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From: "Rob Logan" <Rob@Logan.com>
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Subject:  Liabilities of Buying or selling a homebuilt
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 From: "Ron and Marlene Brice" <rbrice@inter-linc.net>

Attached is the complete text of the several articles published by EAA on
the subject of buying or selling a homebuilt.
 
This will save you time researching legal issues.
 
Ron

Protect Yourself: The legal risks of selling the aircraft you built, Part 1
Sport Aviation -11/99
Pete Axelrod, EAA Legal Advisory Council

The most frequent questions lawyers receive from members are about
buying and selling of amateur-built aircraft.  The most common is "How
do I keep from getting sued?" The short answer is that you can't
absolutely avoid the possibility of litigation.  However, there are
steps the homebuilder can take that reduce the risk of being sued in the
first place, and, in the event that it fails, to reduce the chances the
suit will succeed. 

Because this subject concerns the membership more than any other, the
EAA Legal Advisory Council will address it in six articles over the
coming year.  Here, we'll address the risks a person faces when selling
a homebuilt, and we'll take a realistic look at the magnitude of those
risks. 

In the December issue, we'll discuss the written contract homebuilders
should use when selling their aircraft, why it's necessary, what should
be in it, and what it can and can't do.  The third article will expand
on a key part of the sales contract-the release or hold harmless
agreement.  It will explain what a hold harmless agreement is, what
protection it affords and, as importantly, what it cannot do It will
also discuss the lack of certainty in predicting the effect given the
range of differences in the la from state to state.  The fourth article
will talk about insurance, what's available, what protection it affords,
and what risks are not covered.  The fifth article will address other
means of possible protection, such as disassembly, "deregistration,"
incorporation, and the impact of the Genera; Aviation Revitalization
Act.  The final article in this important series will offer advice to
people buying homebuilts and the differences between owning a homebuilt
you built and one you bought. 

SALES RISKS

When selling a homebuilt, you face two categories of risk: contract
risks and tort liability.  Contract risks are the possibility that you
won't get paid, and that the buyer will claim he didn't get what he paid
for, or that the seller misrepresented the quality or condition or
performance of the product.  These risks are relatively small and
manageable, and you can largely control them with the contract of sale,
which we'll cover in the next article. 

Tort liability is the second sales risk.  It concerns most EAAers
because it's the risk that someone will be killed or injured in the
aircraft you built, which leads to the risk that you'll get sued for
millions and incur thousands for lawyers' fees. 

There is good and bad news regarding tort liability.  The good news is
that it's a low probability risk.  While a few such suits have been
filed, EAA has not heard of even one of them being successful.  Most
aircraft accidents are caused by pilot error.  If a homebuilt has any
serious defects, the builder will be the victim because he usually flies
it for some time before selling the aircraft. 

The bad news is that-win or lose-defending a tort liability suit is
expensive, unless you've insurance to pay the legal fees.  And if you
lose, it can be ruinous.  Tort liability suits against homebuilders are
much like the chances of an asteroid hitting the Earth.  The possibility
of it happening is remote, but it's really bad news if it does happen. 

What these risks mean is that you should take reasonable precautions
when selling your homebuilt but the risks shouldn't, in most cases,
deter you from selling your aircraft. 

CONTRACT LIABILITY

Most lawsuits over the sale of goods arise when the buyer believes he
did not get what he paid for, or when the seller fails to receive the
purchase price.  Whether it's factory- or amateur-built, in the sale of
any used aircraft the largest source of problems arises from how the
seller represents the aircraft's condition.  Many ads in Trade-A-Plane
boast of "fresh annual" or "low time." Problems arise when a ballpoint
pen is the only tool used to perform the annual, or where "low time"
means something different to buyer and seller. 

The factory-built aircraft have a standard to which they can be
compared-the type certificate.  The aircraft either does or does not
conform, and the manufacturer is usually the one making the performance
claims, not the seller. 

Everything is up for grabs with a homebuilt aircraft.  The aircraft
might conform to its published plans, and it might not.  A finished kit
may be what the manufacturer intended-or it may not.  The builder's
skill can vary from AirVenture grand champion perfection to marginal at
best.  When selling a homebuilt, difficulties arise if the seller leads
the buyer to believe that the aircraft is better than it really is.  In
the article on sales contracts we'll discuss in detail the importance of
prepurchase inspections by buyers and the seller refraining from making
any claims or representations about the quality or condition of the
aircraft.  If the airplane truly disappoints a buyer, he can seek
various remedies from the court.  Recision is the first remedy. 
Basically, it means everything is put back the way they were.  The buyer
returns the aircraft and the seller returns the money. 

If recision isn't possible, the buyer may seek damages-the difference
between what he paid and what the aircraft was really worth.  In an
extreme case the buyer can sue for fraud, claiming that the seller
deliberately lied about the aircraft.  In this case, the buyer may win
his actual damages-and punitive damages.  With a good sales contract you
can reduce these risks to a minimum, and it would then be highly
unlikely that a suit would follow the sale. 

TORT LIABILITY

The law holds each of us responsible for our own negligence or
carelessness in the event someone is hurt because of it.  The law also
passes this responsibility to our estate if we subsequently die, or to
the partners we worked with on the project that caused the harm.  When
building aircraft the opportunities for negligence are many-from failing
to follow the plans or assembling the kit improperly, to improperly
engineering that clever modification we invented.  Homebuilders have
almost unlimited freedom to make mistakes because the FAA imposes few,
if any, constraints on them.  If a mistake causes a crash, the
homebuilder, or his estate, can be sued.  Because homebuilders often
wear two hats-builder and mechanic-they can also make mistakes after
they've built the aircraft.  Poor or improper maintenance can also lead
to a crash-and a lawsuit-even if we build the aircraft properly. 

Even a perfectly assembled kit or plans-built aircraft can lead to a
lawsuit if the kit or plans have a design defect.  The injured parties
may well sue the kit manufacturer or the plan's creator, and they will
almost certainly sue the builder, too.  Even if that suit ultimately
fails (our assumption is the builder did nothing wrong), the legal fees
could be huge.  This is particularly true if the kit manufacturer or
plan designer has no insurance, no assets, or is out of business. 

Let us stress again that the risk of actually being sued is small, but
because the potential harm can be large it is worth the trouble to do
all you reasonably can to protect yourself when you sell your homebuilt. 
You can build protection into the sales contract that can contain a
release or hold-harmless agreement.  We'll address these forms of
protection, and others, in subsequent articles. 

DISCLAIMER

That we cannot predict outcomes with certainty - or guarantee results -
frustrates EAA members (and us lawyers).  The reason for this lies not
with lawyers but with the legal system, which in the end comes down to
human judgments and decisions made by juries and judges.  Because these
opinions are always given in hindsight, the most a lawyer can do is
offer advice that will increase your chances for a good result and a
successful sale.  Our aim is to provide advice that will put the odds in
your favor.  With apologies to Ecclesiastes, while the race is not
always to the swift, nor the battle to the strong, that is sure how to
bet. 

Sale Agreement Buying & Selling a Homebuilt, Part 2
Sport Aviation-12/99
By Michael F. Van Hoomissen, EAA Legal Advisory Council

In November Pete Axelrod discussed some of the legal risks of selling an
amateur-built aircraft.  He outlined many of the common issues between
buyers and sellers that lead to conflict, or worse, lawsuits.  This
month we'll address how you can use a sale agreement-a contract-to
improve communication between buyers and sellers and to minimize risks
of conflict and suits that may arise out of a sale. 

Do You Need a Sale Agreement?

In Oregon and in most states, when you sell goods for $500 or more the
law requires a written agreement that expresses its essential terms and
is signed by the party against whom enforcement of the agreement is
desired.  In other words, if you want a court to enforce a sale
agreement involving a sale of goods for $500 or more, you need to have a
written agreement.  If the agreement is for the sale of goods for less
than $500, you don't need to have a written agreement to have a court
enforce the agreement, assuming you are otherwise able to establish the
terms of an oral agreement. 

This is commonly known as the statute of frauds.  In Oregon and
Washington, where I practice, it's found in the Oregon Revised Statutes
at Chapter 72.2010 and in the Revised Code of Washington Chapter
62A2-201.  To learn if your state has a similar statute, you can usually
find it by consulting the index of your statutes under the headings and
subheadings "sales" then "contracts" then "enforceability."

When more than $500 is involved the statute requires some written
expression of what is being bought and sold and by whom.  This reduces
the potential for fraud by those who would claim the existence of a sale
agreement when there was none or terms of the agreement other than
those, which were negotiated. 

A willing buyer and seller may orally agree to sell an experimental
aircraft and exchange the aircraft for cash.  Some people complete
successful sales without any problems just this way.  When
sophisticated, honest buyers and sellers know what they are buying and
selling there usually isn't any confusion or misunderstanding. 

