Closing Private and Business Jet Transactions

The acquisition or sale of a private jet, whether a Gulfstream G650, Bombardier Global, or midsize Embraer Praetor, is a high-value, highly regulated transaction that requires more than a handshake and wire transfer. At AeroMarine Law, we counsel buyers, sellers, lessors, and operators through the full lifecycle of business jet transactions, ensuring that every detail—from tax positioning to international compliance—is meticulously addressed.

In this article, we highlight some of the key legal, tax, and regulatory issues that should be addressed before closing a jet deal.

1.

Aircraft Title and Lien Clearance

Aircraft are often held in special-purpose entities, sometimes layered within offshore trusts or complex ownership structures. We conduct comprehensive title searches through the FAA (or applicable foreign registry) and International Registry, verify deregistration from prior ownership, and ensure all liens, mortgages, and encumbrances are cleared. When applicable, we coordinate with international registries such as the San Marino, Cayman, and Isle of Man aircraft registries.

2.

Ownership Structuring and Regulatory Compliance

Who owns the jet—and where—matters. A U.S. citizen can register an aircraft with the FAA directly, but foreign nationals often require trust arrangements or ownership through properly structured U.S. entities to comply with FAA regulations. We routinely advise on:

• Trustee arrangements for non-U.S. buyers

• Part 91 vs. Part 135 operations

• U.S. DOT and FAA registration compliance

• Foreign air carrier permits

We also structure ownership to limit liability exposure and preserve privacy, using entities tailored to the client’s needs.

3.

Sales Tax, Use Tax, and FAA Fly-Away Exemptions

In U.S. transactions, sales and use tax can add hundreds of thousands—or millions—to the cost of a jet. We advise clients on:

• “Fly-away” exemptions when aircraft are delivered and promptly flown out of the taxing state

• Use tax mitigation strategies through leasing or operational agreements

• Florida, California, Texas, and New York state tax traps

• International VAT or import tax exposure for cross-border closings

Each jurisdiction has specific rules, and closing location can be strategically selected to optimize tax outcomes.

4.

Letter of Intent and Purchase Agreement Terms

The LOI should clearly define key commercial terms while leaving room for negotiation. The subsequent Aircraft Purchase Agreement (APA) is where critical risk allocation happens. Our firm tailors APA terms to:

• Address condition at delivery (including inspections, discrepancies, and airworthiness)

• Define deposit and escrow structures

• Allocate responsibility for export certificates, deregistration, and title transfer

• Include indemnities and post-closing protections

• Align with international delivery logistics (e.g., ferry flights, crew coverage, delivery point weather contingencies)

5.

Escrow, Financing, and Lender Coordination

Most transactions involve using specialized escrow agents, typically in Oklahoma City or Geneva, to hold funds and documents pending closing. We coordinate escrow terms, verify lien release instructions, and ensure that closing mechanics align with lender or lessor requirements. Where financing is involved, we review loan and lease documents to flag cross-default, maintenance covenant, and insurance pitfalls.

6.

International Deliveries and Import/Export Compliance

When aircraft cross borders, import duties, customs declarations, and ITAR/EAR compliance must be managed carefully. AeroMarine Law advises on:

• Export Certificates of Airworthiness

• Temporary Admission and EU import strategies

• Sanctions compliance and OFAC vetting for counterparties

• U.S. customs reporting (CBP and APIS requirements)

We also advise charter operators and family offices on ongoing compliance under FAA, DOT, and IRS rules.

The AeroMarine Law Team

Our team combines deep aviation law knowledge with transactional fluency, offering a boutique experience to its clients. From Miami to Malta, Geneva to San Marino, we advise clients in the purchase, sale, lease/charter of aircraft investments.

Whether you are acquiring your first business jet or upgrading your fleet, AeroMarine Law delivers legal strategy and execution that keeps your transaction on time, on budget, and in the air.

Contact us to schedule a confidential consultation or to request a white-glove transaction checklist for your next transaction.