permitted under the agreement.
Each owner is required to exercise operational control of the aircraft during all flight operations while the aircraft is in the possession of such owner. Moreover, when the aircraft is in the possession of an owner, such owner shall have certain rights. These include the exclusive possession, command, and control of the aircraft. Further, the pilots of any flight by such owner shall be under the exclusive command of that owner.
References
https://www.zapmta.ws/web/results
https://www.bestdiscoveries.co/search/results
https://www.izito.s/top_10/now
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