Such sales can be and are conducted just like used car sales, and much
of the sale agreement considerations are similar.  But an experimental
aircraft is not a used car and some considerations-like the seller's
product liability-are different.  Because state statutes of fraud
require a written document to enforce a sale agreement, and for many
other reasons, I recommend that people use at least a simple bill of
sale for any significant sale.  Preparing a bill of sale always
facilitates clearer communication between the buyer and seller and
minimizes the risk of conflict whenever the amount of money involved is
significant.  In short, both the buyer and seller get a chance to write
out exactly what the deal is. 

In addition to satisfying the statute of frauds, a sale agreement can do
many things for the buyer and seller.  It can define the nature and
extent of the goods being sold.  And it can clearly outline how and when
the purchase price is to be paid and what remedies or penalties will
apply if the price is not paid per the agreement terms. 

Agreement Terms

To begin, the agreement should identify the buyer and the seller.  It
should also clearly identify the aircraft to be sold by stating the
make, model, registration number, and its equipment.  It should also
identify any extra materials, tools, kit parts, jigs, construction
materials or supplies, plans, kit construction manuals, builder logs,
notes, and photographs, as well as the logs for the aircraft, engine,
propeller, and avionics, etc.  that will be sold.  Itemize any
exceptions for equipment or parts that are not part of the sale.  Once
you have identified what you are selling or buying, you should state the
price and any other "consideration" to be paid-a trade, for example.  If
the buyer isn't paying cash, clearly state the terms for payment. 

State the price in U.S.  currency (or other) and indicate how, when, and
where the buyer will make payment.  If there are any financing
considerations, state any interest and late payment penalties that are
to be due, as well as any pre-payment penalties.  Identify what will be
done in the event the payments are not made on time. 

In the agreement state who will bear the risk of loss to the aircraft
hull during the payment period and whether the buyer or seller must have
hull insurance, how much coverage must be obtained, and who will be paid
in the event of loss.  Naturally, these considerations are irrelevant in
a cash sale.  In a cash sale always insist upon certified funds or make
sure the buyer's check clears the bank before you make delivery. 

The seller should warrant that he owns the items being sold free and
clear of any encumbrances to his title in them, and that he will defend
his title to the same at his expense.  If the seller doesn't own the
articles free and clear, the agreement should clearly identify the
encumbrances and include the plan for payment of expenses for clearing
them.  If a bank or other financing is involved, closing the sale with
an escrow agent may be a good idea, especially when significant sums are
involved.  Again, the agreement should indicate how and when this will
happen.  A buyer should always examine the state of a seller's title by
getting a title report.  In the agreement the seller should warrant
whether the aircraft will be in any particular condition or whether the
sale condition is only warranted "as is, where is." Also state whether
the buyer has had an opportunity to inspect the aircraft to his or her
satisfaction.  A buyer's pre-purchase inspection by a competent mechanic
is always a good move-unless the mechanic doesn't know the aircraft
model.  In that case, first find one who does know the aircraft and who
is willing to spend the time necessary to really check it out.  Also
indicate whether the builder logs, notes, photographs, and all logbooks
have been inspected. 

If the buyer has trained in a similar aircraft or test flown the
aircraft to be sold, indicate that in the agreement.  State any
significant findings about the aircraft's condition such as the engine
is out of annual or the brake lines are leaking.  When recorded, these
findings tend to avoid later disputes about the aircraft's condition and
representation.  If there are repairs to be made at the seller's expense
before completing the sale, itemize what is to be done, when, to what
inspection criteria, and, who will pay the expense. 

Address whether the buyer agrees to indemnify and hold the seller
harmless from liability arising out of the buyer's use of the aircraft. 
Does the buyer agree not to sue the seller for any bodily injury or
other damages that result from the buyer's use of the aircraft?

Consider whether the buyer will agree to retain an attorney to defend
the seller and pay any judgment that might result if someone else
suffers bodily injury or property damage resulting from buyer's use of
the aircraft.  Will the buyer be obligated to maintain a certain sum of
insurance for bodily injury and property damage that might arise out of
the buyer's use of the aircraft.  And will the seller be named an
additional insured on the insurance policy and have policy cancellation
notice rights. 

Finally, address what recourse the parties have to enforce the
agreement, such as arbitration or filing suit, as well as where suit can
be filed and what state law shall apply.  Also state whether attorney
fees and litigation expenses may be collectable as part of the damages. 
These are just some of the major issues a sale agreement should address. 

There are others.  What goes in a sale agreement is specific to the
particular transaction, the needs of the parties, and the price and
terms negotiated.  For small transactions a simple form of bill of sale
will satisfy the statute of frauds.  But it probably won't get you any
liability protection or address any special considerations.  An aviation
attorney can help you tailor such an agreement to your needs. 

What an agreement can and can't do

A sale agreement establishes the legal rights and responsibilities
between parties to the sale.  A sale agreement does not prevent you from
being sued, but it should diminish this risk.  While a sale agreement
might contractually obligate someone to pay for your defense if you are
sued, or to reimburse you for any damages that might result, it will not
guarantee that anyone will be able to pay such demands if you were to
make them.  So be careful with whom you deal. 

A sale agreement does not make anyone do anything.  To do that you have
to get a court to agree with your interpretation of the agreement, and
to then enter a judgment order commanding someone to do something for
you, like paying you money.  The court cannot make someone pay you money
they don't have, of course.  When someone can't pay their debts they go
to the Bankruptcy Court for relief.  But a well thought out sales
agreement can go a long way to ensure a successful happy transaction. 

The next article in this series will address a specific clause in sale
agreement-a hold harmless clause-and explain protection it affords and
what it cannot do. 

Waiver & Releases Buying & Selling a Homebuilt, Part 3 Sport
Aviation-02/00 R.  Patrick Phillips, EAA Legal Advisory Council

"How can I protect myself from liability when I sell my experimental
homebuilt aircraft?" This common question is one that is most difficult
to answer because there is no perfect, fail-safe method of liability
protection.  All we can do is minimize the risk of liability based upon
the total circumstances of the sale and purchase of a particular
homebuilt aircraft. 

One way to do this is to create a liability waiver and release of
personal injury form in which the buyer waives his or her rights to file
a lawsuit or make a claim against the seller in the event that a defect
in the aircraft causes a crash resulting in personal injuries, death, or
property damage. 

A waiver and release is nothing more than a contract between two
parties, and it may be enforced against the signers the same as any
other contract.  To be legally effective it must contain the elements of
a contract.  To be valid, it must clearly inform the signing parties
what is being waived.  In its entirety the document must alert the
signer to the nature and significance of what he is agreeing to.  There
must be consideration provided, and it must not have been secured by
fraud. 

The most prominent problem in enforcing a release of personal injury is
that many courts have judged them to be contrary to public
policy-against the public interest.  In other words, they are invalid
and unenforceable where a person is chargeable with using ordinary care
in the interest of public safety.  In legal language, releases of this
nature are sometimes called "exculpatory contracts." The law doesn't
favor them because they tend to encourage or allow conduct below an
acceptable standard of care applicable to the activity. 

Most lawyers and many members of the public are aware of this general
philosophy of discouraging the use of liability waivers and releases. 
The result is that most people reach the conclusion that they are not
enforceable and therefore don't consider their use. 

But two persons or entities are free to contract any agreement they
desire so long as it doesn't contravene public policy.  It's therefore
expected that should it go to court, the court will closely scrutinize
any waivers and releases used in the sale of a homebuilt aircraft to
determine whether such agreement violates public policy.  The release
will be construed strictly against the party seeking to rely on it,
which would be the homebuilder/seller.  Such agreements may not be
necessarily favored, but they are not automatically void and
unenforceable as contrary to public policy. 

In support of the waiver and release, courts in various states have
upheld such agreements where automobile race tracks have required the
drivers to sign releases of liability prior taking to the track.  The
courts have found the releases enforceable when executed prior to any
claim and were unambiguous in meaning and supported by valuable
consideration and not procured by fraud. 

Using a Waiver and Release

Generally, I recommend using the waiver and release when selling a
homebuilt aircraft because it often discourages claims against the
seller in the event of a later accident.  For additional protection,
persuade the buyer's spouse to sign the agreement.  If the buyer signs
it, I feel that most courts would uphold any claims against the seller
so long as the seller has not intentionally damaged the aircraft or been
grossly negligent in its construction.  If the buyer were to have an
accident and become injured, he'd most likely lose if he were to sue the
homebuilt's seller for personal damages or injuries.  If the spouse has
signed the agreement, the spouse would likewise lose any claim against
the seller of the aircraft. 

