Escrow and Deposits: Protecting Your Money When Buying an Aircraft
Updated: 12 hours ago
In almost every aircraft purchase, the buyer pays a deposit long before the aircraft changes hands. It shows the seller the buyer is serious and secures exclusivity while the inspection takes place. It is also the moment where most buyer risk sits, especially when the deal runs through intermediaries.
How an aircraft deposit normally works
The buyer and seller sign a letter of intent setting out the price, the deposit and the inspection.
The buyer pays the deposit to a neutral escrow agent, not to the seller or a broker.
The buyer carries out the pre-buy inspection.
If the aircraft is accepted, the parties sign a purchase agreement and the deposit becomes part of the price.
At closing, the escrow agent releases the funds to the seller at the same moment ownership and registration transfer.
The escrow agent holds the money under written instructions signed by both sides. Many aircraft transactions use specialist aviation escrow and title companies, often close to the aircraft registry.
Refundable or not
This is the key question, and the answer should be written into the letter of intent:
Before inspection: the deposit should normally be fully refundable if the buyer rejects the aircraft after the pre-buy inspection.
After technical acceptance: the deposit usually becomes non-refundable, except if the seller fails to deliver.
If the seller cannot deliver (for example because of title problems or undisclosed damage): the deposit must come back in full.
Make sure the conditions for release are specific. "Satisfactory inspection" is too vague. Define what the buyer can reject the aircraft for and how long they have to decide.
Never pay a broker's account
A deposit should go to an independent escrow agent. Paying it into a broker's or intermediary's bank account removes your protection: if the deal fails, you are relying on that party to return it.
Red flags
Be careful if you see any of these:
A deposit is demanded before the serial number and registration are disclosed. You cannot check an aircraft you cannot identify.
The "seller" is not the registered owner. Ask directly who signs as seller and whether that entity owns the aircraft. A company that only exists to sign the contract, and buys the aircraft behind it, is common but means your contract is with a middleman.
The inspection is restricted. No borescope inspection of the engines, no panel removal, a very short time to accept, or the seller's pilot in command on the test flight. These terms protect the seller, not you.
Heavy urgency. "Other buyers", deadlines tomorrow, pressure to sign before questions are answered.
The price is attractive and the documents are thin. Real sellers can produce records.
None of these proves bad faith on its own, but each is a reason to slow down.
What to agree in writing
Who holds the deposit, and the escrow agent's details
The amount, and when it is paid
Exactly when it becomes non-refundable
The inspection scope, location and the time allowed to accept or reject
What happens to the deposit if either side cannot complete
Who pays the escrow fees
How we help
Jetvice works for buyers as well as sellers. We identify the aircraft, confirm who owns it, check the inspection terms and make sure deposits go to a neutral escrow agent. If you are about to pay a deposit on an aircraft, send us the details first. Email info@jetvice.net.
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