Aircraft Closing Process Explained: Documents, Escrow, and FAA Filing

Buying an aircraft is one of the most exciting purchases you can make. But once the handshake is done and the price is agreed upon, there is still one big hurdle left — the closing. The aircraft closing process is where all the planning, inspections, and negotiations finally turn into real ownership. And if you have never been through it before, it can feel like a maze of paperwork, legal terms, and tight deadlines.

Here is the good news. The aircraft closing process follows a clear, logical set of steps. Each one is designed to protect both the buyer and the seller. The closing represents the final milestone in completing an aircraft acquisition. 

When you understand what happens at each stage, you can avoid costly mistakes, prevent delays, and walk away with full confidence that the plane is legally yours.

This post goes into detail of every part of this process so you know exactly what to expect — and what to do — from the first signature to the moment you fly away as the new owner.

Key Takeaways

The aircraft closing process is the final stage of buying or selling an airplane. It is when the buyer and seller sign all paperwork, transfer ownership, and exchange money. A neutral escrow agent holds documents and funds until every condition is met. The FAA must receive the bill of sale and registration application to officially record the new owner. The entire process is designed to protect everyone involved and make the transaction legally binding.

What Happens During the Aircraft Closing Process?

Think of the aircraft closing process as the grand finale. It is the moment when all the planning, inspecting, and negotiating becomes real. Everything happens in a specific order, and each step exists to protect you.

The Role of the Escrow Agent

An escrow agent plays a central role in most aircraft transactions. This neutral third party holds the purchase price and all important documents until both sides meet every requirement in the purchase agreement.

Think of the escrow agent like a referee. Nobody gets paid and nobody receives documents until everyone follows the rules. This setup prevents situations where one side gets what they want while the other is left empty-handed.

Quick Tip: Choose an escrow agent who specializes in aviation transactions. General real estate escrow companies may not understand the unique requirements of aircraft closings, including FAA filing deadlines and international registry obligations.

What Must Happen Before Closing

Several critical tasks must be completed prior to closing day:

• The title search verifies that the seller actually owns the aircraft and no hidden liens exist
• All inspections at the inspection facility must be finished and approved
• The buyer arranges financing with their lender if needed
• Both parties review and approve all closing documents
• All FAA paperwork is prepared and ready to file

If any of these items are incomplete, closing gets delayed. The more organized you are early on, the smoother things go.

What Happens on Closing Day

On the day of closing, the actual transfer takes place. Here is what unfolds:

1. The seller signs the bill of sale, which legally transfers ownership
2. The buyer pays the full purchase price through the escrow agent
3. Both parties sign all closing documents, including the warranty bill of sale
4. The seller hands over the delivery receipt, logbooks, and warranty information
5. The escrow agent receives authorization to release funds and distributes money and documents
6. The aircraft officially changes hands

Once all signatures are on paper and the funds are released, the transaction is legally binding. The airplane is yours.

Why Does the Aircraft Closing Process Matter?

The aircraft closing process is not just paperwork for the sake of paperwork. Every step exists to protect your money, your legal rights, and your ability to fly. Here is why each part matters.

Legal Protection and Clear Ownership

When you complete the closing correctly, you get full legal ownership that nobody can challenge. The filed documents create a permanent public record proving the aircraft belongs to you.

Both sellers and buyers benefit from this clarity. Without it, disputes about who owns the plane can drag on for months or years — and ground your aircraft in the process.

Financial Security Through Escrow

Aircraft transactions involve large sums of money. The escrow service protects both sides by holding funds until every condition is met.

• The seller cannot take your money and disappear before delivering the plane
• The buyer cannot receive the aircraft and then refuse to pay
• The escrow agent only releases funds when both parties confirm everything is complete

Real-World Example: Imagine paying $350,000 for a Cessna 206, only to find out the seller still owes $80,000 to a previous lender. Without escrow and a proper title search, you could be on the hook for that debt — or lose the airplane entirely.

FAA Compliance and Registration

FAA registration is not optional. Every aircraft flying in U.S. airspace must be properly registered with the FAA Aircraft Registration Branch in Oklahoma City.

These documents must be filed within a specific window after purchase. Missing the deadline can create serious legal problems and prevent you from flying legally.

Protecting Against Liens and Claims

A lien is a legal claim that someone else has on the aircraft — usually because the seller owes them money. Liens can come from mechanics, lenders, fuel providers, or other creditors.

Before you buy, the title search must confirm that all liens are released. If you skip this step, you could purchase an aircraft only to discover someone else can legally seize it.

Warning: Liens are not always obvious. A previous owner may have taken out a loan years ago that was never properly released in FAA records. Always insist on a thorough title search before closing.

