When a multi-million-dollar business jet changes hands, the financial and legal risks are substantial. This is where an escrow company becomes a crucial and indispensable partner. Acting as a neutral third party, the escrow agent holds funds, documents, and other critical assets until all conditions of the purchase agreement are met, ensuring a secure and transparent transaction for both buyer and seller.
A Shield for the Buyer and Seller
The primary function of an escrow company is to mitigate risk for all parties involved. A buyer wiring a large sum of money directly to a seller has no guarantee the seller will deliver the aircraft and a clear title. Conversely, a seller who has provided the bill of sale has no guarantee the buyer will follow through with payment. The escrow company eliminates this risk by:
- Securing funds: The buyer wires the purchase funds into a secure, insured escrow account, where the money remains until the sale closes.
- Managing documents: The seller places all necessary documentation, including the signed bill of sale, into the escrow.
- Enforcing the agreement: The escrow agent follows the terms of the purchase agreement. Funds are not released to the seller and documents are not filed with the FAA until all contractual obligations have been fulfilled by both parties.
Beyond Holding Funds: The Broader Role of an Escrow Agent
The services of a specialized aircraft escrow company extend far beyond simply holding assets. Their expertise helps navigate the complex and specific requirements of aircraft sales.
- Title and lien searches: A critical step, the escrow agent performs a comprehensive title search with the Federal Aviation Administration (FAA) to uncover any outstanding liens, encumbrances, or other ownership claims against the aircraft. This protects the buyer from inheriting the previous owner’s debts.
- Documentation processing: The FAA has meticulous regulations regarding aircraft registration and title transfers. An experienced escrow agent is typically based near the FAA registry in Oklahoma City to facilitate the correct and timely filing of paperwork, ensuring a seamless transfer of ownership and registration.
- International transactions: For jets registered internationally, the escrow agent must also navigate the complexities of foreign regulations and registries, such as the International Registry of Mobile Assets in Dublin, and coordinate multi-jurisdictional filings.
- Facilitating communication: The escrow company acts as a single point of contact for all parties—buyers, sellers, brokers, lenders, and legal counsel—streamlining communication and ensuring everyone is aligned on the closing process.
- Providing a closing package: After a successful closing, the escrow agent provides a detailed closing statement and copies of all final documents, giving both the buyer and seller a complete audit trail of the transaction.
The Closing Moment
At the moment of closing, with confirmation that all conditions (such as the successful pre-purchase inspection and clear title) are met, the escrow agent performs a simultaneous release of funds and filing of documents. The funds are wired to the seller, and the bill of sale is filed with the FAA, officially transferring legal ownership to the buyer. This coordinated action is the culmination of the escrow process, finalizing a complex, high-value transaction with confidence and security.
At Holstein Aviation, our IADA certified professionals bring decades of transaction experience, real-time market intelligence and global reach. We guide our clients through every step of the process, ensuring confidence and clarity in today’s dynamic environment. We work with escrow companies on a daily basis as we conduct transactions and can help you navigate that process smoothly. Regardless of whether you’re preparing to buy an aircraft or sell your aircraft, Holstein Aviation is your trusted partner in business aviation.
