Builder exposure and liability after resale?

[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.

[jiott]

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