When to use:
Use whenever two or more people or sets of people share ownership and use of an aircraft for commercial use. The agreements regulate use where only one owner uses the aircraft at one time. However, there is nothing to prevent a second owner sharing time with another owner.
Ownership: legal matters
When you share a valuable asset with another owner, you partake in ‘fractional ownership’ – you share a percentage of ownership. There are a number of ways of dealing with this.
First, establish the most suitable structure for your arrangement. If you are looking at a commercial arrangement, then it makes better sense to hold the property (the aircraft) in a limited company and buy and sell shares in it. That way, the ownership of the aircraft itself never changes.
However, running a company does cost money, so if the arrangement is recreational, or there are less than ten owners, it is simply a matter of preference as to whether you want the formality, expense and greater certainty of a company structure and shareholders agreement or the lower cost and comparative informality of an agreement like these.
We offer two versions of the same deal. One is for a situation where only two parties share. The other is designed for more than two parties.
Even if ownership of your aircraft is registered with some organisation, the particulars will not record the shares in which the aircraft is held. So if you own 60% and I own 40% we have to record that in some other document. If we do not do so, “the Law” will assume we own in the shares in which we contributed to the purchase price. This may or may not be the same thing. These Net Lawman agreements specifically record the shares. They also record shares which may be owned by someone who is not a registered owner. This is called a beneficial interest.
AU-CB103 includes provision for:
· Terms of beneficial interest - beneficial trusts provision
· Price and payment for the aircraft
· How many people allowed in the aircraft at one time and who they may be
· Who and how will manage payment of expenses
· Purchase of accessories for the aircraft – how they are purchased, whom they belong to
· Management of the aircraft, including operating costs
· Undertakings by the parties
· Alternative exit strategies
· Timetable in the form of a schedule to allow you to arrange who will have the aircraft when
· Effect of termination
· Alternative exit strategies
· Other legal provisions
AU-CB104 includes similar provision, but provides for a management structure ordered by annual meetings of the owners, possibility of proxy voting, and more. The exit strategy allows for a share to be sold to a third party, after offering it to all other owners.