The real problem in selling homebuilt aircraft is that if the buyer dies
in an accident, the buyer's minor children could bring a lawsuit against
the seller for wrongful death.  The children wouldn't have been a party
to the contract and, therefore, the release would not extend to them or
other members of the family who had not signed the release.  Further, a
parent generally cannot sign to release a legal right of a minor child. 

Another major deficiency with the release is that if an aircraft were to
crash in the middle of a neighborhood and cause injuries, death, or
property damage to others, the agreement would most likely afford no
protection. 

Saddled with these realistic limitations, I still encourage the use of
the waiver and release because it creates an obstacle or a hurdle that
the aircraft's buyer must overcome in the event he decides to bring
legal action against the seller for some defective condition with the
aircraft that caused injuries.  It's generally presumed that a
responsible aircraft owner would carry sufficient liability insurance to
cover any damages caused to the public as a whole. 

I'm personally aware of several people who have used a waiver and
release in the sale of their homebuilt aircraft that crashed and injured
the purchaser.  Because they executed a waiver and release at the time
of the sale, it discouraged the buyer's attorney from bringing a
personal injury lawsuit against the seller. 

Because personal injury attorneys generally work on a contingency fee
basis, they may back away from filing a lawsuit if it appears the waiver
and release may be an effective defense.  Further, I have seen potential
lawsuits warded off by immediately providing the buyer's attorney with a
waiver and release, coupled with the fact that the seller had little or
no assets in which the plaintiff attorney could attach to satisfy a
judgment. 

Fortunately, for these reasons and the inherent nature of an
experimental homebuilt aircraft, lawsuits against the homebuilder/seller
are rarely pursued.  When an attorney learns that a builder is free to
change the design as he sees fit and that this is an experimental
homebuilt aircraft based upon the creative genius of the builder, he may
look elsewhere for a more promising suit. 

The EAA Legal Advisory Council has put together a "Suggested Checklist
for the Sale of a

Homebuilt or Restored Aircraft" that is available from EAA Aviation
Information Services and on the EAA website.  This checklist gives a
checklist you can use with your attorney to draft a document that will
help you attain the greatest liability protection.  It's important that
this document is written in accordance with the laws and practices of
your state or community.  Courts may look at these agreements as
contrary to public policy and will seek ways to void them.  It is also
important that the release be in bold letters so the purchaser can see
it. 

The use of a release from liability may be a beneficial document in
deterring a lawsuit for damages against the seller of an experimental
homebuilt aircraft, but it can also be frustrating to the seller because
no one can predict or guarantee the results of using it.  As we can see
from the seller's viewpoint, the fault lies with the sentiments of the
general public, and the decisions of juries and judges who may not be
understanding or sympathetic with those of us who engage in the
activities and hobbies we all love and support. 

R.  Patrick Phillips, EAA 124466, practices aviation law in Orlando,
Florida.  A member of the EAA Legal Advisory Council, he is a Board
Certified Aviation Law Attorney, and holds ATP, CFII, and A&P
certificates. 
Parting Out Liability: The Reality of Liability Protection Options
Buying & Selling a Homebuilt, Part 4
Sport Aviation-05/00 

Joanne Barbera & Jim Ramsey

Over the past few months "Legal Pilot" has been discussing steps
builders can take to minimize the possibility of litigation when selling
their homebuilts.  Before discussing these options, let's review the
legal theories of product liability law.  The doctrines discussed are
generalized and not specific to any state and differences in the factual
circumstances for each case may affect the application of the law. 

Commonly referred to as product liability, tort law generally consists
of three independent legal theories: strict liability, warranty, and
negligence. 

Under strict liability, sellers are liable if they sell a defective
product that is unreasonably dangerous to users or consumers.  For
strict liability to apply sellers must be engaged in the business of
selling such products and the product must reach users or consumers
without substantial change in its condition.  If the seller of a
homebuilt doesn't otherwise engage in the business of selling aircraft,
then strict liability should not apply.  But if a builder sold a number
of aircraft or actually built the aircraft to sell it, then a court may
find that the sale was within the scope of strict liability. 

There are three basic warranties-express warranty, implied warranty of
merchantability, and implied warranty of fitness for a particular
purpose.  Any of these warranties can be either written or oral.  The
difference between a written and oral warranty is the difficulty of
proof as to the warranty's existence or extent. 

Express warranties are any affirmation of fact or promise the seller
makes to the buyer relating to the product that becomes part of the
bargain that the goods will conform to that promise.  No special words,
such as warrant or guarantee, create an express warranty.  Generally,
sellers may give an opinion bout the product's quality and value without
creating express warranty obligations.  The question becomes which of
the seller's statements become part of the bargain.  This can become a
difficult area if sellers aren't somewhat careful in how they market the
aircraft. 

There are two implied warranties: the implied warranty of
merchantability and the implied warranty of fitness for a particular
purpose.  The former applies only to merchants of products of the type
in the involved transaction, and the seller of a homebuilt normally
doesn't need to be concerned with it.  However, as with strict
liability, there may be circumstances that result in the seller of a
homebuilt being considered a merchant. 

An implied warranty of fitness for specific purpose arises when a buyer
relies on the seller's skill, judgment, and experience to furnish him
with a product that will answer his particular purpose.  The seller's
knowledge of the buyer's purpose for the article isn't sufficient to
show the buyer's reliance on the seller's skill, judgment, or experience
that sustains an implied warranty of fitness.  Sellers can expressly
disclaim an implied warranty with written words such as "as is," or
"with all fault." Again, this is a warranty that can be avoided by care
in marketing or selling the aircraft. 

Finally, we have the basic theory of negligence.  The elements of a
negligence claim are the existence of the defendant's duty to protect
the plaintiff from injury, the failure of the defendant to perform that
duty, and an injury to the plaintiff caused by the defendant's failure
to perform that duty. 

When selling a homebuilt, the seller has a legal duty to the buyer.  For
this article, we'll assume the amateur-built aircraft caused damage to
the plaintiff.  The issue is whether the seller breached his duty to the
buyer.  With the exception of professionals, who may come under a higher
standard of care, the law requires individuals to exercise a reasonable
degree of care in their dealings.  If the amateur builder uses
reasonable care in building the aircraft, then there would be no
negligence.  The difficulty arises because a jury generally decides
whether an individual used reasonable care. 

Disassembly

One often discussed method of liability protection when selling a
homebuilt is for the builder to partially disassemble the aircraft
before transferring it to the buyer.  Builders cannot avoid their
liability for their negligent design, workmanship, or maintenance by
disassembling the aircraft, and disassembly substantially reduces the
homebuilt's value (often by a third or more). 

Based upon the legal principles of negligence, if the aircraft or a
component of it fails, or if the aircraft crashes because the builder
didn't use reasonable care in design, construction, or maintenance, the
builder will be liable even if the aircraft is partially disassembled
before being sold. 

Registration Change or Cancellation

In the event of an accident, incident, or other problem with the
aircraft, one of the first pieces of information a claimant looks for is
registered owner.  When you sell your aircraft it's important to make
sure your aircraft bill of sale and the buyer's aircraft registration
application are filed with the FAA Aircraft Registry.  Then, if a
problem arises after you sell the aircraft, the aircraft record will
properly reflect the change of ownership. 

Canceling the aircraft's registration is another method some builders
have tried to attain some liability protection when selling a homebuilt. 
This does not remove the builder's name from the aircraft record,
however.  In most cases, a U.S.  citizen buyer of a deregistered
aircraft can petition the FAA for reregistration.  This will reflect the
buyer as the aircraft's owner but it will generally list the same
builder information as before the cancellation.  The practical effect of
the seller canceling the registration may only be to create additional
paperwork for the buyer. 

Incorporation

Another means of possible liability protection is for a corporation or
limited liability company to own the aircraft.  Both a corporation and
an LLC are business entities that grant limited liability to their
owners.  If the owner properly capitalizes the organization and observes
the organizational formalities, then the organization's creditors cannot
reach the owners' personal assets, just the organization's assets. 

Corporations and LLCs generally do not shield their owners from the
consequences of their own acts and omissions.  In other words, if you
are a shareholder of a corporation that owns a homebuilt and you
personally did not use "reasonable care" in building or maintaining the
airplane, then you'll probably be liable for any damage caused by that
mistake.  However, as discussed below, transferring your completed
aircraft to a corporation or LLC may enable you to come under the
protection of the General Aviation Revitalization Act 18 years after the
transfer. 

General Aviation Revitalization Act

There has been much discussion about the General Aviation Revitalization
Act of 1994 (GARA), which establishes an 18-year statute of repose that
bars a lawsuit after a number of years after the defendant has acted in
some way, such as designing or manufacturing a product.  This statute
applies even if the period, in this case 18 years, ends before the
plaintiff suffers any injury. 

