Goodyear, AZ 85395, US
The Escrow Folks
What is done here
If you are buying an airplane, you have probably bought a house before. The process is pretty simple and similar to the house buying scenario with different requirements. You contact an escrow company, who will hold the money and collect the necessary paperwork from both parties so that the transaction can be completed smoothly. They will also do a title search to ensure a "clean" title is delivered. Typically, you will be asked by the seller for a down payment of some sort to have the seller remove the plane from the market while you do your due diligence. For a plane in the $100-250k range, you should have $5-10k available for this. This is not something you are going to be able to get a loan for, so you will need some liquid cash. You will be required to wire the funds to them. I used Aerotitle. They were very efficient and helpful.
Purchase and Sale agreement
This is important. The purchase and sale agreement (PSA) tells the escrow company what to do with the down payment money in case the sale falls apart. In most cases, it should be fully refundable to the buyer. The title company (escrow agent) may charge a small fee even if the deal falls apart for their hassle. In my case, it was just $100 on the first plane. If the sale proceeds, they take a fee depending on the amount of the sale. For the sub $250k variety, the title company I used charged $400. This fee is also something you should spell out in the PSA.
Again, in my case the buyer, and seller split the fee. The PSA will also include any additional things that the buyer and seller have agreed to. It may include the terms of the pre-buy inspection, when the sale is to be completed by, or any other numbers of things. There are some pretty good examples on the internet.
Once engaged
The title company will ask for a flurry of paperwork from both the buyer and seller. They do not do anything with it immediately. They do make sure that they have everything ready to go so when you tell them to close, they can make the transaction occur.
Changing the PSA
Once your prebuy is complete, there will likely be a change in the price. This is simply done with an amendment to the PSA. Both the buyer and seller sign the changes, and the new amount, or terms become effective by simply sending the countersigned document to the title company.
TIme to close
Once the Escrow Agent has everything they need to make the sale occur, basically all the paperwork is signed by both parties, and the cash has been wired to them that is specified by the PSA, they will send both parties a draft settlement statement. If both parties agree that it is correct, they will announce that they are "ready to close." Once both parties give the go ahead, they file the paperwork with the FAA, wire the money to the seller, and the airplane is yours.