What Does “Due Diligence” Mean When Buying a Jet?

Whether you’re buying a car, a house, a company, or an aircraft, due diligence is a key part of the process. When you’re buying a pre-owned aircraft, this appraisal involves establishing the aircraft’s condition and history to ascertain its fair market value. Here are the specific tasks involved in due diligence as part of a pre-owned aircraft purchase.

Aircraft assessment. This step can identify potentially costly maintenance needs as well as possible safety issues. In fact, the aircraft assessment step, also called a pre-purchase inspection, is so important that it is often performed twice: first, as an initial in-person inspection and then again as a more rigorous undertaking later in the buying process.

The pre-purchase inspection includes a thorough, onsite physical assessment of the aircraft. The buyer pays for the pre-purchase inspection and receives a report from the inspector; the seller, in turn, gets a report detailing any issues that need to be corrected.

For the inspection, the buyer should choose a certified, trustworthy maintenance provider who is highly knowledgeable about the aircraft make and model you’re looking to buy. The provider should have experience in completing “tip to tail” inspections that include internal and external engine parts, avionics, and other aircraft areas and systems.

Records review. Another important task is a thorough review of records from the aircraft’s engine maintenance service plan (MSP) and other maintenance records. This paperwork should include verification of total time in service, that regular servicing and inspections have been performed, and that maintenance records are complete.

Establishing a clear title. This step ensures that you are buying an aircraft free of mortgages, liens, leases, or other obligations. To establish whether the aircraft’s title is clear, check the title filed in the FAA Civil Aviation Registry or in a foreign registry and, if necessary, take the required actions to clear the title. (Title insurance can protect aircraft owners from title problems stemming from liens and other liabilities incurred by previous owners.)

Tax review. The buyer should ensure that tax records for the aircraft are up to date and taxes are paid in full.

If you’re working with a reputable pre-owned jet broker like L & L International, you can rest assured that the broker’s representative will perform the necessary due diligence tasks. Even so, it helps to understand what’s involved in the due diligence process, so that you can ask the right questions to acquire all the information you need about the aircraft’s condition and history and whether its title is clear.