It is common for aircraft sale and purchase transactions to make use of escrow agents as trusted, neutral third parties to hold aircraft papers and the all-important deposit during a transaction.
How escrow companies assist with aircraft sales
There are a number of different layers to this:
No Conflicts of Interest
The escrow agent has no affiliation or ties to the seller or the buyer, nor any of the brokers involved in the transaction.
Aircraft Purchase Process
Once the buyer and seller have agreed on the heads of terms, the buyer will submit a Letter of Intent (LOI) to the seller on those terms. Once accepted, the buyer is usually required to deposit funds in escrow in contemplation of completion. This deposit confirms the buyer's commitment and secures the aircraft while the transaction is being finalised.
The buyer and seller will deposit the necessary documentation (including the aircraft title, registration documents, Bill of Sale, maintenance records, purchase agreement and any inspection reports) with the escrow agent.
The aircraft buyer will usually inspect the aircraft to verify its compliance with the purchase agreement.
Completion of the Aircraft Purchase & Release of the Aircraft Escrow
At completion, the buyer will instruct the escrow agent to release the funds to the seller, and the seller will instruct the escrow agent to release the aircraft ownership documents to the buyer.
The closing process includes signing the final paperwork, transferring the title and completing any other required steps - the escrow agent can assist the parties' lawyers with all of these elements.
Post-Completion Matters
Once the transaction has completed and the aircraft has changed hands, the escrow agent will provide a closing statement detailing the final transactions involved in the sale and often provide digital copies of any documents in a data room.
Choosing your Aircraft Escrow Agent
Most parties will prefer an escrow agent who is operating on their timezone and who has a good reputation and experience in the type and scale of transaction they are carrying out.
For US-US sales, it is normal for the escrow agent to also be based in the USA. For European transactions, however, London remains a popular jurisdiction for escrow agents.
We are also regulated by the Financial Conduct Authority for our payment service provision, so we are well-accustomed to the compliance and professional obligations we are required to adhere to.
Why use an aircraft escrow company?
Like all escrow arrangements, the primary considerations are always security, transparency and independence. We add trust to aircraft transactions.
Some particular benefits of using an aircraft escrow are:
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The escrow agent commits to repay any lenders on completion, ensuring the release of any liens;
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Escrow agents are entirely independent of either side's legal advisors;
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Escrow agents can hold documents as well as funds;
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Only one Bill of Sale can be in play at any one time in respect of the transaction; and
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We carry out detailed anti-money laundering, compliance and source of funds/wealth checks, ensuring that the funds are cleared and ready for completion in good time.
