Read this first
This is a checklist, not legal advice. Aircraft ownership touches state property law, tax, liability and FAA registration rules, and the interactions differ enormously by state. Use this to arrive at a lawyer's office knowing what you want, which is where most of the cost saving in legal work actually comes from.
The three questions the agreement exists to answer
Strip away the boilerplate and every partnership agreement is answering three things:
- Who pays for what, and when?
- Who gets the aeroplane when two people want it?
- What happens when someone wants out — or cannot continue?
Most agreements handle the second reasonably and the first and third badly. That is precisely backwards, because scheduling conflicts are annoying and money and exit are what actually end partnerships.
Ownership and structure
- Each partner's percentage, in writing, with dates.
- How the aircraft is registered — individual co-ownership, or an LLC — and who is on the FAA registration.
- Whether shares can be transferred, and to whom. Almost always: not without the others' consent.
- Right of first refusal for existing partners when a share is sold.
The money sections — the ones that get read
Fixed costs. What they include, how they are split (equally or by share), when dues are payable, and the review date each year. State the split rule explicitly rather than stating this year's dollar figure, which will be wrong within twelve months.
Variable costs. The billing meter (Hobbs or tach), the hourly rate, whether it is wet or dry, and how partner-purchased fuel is credited.
The reserve. The hourly rate, what it covers, where the money is held, who can authorise a withdrawal, and how the rate is reviewed. This section is the difference between a partnership that survives its first overhaul and one that does not.
Unscheduled maintenance. A threshold below which any partner can authorise work — commonly $500 to $1,500 — and above which a defined majority is needed. Without this, either nothing gets fixed or one partner unilaterally spends $6,000.
Capital calls. Under what circumstances partners can be required to contribute additional capital, how much notice is given, and what happens if someone cannot pay. This is the clause everyone skips and the one that decides whether an unexpected engine failure is survivable.
Late payment. When a balance becomes overdue, what interest or fee applies, and at what point flying privileges are suspended. Uncomfortable to write, essential to have. A group that has never written this down will find it impossible to enforce anything at all.
Scheduling and access
Booking method, maximum advance booking, maximum consecutive days, how holidays and long weekends are allocated, and whether there is a minimum daily charge on multi-day trips. That last one matters: without it, one partner can take the aeroplane for a fortnight, fly six hours, and pay for six hours while the others had no access.
A common and workable rule: on trips over two days, a minimum of one or two hours per day is billed regardless of hours flown.
Exit — the section that earns the legal fee
Partnerships end. Sometimes happily. The agreement should handle:
- Voluntary sale. Notice period, right of first refusal, and how the share is valued.
- Valuation method. Agreed appraiser, an average of two appraisals, or a published guide value. Decide the method now; arguing about the method while also arguing about the number is how this goes badly.
- Death or incapacity. What happens to the share, whether the estate can be bought out, and over what period. Without this, surviving partners can find themselves co-owning an aeroplane with someone's heirs.
- Loss of medical. Whether dues continue, and any leave-of-absence provision.
- Deadlock. What happens when a two-person partnership disagrees fundamentally. Often a shotgun clause: one names a price, the other chooses to buy or sell at it.
- Forced sale of the aircraft. What majority is required, and how proceeds are distributed.
Insurance and liability
- Minimum hull and liability coverage, and who is named.
- Pilot qualification requirements — total time, time in type, currency, checkout requirements, instrument currency for IFR flights.
- Who pays the deductible when a partner has an incident. Usually the partner flying; write it down.
- Whether non-partner pilots may fly the aircraft, and under what conditions.
Records and reporting
An underrated section. Specify that partners receive a monthly statement, that the reserve balance is reported, that the books are available to any partner on request, and that corrections are made by credit memo rather than by amending prior records.
This sounds procedural. Its real function is to make the treasurer's job defensible — they are following an agreed process, not exercising discretion — and to guarantee that a partner who becomes suspicious can satisfy themselves without a confrontation.
What to leave out
Anything that will be out of date in a year. Specific dollar figures for dues and rates belong in a schedule that can be updated by agreement, not in the body of the document. An agreement that requires a formal amendment to change the hourly rate is one that will simply be ignored, and an ignored agreement is worse than none because it makes every other clause negotiable too.