This differs from a statute of limitations, which is a set time limiting
a legal action after a particular claim or injury arises.  GARA's
rolling 18-year statute of repose means that over the life span of an
aircraft, each time a component part is replaced, the time for that part
begins again.  GARA applies to any aircraft with a type certificate or
airworthiness certificate that has a maximum of fewer than 20 passengers
and was not engaged in scheduled passenger carrying operations. 

Four exceptions to GARA aren't germane to this article: manufacturer
misrepresentations made in the certification of the aircraft; instances
when the claim is being made by a passenger receiving treatment for
medical or other emergency; a claim by a person not aboard the aircraft
at the time of the action; or an action brought under a written warranty
enforceable under law. 

The major issue for amateur builders is when does the limitation period
start.  The statute defines this time as: (a) the date of delivery of
the aircraft to its first purchaser or lessee, if delivered directly
from the manufacturer; or (b) the date of first delivery of the aircraft
to a person engaged in the business of selling or leasing such aircraft. 

Because the GARA time limits commence on the date of the aircraft's
delivery to its first purchaser or from the date of the aircraft's first
delivery to the person whose business is selling or leasing such
aircraft, there is a question whether GARA applies to a homebuilt before
it's sold for the first time.  No cases discussing such a question have
been identified.  But there are indications that GARA will not protect
amateur builders. 

Because GARA is a statute of repose-which extinguish a claimant's rights
rather than set a time limit-the courts have held that the statute of
repose must be strictly construed.  Such strict construction would hold
that the statute of repose begins to run from "the date of delivery,"
not the date of assembly or manufacture. 

Courts generally hold that if a statute is not ambiguous, they must
follow the statutory language.  If a statute is found to be ambiguous,
then the court may look to the statute's legislative intent.  GARA's
legislative history indicates that it was "developed in response to a
serious decline in the manufacture and sale of general aviation aircraft
by United States companies."

In light of these doctrines of statutory construction, it's possible
that a court would find GARA inapplicable to the first sale of a
homebuilt.  Even though there has apparently been no finding or
determination (yet) whether GARA applies to amateur-built aircraft,
counting on its availability would not be wise.  But if a builder wanted
to plan ahead, after the homebuilt was completed, the builder could sell
it to a separate corporation set up for that purpose.  Then, 18 years
later, they may have a GARA defense if needed.  Jim Ramsey and Joanne
Barbera are attorneys with the Kansas City-based law firm of Cooling &
Herbers, P.C, which practices extensively in aviation law.  Jim Cooling,
managing partner of the firm, is a member of the EAA Legal Advisory
Council. 

Liability Insurance for Homebuilders Buying & Selling a Homebuilt, Part 5
Sport Aviation-07/00 
By Arthur Wasserman

As pilots, we use a checklist to reduce the possibility of loss due to
overlooking something.  In the same vein, this series of articles on
selling a homebuilt is designed to create a checklist approach so
homebuilders can reduce their possibilities of financial loss. 
Awareness of what homebuilders' exposure is (and is not) can foreclose
many of the problems.  An earlier article in this series explained the
risks in terms of negligence, product liability, and warranty.  Others
have dealt with the contract for sale, as well as what releases and
disclaimers can and cannot do. 

Insurance is another avenue for builders' protection, and it can cover
two "parties." First-party coverage is insurance that is available to
protect owners against damage or loss of the property itself, such as
fire, theft, hull loss, or the like.  Third-party protection is
liability coverage that protects the insured against claims made against
them by others arising out of the ownership, maintenance, operation, or
use of the aircraft. 

Most pilots understand first-party protection and have little difficulty
obtaining it.  Because it is similar to the protection we can buy for
any of our personal assets, the insurance industry generally will write
coverage for homebuilts or homebuilt projects.  In effect, this coverage
is a contract by which owners pay a premium in exchange for the
insurance company reimbursing them if certain types of losses to the
insured property take place. 

Third-party coverage deals with a common homebuilder question-"What can
I do if someone sues me because of the aircraft I built?"

Theoretically, the risk to builders is enormous.  To enable us to build
our own aircraft, the FAA has created a special set of regulations. 
These regulations encourage ingenuity, enable self-certification
(compared to factory-made aircraft), and allow builders to work on the
aircraft they build (just like mechanics) and to determine their
homebuilts' airworthiness.  The downside of these privileges is that,
legally, homebuilders are manufacturers with all of the potential
liability of any other manufacturer for negligence, product liability,
and warranty exposure when the aircraft is sold. 

Before passage of the General Aviation Revitalization Act of 1994 (GARA)
a manufacturer's exposure to liability existed throughout the aircraft's
life.  After GARA, it's limited to 18 years.  Manufacturers of
production aircraft can and do insure to protect themselves for
liability for such losses.  Such coverage for an individual builder,
even if it were available, would not be economically practical. 

Some manufacturers do not carry liability coverage.  If a company is
large enough and can fund a liability defense, it is said to
"self-insure." In the case of an individual or small company, the same
concept of going without liability coverage is called "going bare."
There was a period, for example, after the Piper Aircraft Corporation
went into bankruptcy, that its successor elected to self-insure.  The
same situation exists for some of the kit manufacturers, as well as most
of the ultralight manufacturers.  The downside to this, especially in
the case of the individual builder, is obvious.  Overlooking, for the
moment, the potential for liability, the costs of defense in an action
brought could become enormous. 

In actuality, the risks to an individual aircraft homebuilder are
relatively small.  The average individual aircraft builder is simply not
an attractive target.  Claimants and their lawyers are not set up to
collect large amounts from individuals.  Despite this, the potential for
liability can be very large and the costs of defense, even if
successful, can become prohibitive.  Of course, as time goes by, the
sellers' liability exposure diminishes. 

Logically, GARA's 18-year liability limit (statute of repose) may
protect homebuilders just as well as it does manufacturers such as
Cessna, but there are no cases decided yet to confirm whether homebuilts
qualify.  Additionally, once the aircraft is finished and in the field,
it goes through a series of annual inspections that, over time, insulate
the original builder.  Still lurking, however, is the remaining exposure
that eventually led to the enactment of the GARA, namely, the individual
builder will always be in the books as the manufacturer, subject to
manufacturers' liability exposure. 

The key question is, "Can the risk, whether it's large or small, be
insured against?" Until recently, the answer was no.  In recent years,
however, EAA was able to prevail on Avemco Insurance Company to
partially alleviate the problem.  Avemco now issues a policy designed to
protect, to the extent reasonably possible, homebuilders generally and
EAA members in particular.  The Avemco policy carries with it a
so-called EAA insurance plan endorsement that provides coverages not
available anywhere else in the insurance market.  It even gives a series
of discounts for EAA members, including a 5 percent discount for
membership, as well as an additional 5 percent premium discount for
participation in the EAA Technical Counselor program. 

Of particular importance in the Avemco/EAA insurance plan endorsement is
that the policy extends liability coverage, with certain limitations,
even after the aircraft has been sold.  This exposure to liability long
after the manufacturing process was the stated reason for the production
manufacturers to threaten to cease manufacturing and the justification
to Congress for enactment of GARA. 

This latter type of coverage should be of vital interest to
homebuilders.  The key provision in the policy is that coverage extends
for one year after the builder sells the aircraft.  Moreover, if the
builder keeps the aircraft for three years with coverage in full force,
the extension is two years after the sale; if the builder keeps it for
at least five consecutive years, the extended coverage exists for a
total of three years. 

There is no perfect way for homebuilders to protect themselves against
liability, but the existence and availability of the EAA insurance plan
endorsement from Avemco goes a long way in protecting homebuilders. 

In today's litigious society, there is, perhaps, some justification for
the anxiety homebuilders express about theoretical financial loss
arising out of their efforts.  Experience, to date, does not support
these fears.  I checked carefully with other aviation attorneys and
insurers, and the number of lawsuits that have actually been litigated
against homebuilders is minuscule. 

Moreover, at the time of this writing there doesn't appear to be any
instance in which an actual case was filed, tried, reduced to judgment,
and collected against a homebuilder.  There is one pending arising out
of the John Denver crash, but that case is focused against the fuel
valve manufacturer and its retailer, who appears to have coverage,
although the builder is also being sued. 

This doesn't mean homebuilders should completely ignore their
theoretical liability.  However, if they follow what has been suggested
in earlier articles with the contract for sale and they get the
appropriate releases, waivers, and purchases the insurance provides,
they have gone a very long way to obviate the problem. 

Selling a Homebuilt - The Final Answer, Part 6
Sport Aviation-09/00 
By Harry Riggs

Over the past 10 months members of EAA's Legal Advisory Council have
addressed in these pages one of the most perplexing questions they
receive-"How can I sell my homebuilt and reduce or eliminate my exposure
in doing so?"

