Partnerships

[fastj22]

I've been approached by my hangar mate to form a partnership in my plane. He has a sonex too, but isn't flying as much as he thought he would and is having doubts about incurring the costs of ownership. Plus, he doesn't really enjoy working on the plane, just flying it. So he proposed to sell his plane and buy a share in mine. One thing that intrigues me is I could use the money to fund my next project.

I wanted to get a feel from others about this. I've heard partnerships are like marriages, some work, some don't. In certified aircraft, it's probably simpler as you really can't modify or work on them so you just share the costs.

But the thing I absolutely love about experimental is you can modify and work on them as yo use fit. In a partnership, it could hamper how much freedom you have as both parties now must agree.

Any thoughts?

[kmacht]

Check out AOPA. They used to have a pretty good section on their website regarding partnerships. There were even example contracts / letters of agreement that you could download to base one off of. As you said, they either tend to work really well or really badly. You would have to evaluate your hanger mate and determine if the two of you get along enough and agree on most things to see if it would work. If he buys a half ownership then things such as who pays or decides on upgrades or maintence can become issues. What happens if the engine spits out a cylinder and needs a replacement? Is your partner willing and able to come up with half the money for a new engine? What do you do about decisions to upgrade or modify the plane? What if he wants to put in a newer EFIS in the panel and you don't? How does that get decided and paid for? How about access to the airplane? Do you both like to go flying on saturday mornings? If so, how do you figure out who gets the plane and who doesn't? If you sell him half the plane then he suddenly has just as much say in what goes on with that plane as you do. What happens if he decides in a year he wants out? Can he sell his half to anybody he wants without your consent or are you stuck with either selling the whole plane or coming up with the cash for his half? What if you want out? Finally, what about liability? If you are doing all the maintence and something hapens such as an engine out and he gets hurt or killed his heirs are suddenly going to look at you as being responsible whether you are or not since only you did all the upkeep and maintence on the plane. Lots to think about. There is alot of stuff you are giving up for just a chunk of cash. It can work but the key to making it work is making sure all the details to questions like those above are settled and written down somewhere before any money changes hands.

Keith
#554

[fastj22]

Those are really good questions.
In this relationship, it would probably be a primary owner/builder who is the majority partner, and a minority partner who just wants to fly.
Say it was setup as a 75/25.
Have the plane appraised to set the share cost.

Common maintenance costs, hangar fees, insurance would be shared at that percentage. Establish an excessive use level that would trigger a different expense sharing ratio.

In the event of a breakup of the partnership, the plane would be reappraised. Any upgrades to the plane that were not cost shared, would be added to the share of the partner who funded it and removed from the other partnership share value.

The selling partner would then need to gain approval by the remaining partner for a new partner or sell his share back to the other partner.

I'm leaning against it.

[Sonex1517]

I owned a 1973 Piper Cherokee PA-28-140 with a nice upgrade package. It got too expensive for sole ownership, so we carefully entered a partnership.

We met with prospective partners, found one we got along with well and that shared our ideas of what aircraft ownership means, set up a legal agreement, and sold him half an airplane.

It was like a second marriage, and it didn't end well (for reference, my wife and I just celebrated the 17th anniversary of our first date, and have been married 14 years). I have a friend who has been in a successful partnership in a Cessna 182 for over ten years and is very happy with it.

All I can say is it is literally like a second marriage and can go well, or not so well....


Robbie
Sonex 1517

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