Proper Transfer of Warranties and Records

The closing includes transferring all warranties, maintenance records, and logbooks. This documentation is not just nice to have — it directly affects the plane's value.

Aircraft with complete, organized maintenance records sell for significantly more than those with gaps. The assignment of warranties means any manufacturer guarantees now belong to you, potentially saving thousands of dollars if something breaks down the road.

Making Everything Legally Binding

When the purchase agreement is fully executed and all closing documents are signed, the transaction becomes enforceable by law. The letter of intent was just the beginning. The closing is what makes everything official.

The closing location can even affect which state's laws apply to the transaction. Some buyers and sellers choose the delivery location carefully for legal or tax reasons.

When Does the Aircraft Closing Process Take Place?

Timing matters. The closing follows a specific sequence, and understanding the timeline helps you plan and avoid costly delays.

Typical Aircraft Closing Timeline

Most aircraft closings happen between 30 and 90 days after the purchase agreement is signed. Cash deals with no major repairs can close faster. Deals involving lender approval or significant maintenance work often take longer.

What Can Delay Closing?

Several common issues can push your closing date back:

• Title problems — Old liens that the seller must resolve before transfer
• Inspection findings — Major mechanical issues that require negotiation and repair
• Lender delays — Slow loan approval or missing lender documents
• Paperwork errors — Mistakes on FAA forms or missing signatures
• Scheduling conflicts — Coordinating between buyer, seller, escrow agent, and inspection facility

Pro Tip: Order the title search as early as possible in the purchase process. Title problems are one of the most common causes of closing delays, and finding them early gives the seller time to resolve issues without pushing back the closing date.

How Does the Aircraft Closing Process Work Step by Step?

Here is the full sequence, broken down into clear steps so you can follow along no matter where you are in the process.

Step 1: Letter of Intent and Purchase Agreement

The process typically starts when the buyer submits a letter of intent (LOI) to the seller. This document outlines the basic terms — purchase price, major conditions, and a general timeline. While an LOI is not always legally binding, it signals serious interest and kicks off formal negotiations.

Once both sides agree on terms, they sign the purchase agreement. This is the legally binding contract that spells out every detail:

• Purchase price
• Closing date
• Inspection period and rights
• Delivery location and expected condition
• Escrow agent details
• What happens if problems are found

The purchase agreement is executed when both the buyer and seller sign it. From this point, the clock starts ticking on all deadlines.

Step 2: Opening Escrow

The buyer deposits earnest money (also called a good-faith deposit) with the escrow agent. This deposit — typically 5% to 10% of the purchase price — shows commitment to the deal.

The escrow agent creates a checklist of everything needed before closing. This includes all documents and funds that must be collected. From here, the escrow agent coordinates with both parties, tracking progress and answering questions.

Step 3: Title Search and Lien Review

The title search examines the aircraft's full ownership history by checking FAA records in Oklahoma City. It answers three critical questions:

1. Does the seller actually own this aircraft?
2. Are there any liens or security interests on it?
3. Is the registration current and valid?

If liens exist, the seller must obtain proper lien releases before closing can proceed. Sometimes a previous lender still has a recorded claim on the aircraft, even if the underlying debt was paid off years ago. These "zombie liens" must be officially released.

Step 4: Pre-Purchase Inspection

The buyer arranges for a qualified mechanic to perform a thorough inspection at an approved facility. This is one of the most important steps in the entire purchase process.

A typical pre-purchase inspection covers:

• Airframe condition (corrosion, structural integrity, skin condition)
• Engine health (compression checks, oil analysis, borescope inspection)
• Avionics functionality
• Landing gear condition
• Compliance with all Airworthiness Directives (ADs)
• Logbook review for completeness

Cost Insight: Pre-purchase inspections typically cost between $2,000 and $10,000 depending on the aircraft type. A piston single might run $2,000–$4,000, while a turboprop or light jet can cost $5,000–$10,000 or more. This investment is well worth it — it can save you from buying an aircraft with hidden problems worth far more.

If the inspection reveals significant issues, the buyer and seller negotiate who pays for repairs. The purchase agreement typically gives the buyer the right to cancel if major problems are found.

Step 5: Document Preparation

As closing day approaches, all required paperwork must be prepared. This includes both FAA and non-FAA documents.

FAA Closing Documents:

• FAA Form 8050-2 (Bill of Sale)
• FAA Form 8050-1 (Aircraft Registration Application)
• Statement in Support of Registration (if buyer is an LLC, trust, or partnership)

Non-FAA Closing Documents:

• Assignment of warranties
• Lien releases from previous financing
• State sales or use tax forms
• Customs paperwork (if applicable)
• Insurance certificates
• Lender security agreements (if financing)

Aviation attorneys often help prepare these documents to ensure accuracy. Even small mistakes — a wrong N-number, a misspelled name — can delay FAA registration and create headaches.

