Questions & Answers
June 30, 2005:
Q: In the standard wording seen in the description of
precedents to closing on an aircraft acquisition, does the
term ‘airworthy’ mean everything, or just the inspected
portions of the aircraft?
A: That is a great question with a complex answer.
You may know that in the purchase of an aircraft, there are
no surviving representations or warranties.
This means that you could buy an airplane and if on the very
next day, any system on it fails, tested or not, there is no
The airworthy issue is very similar. Typically, one would
see a complete set of precedents for closing.
They usually include, but are not limited to: ‘The aircraft
will be delivered airworthy, with all systems functioning
normally and to manufacturer’s standards.’
The real answer is that only the systems tested or inspected
must function correctly. When you
go to a facility to have a prebuy completed, the report
given does not speak to every single item on the aircraft
being airworthy, it only speaks to the items reviewed or
inspected. This is a critical difference in expectations.
Many buyers would just assume that the term airworthy
describes the entire aircraft and every single one of its
Today, many of the inspecting facilities are getting away
from the term airworthy. They have no way to speak to that
depth of scope. Many are even getting away from giving
distinctions to discrepancies turned up in the inspection.
Instead, they are simply saying the aircraft cannot be
returned to service unless this item or that item is
corrected. This can lead to a very confusing dilemma when
trying to match the actual condition of the aircraft to the
contracted condition of the aircraft.
Q: Is there a general rule of thumb about the amount
of brokers’ commission? Do they generally share commissions?
A: The simple answer to the question of amount is
that there are no simple answers. I often wish there were.
It is different across the board. Some brokers charge a flat
fee, some a percentage, and others, a percentage with a cap.
Unlike boating or real estate, there are no norms or
The second part of your question is a little more complex.
Again, unlike real estate, where a selling broker is tasked
by design to share their commission with the buying broker,
this practice does not exist in the aircraft business.
In the first place, commissions in aircraft sales and
purchases are not as high as real estate commissions. This
means that each participant is tasked with compensating his
or her own representative.
This is not to say that a buyer will not tell his or her
representative to get their commission from the seller. This
is really short-sighted of the buyer.
If the buyer’s broker has to be paid by the seller, who is
already paying his or her broker, then no one is really
working for the buyer.
When the buyer begins to feel good by thinking he is not
going to pay any commission, he should really begin to
realise that no one is really working for him. Big mistake.
- Jay Mesinger