Jay Mesinger

Questions & Answers

August, 2006:

Q: We are interviewing brokers to represent us in the sale of our aircraft. What tips do you have regarding criteria we should use when making our choice?

A: I think there are both basic and mission specific criteria to use when making an important selection like this. First and foremost, think of this business as a people business, secondly as an aircraft business. Let your interview process help you determine if the personality fit is good. Since communication is the foundation of a great working relationship, determine if this interviewing broker brings the same cultural standards as your company cherishes in its daily activities. Of course, the broker's past sales and current listings should play a big part in the selection. Does the broker have recent experience in the category you are considering selling? Are they currently listing aircraft that may be so similar to the one you are considering selling that a competitive environment may exist within the same brokerage house? That could be troublesome. On the other hand, if they are representing two Gulfstream Vs and there are clear differences between them, that could work well since your broker will be creating a bigger net with which to catch prospects. Location of the broker to you is not as critical. The more critical piece is the brokers willingness and financial ability to adequately fund the project ahead of the sale. You should expect your broker to be at showings, demonstrations and pre-buys. They should be present at the closing and not work these critical milestones from a telephone at their desk. Having said that, choosing the lowest cost provider will not get you the best representation. Travel today is expensive and advertising costs go up annually. Choose a broker first based on skill sets and ability, lastly on price. You will be disappointed from the start if you let price define the criteria of selection.

Q: What is the difference between an "Aircraft Acceptance Certificate" and a "Delivery Acceptance Certificate"?

A: The forms serve two very distinct purposes. Both are usually exhibits to the Aircraft Purchase contract. The Aircraft Acceptance Certificate is used post pre-buy to accept or reject the aircraft and define the needed corrective action as a result of the pre-buy inspection findings. Once items to correct are agreed to by both buyer and seller, this form is typically forwarded to the title company and triggers the deposit instructions. At this point, conditional upon the seller completing the corrective action and meeting all other conditions of the Purchase Agreement, the deposit becomes non-refundable. By the way, even though the deposit becomes non-refundable, it stays with the title company and is not forwarded to the Seller as part of the final payment until closing and final funding. The deposit also usually represents fully liquidated damages for the account of the Seller once a pre-negotiated time limit has passed without funding in full by the Buyer. All of this deposit language starts with the signing by both parties of the Aircraft Acceptance Certificate. The Delivery and Acceptance Certificate is used when making the final acceptance of the aircraft at closing. This form signifies the final acceptance of the aircraft and often signals the death of non-survivable representations and warranties.


- Jay Mesinger