Step 6: Final Walk-Through

Shortly before closing, the buyer conducts a final walk-through. This check confirms:

• The aircraft is in the agreed delivery condition
• All promised repairs have been completed
• Equipment listed in the purchase agreement is present and functional
• The interior and exterior match expectations

Any issues found during the walk-through must be resolved before closing. Do not sign the delivery receipt until you are satisfied.

Step 7: Closing Day

On the scheduled date, both parties (or their representatives) gather at the closing location. This might be the escrow agent's office, an attorney's office, or even the airport where the aircraft is located.

Here is the sequence:

1. The seller signs the bill of sale and all transfer documents
2. The buyer reviews and signs the purchase agreement acknowledgment
3. The escrow agent confirms all conditions are met
4. Both sides give the escrow agent authorization to close
5. Funds are released to the seller
6. Documents and aircraft records are delivered to the buyer
7. The delivery receipt is signed

Step 8: FAA Registration Filing

After closing, the signed bill of sale and registration application must be filed with the FAA Aircraft Registration Branch in Oklahoma City within the required filing window.

During processing (typically 4–6 weeks), the buyer receives a temporary registration certificate valid for 90 days. This allows you to fly legally while waiting for the permanent certificate.

For aircraft with international operations, additional filing with the International Registry may be required to record financing arrangements and security interests.

Step 9: Delivery and Possession

The closing and delivery process concludes when the buyer takes physical possession of the aircraft at the delivery location. The signed delivery receipt confirms the transaction is complete.

From this moment, the buyer owns the aircraft and assumes all responsibility — maintenance, insurance, hangar fees, and everything else that comes with aircraft ownership.

Aircraft Closing Costs: What to Expect

One of the most common questions buyers have is how much the closing process itself costs. Here is a realistic breakdown.

Example: On a $400,000 aircraft purchase, your closing costs (excluding the inspection and sales tax) might total $6,000–$12,000. That is roughly 1.5%–3% of the purchase price — a small investment to ensure everything is done correctly.

Who Pays What?

The purchase agreement should spell out who pays which closing costs. In many aircraft transactions:

• The buyer typically pays for the title search, FAA registration, their own attorney, and inspection costs
• The seller typically pays for lien releases and their own attorney
• The escrow fee is often split 50/50, though this is negotiable
• Broker commissions (if applicable) are usually paid by the seller

Always clarify cost responsibilities early in the negotiation to avoid surprises on closing day.

Common Mistakes to Avoid During Aircraft Closing

Even experienced buyers can stumble during the closing process. Here are the most frequent mistakes — and how to avoid them.

Skipping the Title Search

Some buyers try to save a few hundred dollars by skipping the title search. This is a serious gamble. Hidden liens can cost tens of thousands of dollars or result in losing the aircraft entirely. The title search is one of the most important investments in the entire transaction.

Not Reading the Purchase Agreement Carefully

The purchase agreement is a legally binding contract. Every word matters. Pay special attention to clauses about delivery condition, what happens if inspections reveal problems, and who pays for what. If something is unclear, ask your attorney before signing.

Missing FAA Filing Deadlines

The FAA requires ownership documents to be filed within a specific timeframe. Missing this window can create legal complications and may affect your ability to fly. Work with your escrow agent or attorney to ensure filings happen promptly after closing.

Accepting Delivery Without a Thorough Walk-Through

Once you sign the delivery receipt, you are accepting the aircraft in its current condition. If something is wrong that you failed to notice, it becomes your problem. Take your time with the final walk-through and do not let anyone rush you.

Not Having Insurance in Place

You need aviation insurance effective the moment ownership transfers. If you take delivery without coverage and something happens — even taxiing to your home airport — you have no protection. Arrange insurance well before closing day.

Remote Aircraft Closings: How They Work

Remote closings have become increasingly common in aircraft sales, especially since many buyers and sellers are located in different states or even different countries.

In a remote closing, the escrow agent coordinates everything by mail, email, and electronic signatures. Most closing documents can be signed electronically, though some lenders may require wet signatures (physical ink on paper) for certain loan documents.

The key challenge with a remote closing is physical delivery. Someone must inspect and accept the aircraft on the buyer's behalf. Many buyers hire a ferry pilot or designate a trusted representative to handle the final walk-through and sign the delivery receipt in person.

Tip for Remote Buyers: If you cannot be present for delivery, consider hiring an independent aviation consultant to represent your interests. They can conduct the final walk-through, verify delivery condition, and sign the delivery receipt on your behalf under a power of attorney.