Over the years people have criticized lawyers for not giving specific
answers to specific questions.  They are not being evasive, rather the
specific answer you seek depends on other relevant facts that may or may
not be a part of the question.  Before addressing this point, let's
recap the basics of what "Legal Pilot" has presented about selling a
homebuilt. 

In November 1999's "Protect Yourself: The Legal Risks of Selling the
Aircraft You Built," Peter Axelrod discussed many of the issues between
buyers and sellers that not only lead to conflicts, but that sometimes
precipitate lawsuits. 

In December 1999's "Sales Agreement: Buying & Selling a Homebuilt,"
Michael F.  Van Hoomissen discussed the need for a sales agreement and
some of the basic provisions it should contain.  He also pointed out the
importance of spelling out the aircraft's specific condition in the
sales agreement and the importance of having a qualified airframe and
powerplant (A&P) mechanic perform a prepurchase inspection on the
homebuilt. 

Typically, the prospective buyer pays for the prepurchase inspection
because he or she will rely upon the mechanic's information and
representations.  This should be clearly spelled out in the agreement,
which should also include that in making the purchase the purchaser is
relying on his or her own inspection and the inspection of his or her
agent and not relying upon any representations of the seller. 

In February's "Waivers & Releases: Buying and Selling a Homebuilt," R. 
Patrick Phillips explained that waivers and releases are nothing more
than contractual agreements between the two parties who sign the
document.  It does not or cannot bind third persons who have no
knowledge of the agreement and are not parties to it. 

Disclaimers or waivers of liability are binding on the parties who sign
it, but they have no effect on a passenger in the airplane or someone on
the ground who may be injured or whose property may be damaged by an
aircraft accident.  For example, assume the wing on a homebuilt (or any
other airplane) fails in flight while being operated by the new
purchaser, and the passenger on this flight is injured.  The release or
waiver agreement between the buyer and seller doesn't include the
passenger, who may decide to sue to recover for his or her personal
injuries because he or she didn't sign it. 

Let's also assume that the new buyer had an opportunity to inspect the
aircraft and was satisfied with the details of the construction by the
seller and agreed to protect the seller and hold him or her harmless
from any lawsuits that may be brought against him or her for injuries by
third parties.  If the seller (original builder) is named in a
subsequent lawsuit, that agreement may be worthless if the buyer is
insolvent or unable to provide the seller's cost of defense.  Further,
liability insurance, which the buyer may have on his newly acquired
homebuilt, may not be sufficient to cover all the damages alleged by the
injured innocent passenger. 

In May, Jim Ramsey and Joanne Barbera, members of the Kansas City-based
law firm of Cooling & Herbers, wrote "Parting Out Liability: The Reality
of Liability Protection Options." (Jim Cooling, a senior partner in the
law firm, is a member of EAA's Legal Advisory Council.) The article
discussed the possibilities of minimizing the perspective purchaser's
liability by disassembling the homebuilt and canceling its FAA
registration and incorporation.  These options depend upon the state in
which the purchaser resides, where the aircraft is to be based, and,
more importantly, the substantive law of that particular state as it
deals with each of those subjects. 

Remember that corporations and limited liability corporations (LLCs) are
all creatures of statutory state law.  The structure and organization of
these "legal entities" specify how many officers and directors are
required, the need to keep minutes, and the need for a formal
organizational structure.  Typically there are numerous decisions from
the particular state where the corporate structure has failed to
insulate one of its shareholders or owners from liability where the
statutory requirements to maintain the corporation were not followed. 

Finally, in July, Arthur Wasserman wrote "Selling a Homebuilt: Liability
Insurance for Homebuilders." This is another article worth reviewing
because most insurance policies provide first-party protection.  An
insurance policy is nothing more than a contract between the insurance
company and the insured where, for a certain consideration (annual
premiums), the insurance company agrees to pay up to a certain amount of
money on behalf of the insured upon the happening of certain events. 

The policy defines the events that require payment, and those
definitions and circumstances are, in most cases, detailed and specific. 
The easiest coverage to understand is automobile insurance.  Passengers
in your car, pedestrians, and operators of other vehicles who are
injured because of the negligence of the driver are entitled to sue the
negligent driver and recover for those injuries and loss.  Up to the
limits of the insurance coverage, the insurance company is obligated to
pay for and on behalf of the named insured those sums which the named
insured may be liable to pay to injured third parties. 

As the article pointed out, the risk to homebuilders is enormous.  The
FAA created special regulations to encourage homebuilding, including
self-certification, and to allow builders not only to work on and repair
the aircraft they build, but also to determine whether or not they are
airworthy.  There's a considerable downside to these privileges because
as the manufacturer of a product (amateur homebuilt), the homebuilder is
potentially liable to those who may be injured or damaged by reason of
any negligence or carelessness employed in the construction of the
aircraft. 

In the past it was difficult, if not impossible, to obtain insurance
coverage to insure against these risks.  Recently, however, EAA was able
to prevail upon Avemco Insurance Company to provide liability insurance
for the homebuilder.  The Avemco plan not only extends liability
coverage with certain limitations during the period of the policy, but
there are also circumstances when this same liability coverage can be
extended to third parties even after the original builder sells the
homebuilt. 

One unique provision obtainable in the policy is that coverage will
extend to third persons for one year after the builder sells the
aircraft.  If the builder keeps the aircraft for three years with
coverage in full force for each of the three years, the extension is two
years after the sale.  If the homebuilder keeps the aircraft for at
least five consecutive years and provides insurance coverage for each of
those five years, coverage will continue to exist for a total of three
years after the aircraft is sold.  Such unique coverage by Avemco goes a
long way toward alleviating many of the concerns of the homebuilder. 

Historically, the law has not favored waivers and disclaimers.  At one
time or another, many states have concluded that such provisions were
against their public policy.  They further reasoned that a person could
not contract to exempt himself or herself from his or her own
carelessness and negligence.  Further, courts reasoned that a person who
signed such a waiver or disclaimer would not be fully aware of all of
the risks he or she was assuming, and the law reasoned that had he or
she been aware of such a known risk, he or she would not have
voluntarily entered into such a transaction. 

Today, this thinking and reasoning has changed in many of the states,
and they allow private parties to execute such exculpatory agreements. 
Recently I was involved in litigation in Tennessee in which two
individuals who were involved in sport parachute jumping were injured
when the aircraft in which they were riding crashed on takeoff because
of an engine failure.  The releases both individuals had signed were
quite broad and extensive and released not only the company conducting
the parachute jumps but also the company which made the rigging and
harnesses for the parachutes. 

Tennessee law favors freedom to contract against liability for
negligence.  An express release, waiver, or exculpatory clause by which
one party agrees to assume the risk of harm arising from another party's
negligent conduct will be enforced by the Tennessee courts.  While
relating to a different situation, one Tennessee decision held that it
does not matter that the person signing the release claims not to have
read the waiver prior to signing it.  The court held that in the absence
of fraud or duress, failure of a person to read or learn of the contents
of a written agreement does not relieve that person from the binding
obligations in the agreement. 

For anyone considering the sale of his or her homebuilt, a review of the
five preceding articles is strongly recommended.  It should be obvious
that no agreement can insulate the homebuilt or its operator from all of
the risks associated with the aircraft's operation.  It is also obvious
that a number of things can be done to minimize the risk.  Acquiring
adequate insurance is a must. 

Several years ago the EAA published a checklist for the sale of a
homebuilt or restored aircraft.  This checklist contained a number of
ideas and suggestions to take to an attorney knowledgeable in aviation
matters that may be asked to prepare sale documents.  Keep in mind that
such documents will only apply and be binding upon the parties to the
agreement. 

This series of "Legal Pilot" articles may not have answered all of your
questions or addressed all of your concerns.  This author is not aware
of any website you can go to and obtain boilerplate forms that can be
used to sell a used homebuilt or where language can be found regarding
releases and waivers for passengers riding in homebuilt aircraft.  Each
situation is different.  Consulting a lawyer in such matters will be
well worth the time and expense. 

Chairman of EAA's Legal Advisory Council, Harry Riggs is a partner in
the Cincinnati-based law firm of Dinsmore & Shohl.  He holds an Airline
Transport Pilot rating and is one of the pilots on the EAA's B-17 and
DC-3. 

Suggested Checklist For The Sale Of A Homebuilt Or Restored Aircraft

In order to obtain the maximum liability protection provided by your
state's laws, you should consider consulting an attorney when selling
your aircraft.  The attorney should be knowledgeable in aviation
matters, specific to a hold-harmless agreement for the sale of your
homebuilt or restored aircraft.  Although these types of hold-harmless
agreements are not favored by the law, both the seller and the purchaser
can benefit greatly from a well-written aircraft sale agreement. 

