Slack & Davis Aviation Attorneys Guide Buyers and Sellers in Aircraft Purchases and Sales

Tuesday 8/22/2006

Buying and selling aircraft used to be accomplished with a handshake and personal check. Most buyers and sellers knew one another, or else knew someone who did. If the aircraft flew, everybody was happy, so pre-purchase inspections were not a big deal, and in some cases, title searches were not even completed before the sale.

“In today's aviation world, the opposite is true. Solid contracts, thorough pre-buy inspections and conclusive knowledge of an aircraft’s airworthiness and history should be integral to every sale,” said Michael L. Slack, managing partner of the aviation law firm Slack & Davis.

The civil litigation firm has offices in Austin and Dallas, with six attorneys who focus on aviation-related cases. The firm litigates cases throughout the nation and sometimes even internationally.

“‘Deals’ as they are called in the aviation industry should stand the test of time. The ideal deal should be one in which all future considerations have been vetted and negotiated. Then the contract should be filed in the drawer, having done its job,” said Ladd Sanger, managing partner of the firm’s Dallas office.

Slack says that far too often, either the seller or buyer violates some part of the agreement. When this happens, the other party may think they have no recourse, but Slack says, “They need to understand they have enforceable rights that may include the recovery of attorneys’ fees.”

More used aircraft, more need for aviation attorneys

According to the Federal Aviation Administration, there are 28,846 aircraft registered in Texas. In the Dallas-Fort Worth area, there are 3,104 registered aircraft in Dallas County, 2,634 in Tarrant County, 948 in Denton County and 804 in Collin County. In South Central Texas, there are 855 registered aircraft in Travis County, 354 in Williamson County, 136 in Hays County and 1,158 in Bexar Counties.

“With thousands of used aircraft being bought and sold, the situation is ripe for inexperienced newcomers to be victims of sloppy business practices. Concerns that surface include breach of contract, shady titles and disputes over just who is liable for repairs before and after the sale,” Slack said.

“The most common case is a buyer who believes his new aircraft is not what the seller or broker had represented. Likewise, a seller may think he had disclosed the aircraft’s background adequately, only to learn at the pre-purchase inspection or after the sale that there were discrepancies. In yet another scenario, a seller may have spent a bundle fixing a plane to meet a buyer’s demands, but the buyer gets cold feet, leaving the seller in a deep hole,” said Austin attorney Justin Townsend, who serves as co-counsel with Slack & Davis on aviation transactional cases.

Even after the sale, new aircraft owners might need legal counsel if they want to arrange management and operation agreements with third party vendors, Slack said.

Specialized aviation expertise required for aviation attorneys

Regardless of situation, Slack says that aviation attorneys who have specific technical knowledge should be involved in every aspect of the sale. “The more attorneys know about piloting, operations and maintenance, the more buyers and sellers can be sure their transactions will stand the test of time,” Slack said.

Slack & Davis has three licensed pilots on its aviation attorney team. Slack is a former senior aerospace engineer for NASA, while Sanger pilots both helicopters and airplanes. John C. Allman, aviation attorney for the firm, was a commercial airline captain and Top Gun Naval aviator. Co-counsel Townsend is currently taking piloting lessons.

“Unfortunately, buyers or sellers often negotiate deals without specialized legal counsel, then find themselves suddenly needing an attorney,” Townsend said. “The best advice I can offer anyone on buying or selling an airplane is not to be ‘penny wise and pound foolish.’”

Demand for legal services moves beyond air crash cases

Known as a firm that represents individuals after air crashes, Slack & Davis has experienced a marked increase in cases related to the purchase, resale, operation, management and refurbishment of aircraft, both by private owners and companies.

“In many cases, not only are many thousands of dollars at stake, but also the safety of pilots and passengers. I’ve seen instances where neither party knew the aircraft was unsafe until a pre-purchase inspection uncovered major problems,” Sanger said.

Slack mentioned a recent case involving a privately-owned Boeing Business Jet that was being refurbished by a major supplier. After the new interior was installed, the 737-sized jet was too heavy to be certified to fly the distances the new owner intended to fly.

“If our attorneys had been involved before the mistake was made, our expertise could have prevented this from happening. Helping all parties understand and fulfill their obligations assures not only smooth transactions but also more serviceable and safe aircraft,” Slack said.

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