Aircraft Closing Process for LLCs and Trusts

Many aircraft buyers choose to register their plane under a limited liability company (LLC) or an owner trustee arrangement rather than in their personal name. This is common for privacy, liability protection, and tax planning.

If you are buying through an LLC or trust, the closing process includes additional steps:

• A statement in support of registration must be filed with the FAA showing that the entity meets U.S. ownership requirements
• The operating agreement or trust agreement may need to be provided to the escrow agent
• The FAA has strict rules about who can own U.S.-registered aircraft, so foreign citizens using trusts must comply with specific regulations
• Your attorney should review all entity documents before closing to ensure compliance

These extra steps add complexity but are manageable with proper planning and experienced legal counsel.

Conclusion

The aircraft closing process is your safety net. It protects your investment, confirms legal ownership, and ensures that every detail — from lien releases to FAA registration — is handled correctly. By understanding each step, from signing the purchase agreement to filing documents with the FAA in Oklahoma City, you can avoid costly mistakes and move through the process with confidence.

The key is preparation. Order your title search early. Hire an experienced aviation attorney. Choose a specialized escrow agent. Get your insurance lined up. And never rush through the final walk-through.

When everything comes together on closing day, you will sign your name, receive the keys, and fly away knowing the aircraft is legally, officially, and completely yours.

Want to buy or sell an aircraft with confidence? Visit Flying411 to browse listings, find trusted service providers, and connect with a community of aviation enthusiasts who can help you navigate every step of your aircraft transaction.

Frequently Asked Questions

Can I close on an aircraft remotely without being physically present?

Yes, remote closings are possible and increasingly common. You can use electronic signatures for most documents and have the escrow agent coordinate everything by mail or email. However, someone must accept physical delivery of the aircraft on your behalf. Some lenders also require in-person signing for certain loan documents, so check those requirements early in the purchase process.

What happens if problems are found after closing is complete?

After closing, the buyer generally owns the aircraft "as is" unless the purchase agreement included specific warranties about condition. If the seller intentionally hid known defects, you may have legal options, but proving fraud is difficult and expensive. This is exactly why thorough pre-purchase inspections are so critical. Any warranty claims on equipment should be documented in the assignment of warranties at closing.

How long does the FAA take to process registration after closing?

The FAA typically processes registration applications within 4–6 weeks after receiving properly completed forms. During this time, you receive a temporary registration valid for 90 days, so you can fly legally while waiting for the permanent certificate. Errors on FAA Form 8050-1 or FAA Form 8050-2 can delay processing significantly, so double-check everything before submitting.

Do I need aviation insurance before the closing date?

Yes. You should have insurance in place before taking delivery. Most lenders require proof of insurance before releasing funds, and you need coverage the moment ownership transfers. Contact aviation insurance providers early in the process to get quotes. The escrow agent can help coordinate timing so coverage becomes effective exactly when the transaction closes.

What fees should I expect to pay at aircraft closing?

Closing costs typically include the escrow agent fee (1%–2% of purchase price), title search fees ($300–$800), FAA registration fee ($5), and attorney fees ($500–$2,000+). If using a lender, expect additional loan origination fees. The purchase agreement should specify who pays which fees, so clarify this early to avoid surprises.

What is the difference between a bill of sale and a warranty bill of sale?

A standard bill of sale simply transfers ownership from seller to buyer. A warranty bill of sale goes further — it includes the seller's guarantee that they have the legal right to sell the aircraft and that it is free from liens or encumbrances. Most buyers should insist on a warranty bill of sale for added protection.

Can a lien on the aircraft prevent closing?

Absolutely. If the title search reveals an active lien, the seller must resolve it before closing can proceed. This usually means paying off the underlying debt and obtaining a formal lien release. If the seller cannot clear the lien, the buyer may have the right to cancel the deal and recover their earnest money deposit.

How do I verify the aircraft's airworthiness before closing?

Airworthiness is verified through the pre-purchase inspection performed by a qualified mechanic. The inspection checks compliance with all FAA Airworthiness Directives, verifies the condition of the airframe, engine, avionics, and landing gear, and reviews all maintenance records for completeness. The aircraft must have a current airworthiness certificate to be legally flown.

What role does a broker play in the aircraft closing process?

An aircraft broker helps coordinate the transaction between buyer and seller. They can assist with finding the aircraft, negotiating terms, scheduling inspections, and keeping the closing process on track. The broker typically earns a commission (often 5%–10% of the purchase price) paid by the seller, though arrangements vary. A good broker adds value by catching problems early and smoothing out complications.