In addition to the specifics of the agreement, the seller and the
purchaser of the homebuilt or restored aircraft may wish to consider,
with legal counsel, the inclusion of the following into the sale
agreement.  Understandably, you may wish to use some or all of the
suggestions below based on your particular requirements.  This list is
not intended to be a complete guide, but represents suggestions for you
and your local attorney. 

* A warranty by the seller that the aircraft is free and clear of all
liens, claims and encumbrances, including any applicable federal and
state taxes. 

* An agreement by the seller and the purchaser that the aircraft is sold
on an "as is" basis with a disclaimer of any express, implied or other
warranties specific to airworthiness or mechanical condition. 

* A warranty by the seller that the aircraft will be delivered with an
appropriate FAA Bill of Sale; other required registration documents and
clear title, where appropriate. 

* An acknowledgment by the purchaser that he is buying a homebuilt or
restored aircraft. 

* An offer by the seller to make the aircraft available to the purchaser
at an agreed location prior to delivery of the aircraft to allow the
purchaser to have a pre-purchase inspection performed by the purchaser's
agent. 

* An acknowledgment by the purchaser that he/she has had the aircraft
and its records inspected by an FAA rated mechanic or FAA approved
repair station. 

* The sale of the homebuilt or restored aircraft should be based on the
completion of a pre-purchase inspection. 

* An agreement by the seller to transfer to the purchaser all logbooks
and other records pertaining to the operation and maintenance the
aircraft at the time of delivery. 

* An agreement as to which state's law will govern the interpretation of
the contract. 

* A statement that the purchase agreement shall not be modified except
by an instrument in writing agreed to by both the seller and the
purchaser. 

* An agreement by the purchaser that the seller disclaims the accuracy
of any maintenance records, other than those during the time of
ownership by the seller. 

* Appropriate witness signatures, signatures of the purchaser and the
seller, as well as notarization of signatures. 

* An agreement by the purchaser to defend and indemnify the seller for
losses occurring out of the subsequent operations of the homebuilt or
restored aircraft. 

* An affirmation by the purchaser and the seller that they are of legal
age, under no disability, and have related upon the advice of counsel
specific to the aircraft sale agreement. 

* The seller and the purchaser should ensure that the following
documents are mailed to the FAA on the day of the sale:

16.  The completed FAA Aircraft Registration Application (FAA Form
8050-1)

17.  The completed Bill of Sale (FAA Form 8050-2)

(The FAA will consider the owner of the aircraft to be the one who files
the Bill of Sale and Registration with its Oklahoma City office first. 

Aircraft have been sold twice in one day to different and unsuspecting
"purchasers".  Your aviation attorney will explain the importance of
forwarding these documents to the FAA immediately for liability and
other legal purposes.  The Homebuilt Decision: Would You Buy a Used
Airplane Built in a Garage?

Sport Aviation-7/99 By Bob Warner

Sometimes it becomes necessary to say goodbye to an old friend - not
human ones, of course, but rather inanimate ones. 

Our 1947 Stinson 108-3 had served us well for nine years, but its fabric
was growing weary and my wife, Noel Marshall, and I were feeling the
"need for speed" or, rather, we were hoping to expand our range. 

Decision time.  Keep the Stinson and restore it, or buy a different
airplane? Were we still content to continue our short joy rides around
Wisconsin, sharing many with our friends, or were we interested in
moving on to something different? Almost a year of discussions about
time, money and priorities contributed to a new series of questions
about whether our "flight mission" had changed over the years.  It
didn't take long for us to agree on our new mission: An economical,
quick, cross-country, comfortable aircraft with enough room in the
baggage compartment for weekend gear and our 13-pound dog, Reggie.  This
would meet the requirements for an aircraft that would get us from
Oshkosh to the Washington, D.C.  area (where our parents live) in a
reasonable amount of time.  Both Noel and I enjoy traveling, and the
number of "neat places to visit" would grow exponentially with some more
speed. 

We began listing all the possible aircraft makes and models and
eventually pared the list down to about 200 choices - the vast majority
being homebuilts. 

Time for another layer of discussion and decisions.  Homebuilts
generally are more economical to maintain and operate than type
certificated aircraft because of the privileges (and responsibilities)
of more allowed owner maintenance, and there's the opportunity to use
"non-approved" components and auto fuel. 

While intriguing, the option of building our own homebuilt was not a
rational one; we simply don't have the time.  If our final choice became
a homebuilt, our only option would be to buy a used one. 

Used Homebuilts Becoming Popular

The decision to buy a used homebuilt is becoming an increasingly popular
one.  With over 20,000 experimental amateur-built aircraft on the FAA
Registry, the range of opportunity to find a make and model that fits
the type of flying you do is greater than ever. 

But, while the magazine advertisements luring you to buy a kit plane
rather than a production aircraft look much the same - promising speed,
economy, and a chance to be more popular among your friends - there are
vast differences between production (type certificated) aircraft and
their homebuilt cousins. 

Like anyone considering purchasing a homebuilt should, we thought long
and hard about those differences.  The major difference is the actual
government certification standards.  The "store-bought plane" is a
government-approved design, built in a government-approved factory and
signed off by a government representative who attests that it is
identical to the original, highly tested production prototype. 

While a homebuilt may, in fact, exceed the design criteria of a
particular government category, it need not meet any standard.  And, of
course, in the United States the "manufacturing facility" of a
homebuilder, a garage or basement, is not required to meet any standard. 

Another major difference, which can be both an advantage or a
disadvantage, is the operating envelope of the aircraft.  Human beings
are very adaptable, and pilots are capable of "making up the difference"
in how an aircraft behaves in flight; however, it is important to know
that the flight characteristics between a homebuilt and production
aircraft can be vastly different. 

Using the Resources of EAA

You would think a guy who is the Executive Vice President of EAA would
know all about homebuilts and jump right into building or buying one. 
But my conservative and analytical personality traits caused us to move
slowly.  After all, my "job" at EAA is one of association management and
my personal aviation experience has been more with production aircraft -
having owned six production airplanes since 1977

As an EAA staffer, I had access to every single resource available to my
fellow members, which was a constant benefit.  A check with the staff in
EAA Aviation Information Services helped answer my questions about
safety issues and the basics of FAA registration.  They also provided us
with a list of builders of the models we were seriously considering.  A
search of the EAA website "Members Only Area" provided us with a list of
model-specific articles that have appeared in EAA publications.  It was
time for a lot of reading and networking with owners of the homebuilt
models we were considering.  We had many conversations with other
EAAers. 

Another great resource for EAAers is the opportunity to go "knowledge
shopping" at the thousands of EAA fly-in events throughout the world. 
While I was a bit busy with official duties at EAA AirVenture Oshkosh,
the EAA Golden West Regional Fly-In, and the Southwest Big Country
Fly-In at Abilene, I always found a few minutes to pick the brain of
more experienced homebuilt owners. 

With nearly 1,000 EAA Chapters in existence around the world, meaning
lots of fly-in breakfasts and other such events, the great majority of
EAA members have the opportunity for this kind of networking "locally."
If you are thinking of buying a used homebuilt (or building one) and are
not a Chapter member, it's well worth your time to consider how to take
advantage of that vast experience in your local area.  My fellow EAA
staffers, in many ways, served as my EAA Chapter. 

As we continued narrowing our list of potential aircraft, our options
were weighing heavily towards homebuilts.  More in-depth research was
important.  We began contacting the aircraft type clubs for our
"favorite" models, and checked out their newsletters and websites to
learn specific information about those particular aircraft.  Another
major consideration was insurance.  A call to Avemco, EAA's approved
insurance company, provided us with information on the safety records of
those makes and models. 

The bottom line in making the decision to buy a homebuilt, be it new or
used, is gaining the confidence to know which make and model is right
for the type of flying you do and the type of pilot and aircraft owner
you are. 

Which RV-6A?

Eventually, we settled on the RV-6A as our model of choice.  Why the
RV-6A? Simply, it met all our criteria, including the potential for Noel
to renew her flying with a nose wheel airplane after a 13-year lapse. 
Like everything in life, there is rarely a perfect match; we did have to
give up having two extra seats for our friends, but in all other ways,
the RV-6A fit the bill. 

Now, which of the dozens of -6As listed in Trade-A-Plane to buy? Even
with a simple plane like this, buying "used" is like buying a used car. 
There were many factors to consider: The condition of the plane; what
types of radios; electric vs.  manual trim and flaps; do we like the
paint job? These choices were all compromises in the decision to buy
used rather than building it yourself. 

