Builder exposure and liability after resale?

[ColdFusion]

So I want a tundra Kitfox V - VII for adventure in Utah. I am reaching out to see what liability exposure may exist down the road if the aircraft I build is ever resold and is ever involved in a crashed by a future owner.

Because of this unknown forever liability threat I am leaning toward buying a built/flying Kitfox or SLSA instead of a kit.

Regardless of any legal document agreed to between the builder and future buyer releasing builder of any liability for any reason, I think it is easy and possible for the builder to remain exposed and pulled into an expensive court defending self.

I do not know the legal protection of experimental status aircraft and if there is any protection for the builder. I understand placing the aircraft into an LLC, and this may soften interest in low seller asset conditions, but may also promote great interest in pushing deeper to gain access with high asset builders.

Thoughts???

[jrevens]

This is a very common question... you can find answers all over the internet. There has supposedly never been a successful lawsuit against the builder of an experimental aircraft that was sold to someone else. That doesn't mean that there haven't been lawsuits that require builders to defend themselves... I don't know what the statistics are on that. There are far too many people who have no problem taking whatever they can get from others, disregarding personal responsibility and due diligence, and mostly driven by lawyers in this country. If you build a good airplane your exposure may be diminished somewhat. If you build something that is structurally unsound it goes without saying that you're asking for trouble if you sell it to someone. The EAA has a bill of sale form that is properly worded to minimize exposure also. If you do things properly you will probably never have a problem, statistically. There are many other things that are commonly done by people in this country that expose them to much greater risk than selling a homebuilt, especially if you are well-off and have a target on your back. It's pretty sickening to me.

[mr bill]

Sad, but true.

[Dave S]

T,

I think if this is something you are genuinely concerned about - your best advice will come from a competent aviation attorney.

Or you could consider the reduced return of parting it out (rather that selling it as a operational aircraft) when you are done with it as part of the cost of the project.

[Pmcc]

The shame is that the real attorneys hate these personal injury sharks. Needed? A little. Abused? A lot.
I have friends who practice and love the law. They understand its importance in civil society for the conduct of business both personal and professional, in determining ownership and in criminal justice, for the protection of the rest of us.

[PaulSS]

I think there should be a law suit raised against beginning any sentence with 'so' and using the phrase 'reaching out'.

Sorry, just pet hates of mine :D

Back to proper, adult discussion.

[David47]

.....There are far too many people who have no problem taking whatever they can get from others, disregarding personal responsibility and due diligence, and mostly driven by lawyers in this country. If you build a good airplane your exposure may be diminished somewhat. If you build something that is structurally unsound it goes without saying that you're asking for trouble if you sell it to someone. The EAA has a bill of sale form that is properly worded to minimize exposure also. If you do things properly you will probably never have a problem, statistically. There are many other things that are commonly done by people in this country that expose them to much greater risk than selling a homebuilt, especially if you are well-off and have a target on your back. It's pretty sickening to me.

Well said John .... personal responsibility and accountability are something in short supply by some people these days. And Lawyers make their $M's off that very thing. I would think that if you build it well, document what you built, detailed any changes you made (these should be discussed with someone knowledgeable in the areas you've changed) and you've maintained it in accordance with a good maintenance schedule, you've done what any reasonable person building a homebuilt would be expected to do. It should also be remembered that aircraft issued with an Experimental Certificate do not comply with a "normal" certification standard and therefore attract a greater level of risk in the eyes of the Regulator. As long as you've spelled that out to any prospective buyer, (your aircraft placarding states that anyway), this together with everything else above means you've exercised a reasonable level of duty of care. That may not be a full defence in court if it ever got to that point, but it sure helps ....

[n85ae]

Haha, yes - So true!


I think there should be a law suit raised against beginning any sentence with 'so' and using the phrase 'reaching out'.

Sorry, just pet hates of mine :D

Back to proper, adult discussion.

[TY2068]

Thought this was a good article on the subject.

https://www.eaa.org/en/eaa/aviation-communities-and-interests/homebuilt-aircraft-and-homebuilt-aircraft-kits/next-steps-after-plane-is-built/selling-and-buying-articles/part-3-waiver-and-releases-buying-and-selling-a-homebuilt

[Flienlow]

Should one build their aircraft under a corporate veil?

