An escrow company plays an important role in an aircraft purchase transaction. When a prospective buyer puts down a non-refundable deposit toward the aircraft’s purchase, the escrow company serves as a trusted, neutral third-party to securely hold the aircraft papers and deposit. Whether you’re buying or selling an aircraft, knowing how an escrow company works will help you to be better informed about the sale process.
Escrow basics
Using an escrow agent can help avoid conflicts of interest in an aircraft sales transaction. That’s why it is of the utmost importance that an escrow company has no ties to the buyer, seller, or broker involved in a transaction.
Once a buyer and seller have agreed on the terms of the aircraft sale, the buyer submits a letter of intent (LOI) to the seller. Once the seller accepts the LOI, the buyer then submits deposit funds for escrow. The buyer and seller should jointly agree on the steps in the escrow process to avoid surprises at closing. When the transaction is near completion, the buyer and seller meet with the escrow company to release ownership documents to the buyer and funds to the seller.
The escrow company typically charges a fee to hold the deposit and aircraft documents and also files documents with the FAA to transfer the title. Most escrow services are FDIC insured, but you should verify this with the escrow service you’re considering.
A full-service escrow company such as Insured Aircraft Title Service (IATS) can assist with document and deposit-holding services, title and registry search, and title clearing as well as filing the necessary documents with the FAA.
Contact L & L International if you need assistance in purchasing or selling a private jet. You can reach our sales specialists today at sales@L-Lint.com, call us any time at +1.305.754.3313, or visit us online.