Greg Reigel's Aero Legal Services

A 2007 Recap: Airplanes Make People Act "Crazy"

By Gregory J. Reigel

© January, 2008 All rights reserved.

As I reflect back on 2007, a variety of my experiences with clients re-affirm my long-held belief that airplanes can make people act "crazy". Why do I believe that? Well, over the years I have had multiple clients who are intelligent individuals, but when they became involved with airplanes they did things that, to me, were just plain crazy. That doesn't mean they are bad people. On the contrary, they are often some of the most honest and good-natured people you will find. Unfortunately, in the face of the aviation disease with which we pilots are all infected, these individuals' common sense sometimes takes flight.

Several examples of this "craziness" come to mind:

1. Individuals buying or selling aircraft on a handshake without a written purchase agreement. Now, don't get me wrong, I will be the first to admit that, in a perfect world, this is the way a deal should be done. Unfortunately, we don't live in a perfect world and successful handshake deals are few and far between. A similar, and equally distressing situation for me, is when a client presents me with a purchase agreement he or she has already signed and asks me what the language means, or the client informs me that the other party now wants to get out of the deal and the client wants to know if he or she can stop them, what happens to the earnest money etc.

In the latter situation, the purchase agreement was typically not reviewed by an attorney or someone else with the needed knowledge to protect the client's interest. In both situations, the client lost the opportunity to negotiate and not only protect his or her interests, but also to make sure that the deal is structured the way he or she wants it structured. When you are spending the amount of money necessary for an aircraft purchase (e.g. thousands and, oftentimes, hundreds of thousands of dollars), it seems crazy to me not to have a negotiated and written agreement dictating exactly how the transaction will proceed and what will happen if the deal doesn't close.

2. I see clients making similarly crazy decisions when they lease aircraft without a detailed lease agreement. In the absence of a written aircraft lease agreement an aircraft lessee may be exposing him or herself to liability for more than just an hourly lease fee. For example, what happens if the aircraft is damaged while in the lessee's possession? For what is the lessee responsible? Does the lessor have insurance to cover the loss and is the lessee also insured? Who is responsible for the cost of maintenance and/or repairs when the aircraft is in the lessee's possession? A written aircraft lease agreement should provide answers to these questions so both the aircraft lessor and aircraft lessee each know where they stand.

3. Another less than prudent client decision, in my opinion, occurs when a client buys an aircraft without having a title search performed to identify any liens or encumbrances against the aircraft. The client later learns that the aircraft was, and still is, encumbered by a lien, mortgage or some other similar security interest. The client then comes to me wondering whether he or she has any recourse against the seller. Unfortunately, at that point in time the client's remedies may be limited.

If the client had obtained a title search before the closing, the client would have been aware of the lien(s) and could have required the seller to satisfy the lien(s) or the client could have either satisfied the lien(s) directly from the purchase proceeds or simply terminated the transaction. Often in this situation the client did not sign a purchase agreement or the purchase agreement is very short and less than thorough. As a result, the purchase agreement may not provide much assistance. In any event, the seller has typically spent the purchase price paid at closing and may or may not have the resources to satisfy the lien(s), not to mention any payment to the client for damages he or she may incur as a result of the lien(s).

4. Another potentially serious error would be talking to an FAA inspector or "calling the tower" prior to consultation with an aviation attorney. You have probably heard the story: A pilot is on a flight and some type of incident occurs (e.g. runway incursion, altitude/clearance violation etc.) and ATC instructs you to contact the ATC when you land. Or, at some point in time after the flight in question, an FAA inspector contacts you to discuss the flight. Although you are not required to talk to the inspector or call ATC, many times pilots feel obligated to call and think they can explain the situation or otherwise "make it go away." Unfortunately, this is far from the truth. Typically, during his or her communication with the inspector or ATC the pilot not only confirms that he or she was operating the aircraft, but the pilot also may make other admissions that the FAA will later use against the pilot.

A similar situation occurs when a pilot receives a letter of investigation ("LOI") from the FAA. According to the LOI, the pilot has 10 days to respond. However, rather than consulting with an aviation attorney before sending a response, the pilot sends in a response to FAA again trying to explain the situation or otherwise "make it go away." Here again, the pilot oftentimes makes admissions that the FAA will later use against the pilot.

Both of these situations represent lost opportunities to mitigate damage, minimize investigation, avoid providing admissions or other evidence that will later be used against the client by the FAA or, at a minimum, to have an aviation attorney run interference between you and the FAA. Although FAA enforcement actions are not criminal proceedings, they have the potential to significantly limit, if not revoke, an airman's privilege to operate an aircraft. Representing yourself in such actions without aviation legal expertise is, to me, acting crazy.

These are just a few examples of the things some people unwisely do, or fail to do, when they become involved with aircraft. No doubt the "type A" personality of some pilots has something to do with this phenomenon, as may the excitement and love of aircraft and aviation felt by those of us enamored with aviation. Regardless of the cause, I encourage everyone involved with aircraft to temper their emotions and to handle these types of situations in a businesslike and professional manner. Trust is great, so long as both parties are trustworthy and reasonable. If you are a pilot or aircraft owner, you have a lot at stake. Make sure your interests are protected. If you are unsure of exactly what your interests are and how they need to be protected, get help. With some guidance and a little common sense, you too can avoid making "crazy" decisions involving aircraft.

Here's wishing all of you safe and enjoyable flights through the new year!