Meaning create "John Smith Aircraft Corp." It would seem that if you sold the Plane under that veil and something happened, the end user would have to sue a corporation. If the Corporation had no assets, it would be meaningless to sue and the corp could just file bankruptcy and simply go out of business.

I am no authority on this strategy, but have been victimized by it in the real estate world. I am not sure if would work in this instance either.

[PapuaPilot]

After reading the articles on the EAA website I think the best answer would be to talk to an aviation attorney. What is the purpose of the opinions from those who aren't experts on the subject.

[Av8r3400]

Should one build their aircraft under a corporate veil?

Meaning create "John Smith Aircraft Corp." It would seem that if you sold the Plane under that veil and something happened, the end user would have to sue a corporation. If the Corporation had no assets, it would be meaningless to sue and the corp could just file bankruptcy and simply go out of business.

I am no authority on this strategy, but have been victimized by it in the real estate world. I am not sure if would work in this instance either.

Im not an attorney, but I'd bet the FAA will have an issue allowing the John Smith Aircraft Corporation build an experimental aircraft. The Corp (LLC) could own the completed plane for liability reasons, but I doubt it can be the builder of record.

[TY2068]

It doesn't bother me if guys want to throw in an opinion on this subject. This is a Yak forum for just about anything Kitfox related right ? Someone may have an interesting hear-say story or direct personal experience with this issue.

Case in point. Years back I knew an owner/builder who had a buyer kill himself 10 minutes after signing the paperwork. There was no liability release signed at the time of purchase. The plane (not a Kitfox) had not been flown in 10 years and the low time buyer had zero time in type. Recipe for disaster and that's what happened. PIO's and guy augered it straight in. No suit was filed.

Personally I think one way to lessen exposure when selling is to insist that a plane be hauled away rather than flown away. Not always practical in many cases but may be a good idea if the plane is located on your personal private strip. This may be something to consider if a potential buyer is inexperienced and shows signs of over confidence. In a certain way I fault the owner/builder for not using better judgement about the sale of his plane. He should have never agreed to or provided the circumstances for this to occur on his watch. He knew better than that crap but clearly was more interested in the $$$$.

I have a friend who recently sold his Part 103 Ultralight. He had a release signed and took the plane apart. It was sold as a non working parts plane in the paperwork description. He would not sell it as a pristine functioning plane which in reality is what it was. Doing this could be an option for selling a Kitfox too.

[Flienlow]

Im not an attorney, but I'd bet the FAA will have an issue allowing the John Smith Aircraft Corporation build an experimental aircraft. The Corp (LLC) could own the completed plane for liability reasons, but I doubt it can be the builder of record.

Yeah.Probably not. I bet John @KF may have some insights as to this. It might also be a simple as a few lines on a purchase and sales agreement along with a strongly worded hold harmless clause.

[efwd]

Oh Darn, I thought in 2018 maybe I would hear less of the "blame the other guy" phenomenon.

[ppilotmike]

EAA has a webinar scheduled for tomorrow evening covering this subject. Mike

[dholly]

Late to the party, and sorry to miss the webinar. Any critical take always?

Personally, I'd rather try to head trouble off before the pass. I provide and require a liability release when selling each of my unstarted or partially completed kits, finished but not flying and of course registered, flying EAB aircraft. I took the EAA recommended wording to my corporate counsel who in turn consulted with an aviation liability attorney friend of his.

The result was a state specific purchase/sale agreement about 3x more wordy with a LOT of duplicity, confirmative response input (i.e. 'Buyer must initial here' on important para.) to proactively squash subsequent claims of ignorance or confusion, a multiple Witness requirement, yada, yada. Came with a cost but I'm convinced it would effectively stop 99% of potential legal fishing expeditions. Much cheaper than defending against low-life ambulance chasers hoping to scare up a quick settlement. Cheap tort reform, if you will.

Also, a long while ago I posted some info and thoughts on LLC ownership HERE (http://www.teamkitfox.com/Forums/showthread.php?t=1631).

[jiott]

The EAA webinars are archived, so its easy to just go to the archive and watch a previous webinar.