At Holstein Aviation, our team has guided clients through more than 4,700 transactions. We often describe the Aircraft Purchase Agreement (APA) not just as a contract, but as the “user manual” for the transaction. It is the definitive document that turns the handshake of a Letter of Intent (LOI) into a legally binding, multi-million dollar reality.

In the current 2026 “Sorting Market,” characterized by high demand for turnkey assets and a continued focus on aircraft market transparency, a poorly structured APA is the fastest way to ground a deal. Whether you are navigating your first aircraft acquisition or managing a fleet divestiture, here is how we structure an APA to ensure the process remains routine and uneventful.

1. Defining the “Delivery Condition”

The most critical section of any APA is the definition of the aircraft’s condition at the moment of closing. In 2026, with the high cost of maintenance labor and parts, “vague” is expensive.

• Airworthiness is the Floor: The agreement must stipulate that the aircraft be delivered with a valid FAA Certificate of Airworthiness, all systems operational, all mandatory Service Bulletins (SBs), and Airworthiness Directives (ADs) complied with.
• The “Clearance” Standard: We ensure the APA requires the aircraft to be delivered free and clear of all liens and encumbrances. In today’s market, this includes a “clean” search of both the FAA Registry and the International Registry (IR).

2. The Pre-Purchase Inspection (PPI) Framework

The pre-purchase inspection (PPI) is the heart of the transaction, and the APA must define its boundaries clearly to prevent “scope creep.”

• The Work Scope: The APA should include the agreed-upon purchase inspection work scope as an exhibit. This prevents the buyer from turning a standard “pre-buy” into an exhaustive, open-ended research project at the seller’s expense.
• Discrepancy Resolution: We structure the APA to clearly distinguish between “Airworthiness Discrepancies” (which the seller is typically obligated to fix) and “Cosmetic Items” (which are usually for the buyer’s account). In 2026, having a professional aviation advisor define these categories can prevent weeks of emotional negotiation over seat-track wear or paint chips.

3. The “Technical Guardrails”: Records and Programs

In the modern business jet market, the paper trail is critical. A well-structured APA must protect the aircraft’s pedigree.

• Logbook Integrity: The agreement must mandate that all original logbooks (back-to-birth) be present and organized.
• Maintenance Programs: If the aircraft is on a program like JSSI, MSP, or CorporateCare, the APA must outline the process for transferring those “equity hours” to the buyer. This ensures the buyer receives the full benefit of the “financial firewall” the seller has paid into.

4. Deposits and Termination Rights

A fair APA provides “exclusivity” to the buyer while protecting the seller’s time.

• The Earnest Money Deposit: Usually held by a neutral escrow agent, the deposit should be fully refundable until the “Technical Acceptance” milestone. Once the buyer signs the Technical Acceptance following the PPI, the deposit typically becomes non-refundable, securing the deal for the seller. An alternative structure involve the deposit being non-refundable as long as the seller meets all of the delivery conditions.
• Cure Periods: We include specific “cure periods” that allow the seller a defined number of days to rectify any discrepancies found during the inspection. This keeps the transaction moving toward the goal of closing.

5. Taxes and Jurisdictional Clauses

In 2026, tax strategy is a primary driver of aircraft acquisition support. The APA must clearly define:

• Sales/Use Tax Responsibility: Typically, the buyer is responsible for any taxes in their home jurisdiction, but the APA must specify the “Delivery Location” to ensure the transaction occurs in a tax friendly location.
• Governing Law: Most international and domestic deals favor New York or Oklahoma law to provide a predictable legal framework for dispute resolution.

The Holstein Perspective

At Holstein Aviation, our goal is to eliminate surprises. By meticulously drafting the APA, we do the “headwork” early so that the actual closing call is the most boring part of your day. We believe a contract should protect the relationship as much as the asset.