Putting the cosmetic and operational issues aside, one of the most
important elements for us -as it should be for anyone contemplating
purchasing a used plane - was our confidence in the construction of the
aircraft.  I must admit there is a certain level of trust inherent in
knowing the employees of Clyde Cessna or Eddie Stinson had to conform to
an FAA-approved type certificate with every single airplane that came
off the production line.  With a homebuilt, at some time you're likely
to face this question at a neighborhood barbecue - "You bought an
airplane from someone you don't know who built it in their garage?"

Here's where being an EAA member has another major benefit.  It was time
to tap into the resources of the EAA Technical Counselor Program.  EAA
Technical Counselors are experienced builders or mechanics who volunteer
their time to mentor builders and restorers, providing the benefit of
their knowledge.  Most Technical Counselors are affiliated with
Chapters, although there are also many "at large" Technical Counselors. 

While it may be common to think of Technical Counselors as folks who
only help builders, we found a new, important value for these
experienced volunteers.  We were fortunate to be able to talk many times
with the Technical Counselor who oversaw the construction of the
specific plane that we eventually purchased.  In fact, it was a major
selling point for us when that builder, who had completed the aircraft
in August of 1997 and flown it for more than 70 hours, gave us the name
of his Technical Counselor to discuss the specifics of the airplane. 
Not everyone contemplating a purchase will have the convenience of the
Technical Counselor for their aircraft available, however, conversing
with any Technical Counselor can help a potential purchaser determine
what to look for and what questions to ask about any of the airplanes
being considered. 

In our case, conversations with RV-6A designer Dick VanGrunsven
reinforced the value of having a Technical Counselor oversee the
construction effort, particularly for a first-time builder, which was
the case with our airplane.  In fact, we may have talked more to the
Technical Counselor than to the builder himself!

The RV-6A we were considering was based at the Caldwell, Idaho airport,
some 1,300 miles from our home in Oshkosh.  Having the Technical
Counselor available as an on-site advisor was a great help; however,
when buying any aircraft 1,300 miles from home, the prudent purchaser
should always have a disinterested third party do a "pre-purchase
inspection." While many mechanics and repair stations are not
comfortable inspecting a homebuilt, it is important to find one who will
review the construction and past maintenance practices for the aircraft. 
Sometimes they can also evaluate the construction process by reviewing
the construction notebook.  In our case, the mechanic placed high value
on the involvement of other experienced builders who helped our
first-time builder with his plane.  His advice was also helpful, for
example, in ensuring an appropriate break-in routine for the recently
overhauled engine. 

Am I Ready To Fly This Thing?

After flying for 31 years and with nearly 3,000 hours in a variety of
planes, my attitude could have been, "Of course I can fly this plane."
I've owned Cessnas and taildraggers for 20-plus years.  This could be
the attitude of many pilots, but it's a foolish attitude.  A study of
the track record of pilots with low levels of experience in any make and
model of aircraft suggests you have increased odds of being first at the
scene of an accident or incident without appropriate transitional
training. 

Prudence dictates that anyone moving from one type of flying machine to
another should gain experience via the oversight of other competent
individuals.  Whether moving from a type-certificated airplane to an
ultralight, from a nosewheel plane to a tailwheel plane, or a
conservatively behaving type-certificated plane to a higher performance
homebuilt, it is important to match the pilot's experience and
proficiency with the aircraft. 

A wealth of such experience resides in EAA and its affiliate, the
National Association of Flight Instructors (NAFI).  Nothing beats having
time in the exact make and model of plane you're contemplating
purchasing.  For me, there was the opportunity to fly another RV-6A
locally.  I selected a flight instructor with time in type and flew with
him for check-outs that exceeded insurance requirements and our combined
personally set expectations. 

For the homebuilder, this is where EAA's Flight Advisor Program
increases your odds for a safe transition into flying a homebuilt.  The
Flight Advisor Program, like the Technical Counselor Program, is
composed of hundreds of flight-experienced volunteers who assist EAAers
preparing for their first flight in a homebuilt, recently restored
vintage plane, or ultralight.  These individuals may or may not be
flight instructors, but they do have experience in conducting first
flights.  In utilizing the structure of the Flight Advisor program, they
help a pilot evaluate his or her competencies versus the flight
characteristics of a particular aircraft. 

As with Technical Counselors, many EAAers may think of this program's
value as only being relevant to someone who recently restored a vintage
aircraft or completed a homebuilt.  Not so! Flight Advisors can also be
very helpful to a purchaser of a previously owned homebuilt or
ultralight.  In addition to helping a pilot evaluate his level of
experience and competency in a particular type of aircraft, the Flight
Advisor has the resources of EAA's list of flight instructors and
experienced pilots who have time in that specific make and model. 

Unlike the popular RV-6A, many homebuilt designs, because of their low
numbers, do not offer the availability of other airplanes to build time
in before flying your own.  However, Flight Advisors have a list of
comparable type-certificated aircraft that have many of the same flight
characteristics as certain homebuilts, and they can advise you on the
types of experience you should gain to ensure you're making the right
decision for you. 

Of course, the final step in pilot preparation is dual in the purchased
plane.  Our seller recommended a local CFI with whom he had flown, which
provided me with a plane-specific checkout and, in our case, a refresher
in mountain flying for the trip home. 

In purchasing a popular model and having the opportunity to fly that
very same model of aircraft, I had the best of all worlds in preparing
for the purchase of the RV-6A.  My advice to anyone considering the
purchase of a homebuilt, whether a low-time pilot or a NASA astronaut,
would be to utilize the resources of EAA and the Flight Advisor program
specifically.  Accident statistics reinforce my opinion. 

The Happy Ending/Reflections

The end of our decision making is just the beginning of our flying fun,
which Noel has recorded in the accompanying article.  The lessons
learned from our purchase of Rob Greener's beautifully constructed RV-6A
showed the tremendous resources that are available within EAA to provide
the information, confidence and level of competence necessary to make a
wise decision whether building a homebuilt or buying a used one. 

Lower accident/incident rates are proof that the EAA Technical Counselor
and Flight Advisor programs have contributed to improving the safety
record in homebuilt aviation.  One of the lesser known values of these
programs is that which is provided to the potential purchasers of used
homebuilts.  Perhaps if everyone buying homebuilts asked about the
builder's participation in these programs, more builders would avail
themselves of these important safety opportunities.  That way, everyone
would win in the deal - the original builder, the eventual purchaser,
and the homebuilt community's reputation with the public and government. 

Decision made.  Purchase accomplished.  Let's go flying!

When You Buy or Sell a Homebuilt Sport Aviation -11/84 By Tony Bingelis

HOW DO YOU transfer the ownership of homebuilt aircraft? A partially
completed project? Does the FAA need to be notified? If so, how? What
else should be done and who does it?

The mechanics of, or rather the procedure for, selling or buying a
homebuilt is relatively simple but it does involve specific forms,
actions and understandings important to both the seller and buyer alike. 

Needless to say, it is the buyer who assumes the greatest responsibility
in assuring that the transaction is properly completed and documented. 

First the Obvious

It is so obvious that you would think it unnecessary to ask .  .  .  but
I will.  Does the seller of the aircraft (or a partially completed
homebuilt project) have the right to sell it? In other words, is that
individual the legal owner? The sole owner? If the right to sell is
encumbered by a co-owner or others, they must also be included in the
transaction.  Sometimes a flyable homebuilt, or a partially completed
project, is put up for sale to settle an estate.  Be sure that whoever
is handling it has the legal right to effect the transfer in ownership. 

Unlike autos, there is no title per se issued for an aircraft.  The
closest equivalent is a Bill of Sale and Aircraft Registration. 

Most homebuilders handle the sale of a project, engine, propellers,
radios and the like pretty casually.  Sometimes there is not even a
receipt or Bill of Sale exchanged.  And more often than not, even when a
receipt is scribbled out, neither party would ever think of listing the
serial number(s) or describing the property. 

And then, there is stolen property.  Of course, a buyer must beware! But
he should not become so paranoid about the transaction that he feels
compelled to demand unnecessary or unreasonable documentation, notarized
receipts, statements and the like, to the degree that the seller is
overwhelmed.  He could, in frustration, throw up his hands and walk
away. 

There is no reason why the sale of a partially completed project cannot
be accomplished with a dated and signed Aircraft Log Book entry.  If no
Aircraft Log Book had been started, a written receipt briefly describing
the acquisition, dated and signed in ink, should suffice. 

The FAA And "Approved" Kits

There is more you should know about purchasing a partially completed
aircraft project.  You should be aware of certain requirements that the
FAA has for "Kit-built" aircraft.  For one thing, in order to help
establish ownership of a homebuilt, the FAA will ask that you produce
the receipts for all kits that were purchased during the building of
that aircraft.  Secondly, you should determine, beforehand, when you buy
somebody's project, that the FAA will allow it to be certificated as an
Amateur-Built aircraft.  Some kits are so complete that the FAA may not
accept a builder's word that he had constructed 51% or more of the
airplane.  The burden of proof is on the builder.  For this reason it,
is important to maintain a good record of the construction.  Work
photos, diary entries and inspections by an EAA Technical Counselor can
do much to validate a claim for the construction work accomplished. 

To be on the safe side of FAA's 51% requirement, you should assure
yourself that the kit-built airplane or project you buy is on the "FAA
approved list".  Now understand this .  .  .  the FAA does not approve
any kit design in the sense that it is a good safe airplane or that it
is strong as a fighter plane and capable of soaring like an eagle.  Not
at all.  FAA approval for a homebuilt kit design is merely an
acknowledgement that, in their estimation, anyone who buys and
constructs an aircraft from that kit will actually have to build 51% or
more of the airplane.  And that it would, therefore, be eligible for
certification in the Amateur-Built Category. 

Why such a fuss over this detail? Well, what if you did buy an airplane
project that was almost complete.  One that was being constructed from a
very complete kit where all the parts were pre-formed or already made
when purchased .  .  .  and the FAA refused to certificate it? What
then?

Without FAA certification you could not legally fly that airplane.  Oh
sure, you might be permitted to license it in one of the other
Experimental Categories such as Research and Development, Exhibition,
Market Survey, Crew Training or Racing.  But these categories are very
restrictive.  You would never have free use of the aircraft without
having to make repeated reapplications for most every flying event or
experiment.  Think about it. 

Aircraft Bill of Sale

An Aircraft Bill of Sale is a very important piece of paper,
particularly if you are the buyer, as you will not be able to register
your newly purchased homebuilt unless you can submit proof of ownership
that meets the requirements of FAR Part 47. 

If the aircraft was not purchased from the last registered owner, you
will have to prove that you are the current legal owner.  To do this you
must produce conveyances completing the chain of ownership from the last
registered owner, through all the intervening owners, to yourself, the
present applicant. 

The FAA has a standard Aircraft Bill of Sale Form (AC Form 8050-2) for
anyone who wants to use it.  Its use is not mandatory.  Still, it is
much more convenient and easier to use this Bill of Sale form than to
make your own.  For one thing, it contains all the elements of
information that the FAA wants and it does meet the requirements of FAR
Part 47.  For another, the form is free and readily available from
either the FAA or most any airport where aircraft are bought and sold. 
This AC Form 8050-2 may be used to record the sale of any certificated
aircraft, including aircraft in the Amateur-Built category. 

One more note.  As the buyer, you are the one who must assume the
responsibility for sending the original copy (signed in ink) to the FAA
Aircraft Registry!

Aircraft Registration

When you purchase, a homebuilt aircraft it becomes your responsibility
to get it registered as soon as practicable. 

Naturally, there is a form (AC Form 8050-1) you must use to effect the
change in aircraft registration.  It is prepared in triplicate.  The
WHITE original and the GREEN copy of the form is mailed to the Aircraft
Registry along with a $5 recording fee and proof of ownership (Aircraft
Bill of Sale).  For your convenience, the address is: FAA Aircraft
Registry, Mike Monroney Aeronautical Center, P.  O.  Box 25504, Oklahoma
City, OK 73125. 

Carry the PINK copy of the Aircraft Registration Application in the
aircraft as it grants you temporary authority to operate the aircraft
pending receipt of the verified original registration. 

Special Airworthiness Certificate

In addition to sending off the Bill of Sale and Aircraft Registration
Application you have a few more details to attend to. 

The aircraft must have a current airworthiness certificate on board. 
This is a pink colored form, FAA Form 8130-7, SPECIAL AIRWORTHINESS
CERTIFICATE, that is issued with the original certification of the
aircraft.  It should be displayed someplace in the aircraft.  Check that
the N-Number is correct and check to see whether there is an EXPIRATION
DATE or the entry, "INDEFINITE". 

The presence of an Expiry date entry would indicate that the original
builder of the homebuilt has not yet flown off the mandatory flight
hours in an assigned test area. 

An "INDEFINITE" entry, on the other hand, indicates that the original
flight test area restrictions have been removed.  If this is the case,
this aircraft may be flown, at will, to just about anywhere, anytime . 
.  .  as long as the flights are conducted in accordance with the
aircraft's operating limitations document. 

Experimental Operating Limitations

The Experimental Operating Limitations certificate is a companion
document to the Special Airworthiness Certificate. 

You should understand that a homebuilt must be operated in accordance
with the operating limitations issued for it by the local FAA District
Office.  Each of the FAA Regions in the country probably has a different
format for the document used for this purpose.  That is because each FAA
Region issues its own Experimental Operating Limitations document based
upon their own interpretation of the criteria for its issuance.  This
criteria is outlined in their handbook, "FAA Airworthiness Certification
of Aircraft and Related Approval."

If the aircraft's Experimental Operating Limitations had an "INDEFINITE"
expiration date (same with the Special Airworthiness Certificate) no
further action with the FAA is required. 

If, however, both the Experimental Operating Limitations and the Special
Airworthiness Certificate contain expiration dates, on the date of your
purchase that aircraft must be considered to be "grounded".  (On the
sale of a homebuilt, the operating limitations document and the Special
Airworthiness Certificate, as issued for an aircraft still undergoing
its mandatory 25 to 40 hours in a restricted flight test area, is
automatically cancelled (at least in this FAA Region).  This means that
you (the new owner) would then have to go to the nearest FAA MIDO
(District Office) and obtain a new Experimental Operating Limitations
document and a new Special Airworthiness Certificate.  This process may
entail another inspection of the aircraft by the FAA.  At any rate, you
better check with your local FAA inspector regarding the status of these
two important documents. 

Even if the aircraft you purchase does have an "INDEFINITE" expiration
date on both certificates, the airplane may continue to be flown in
accordance with the operating limitations issued it, ONLY if it has had,
in the preceding 12 months (as indicated by an appropriate entry in the
Aircraft Log Book), a condition inspection (Annual Inspection) performed
by:

1.The original builder (provided he has been issued a Repairman,
Aircraft Builder Certificate for the particular homebuilt), or

2.  A certified mechanic with appropriate ratings, or

3.  A repair station with appropriate ratings. 

In other words, a homebuilt, like a commercially produced airplane, must
also have current "Annual Inspections". 

Aircraft Log Book

As you probably know, the Aircraft Log Book is a very important document
and you should check it carefully.  And, as already mentioned, a current
inspection status should be reflected by an appropriate entry. 

The Aircraft Log Book is also a historical record of the aircraft's
origin and use.  In it should be recorded all malfunctions, repairs,
modifications, inspections and hours flown.  (Amateur-Built aircraft are
not required to have an Engine Log Book or Propeller Log Book, so don't
bother looking for either.) Because of the importance of the Aircraft
Log Book during the construction and certification process, every
builder of a homebuilt should conscientiously make accurate and detailed
entries. 

As for selling the aircraft, a Log Book entry by the seller, dated and
signed, would be appropriate for record purposes. 

Weight and Balance Data

The weight and balance data is another required document and should be
available with the aircraft.  Check with the seller to verify that the
figures are still valid.  Builders are prone to add and remove equipment
without making any further entries to the original weighing figures and
computations.  This weight and balance report or data can be in any
form.  Figure 6 illustrates a portion of a typical weight and balance
record. 

You don't have to do anything with this data .  .  .  just know where it
is and become familiar with the center of gravity location and loading
limits. 

Summary Check List

The documents and necessary actions involved in the sale or purchase of
a homebuilt can be tabulated as follows:

1.  Aircraft Bill of Sale (AC Form 8050-2): Copy to FAA signed in ink. 

2.  Aircraft Registration Application (AC Form 8050-1): Keep pink copy
with airplane as temporary authority. 

3.  Special Airworthiness Certificate: Check N-Number an expiration
date.  If "INDEFINITE", no further action required, otherwise see text. 

4.  Experimental Operating Limitations: Check N-Number and expiration
date.  If "INDEFINITE", no further action required, otherwise see text. 

5.  Aircraft Log Book: Check for current "Annual Inspection".  Stays
with aircraft. 

6.  Weight and Balance Data: Check for presence in aircraft and
currency. 

NOTE: If you wish to get a new N-Number or transfer one from an airplane
you now have, things can get complicated.  All items referenced above
will require the change and additional coordination with FAA.  The data
plate affixed to aircraft would also be affected.  Keep the aircraft's
original number and the transfer of ownership will be much easier.  The
two "big things" are the Bill of Sale and the Registration Application. 
The other papers or documents may not require further action except as
pointed out in the text. 

If you are the seller .  .  .  spend your money wisely (another project,
perhaps?). 

If you are the buyer, take good care of your investment and enjoy it.