The Aerlex Law Group is a California law firm with offices in Santa Monica; we are very well experienced in fractional ownership transactions. We have assisted many companies and individuals in their acquisition of fractional jet interests. We also advise companies and individuals on how to create fractional ownership programs.
Acquiring fractional jet interests requires familiarity with Federal Aviation Regulations (FARs) as well as contract law. We advise and guide buyers and lessors as to what is and what is not being acquired, and we help the buyer or lessee negotiate the most favorable deal available, under the circumstances.
There are typically four major agreements which are necessary to the buying or leasing of a fractional jet ownership. Each agreement requires a knowledge of applicable Federal and state laws and regulations and the specific buyer's or lessor's needs.
These agreements are:
- the Aircraft Lease or Purchase Agreement
- the Management Agreement
- the Master Interchange or Dry Lease Exchange Agreement
- the Joint Ownership Agreement
Each of the four agreements include various addenda, including some with legal effect, and otherwise contain many provisions which affect the acquirer's rights and responsibilities.
These provisions can be confusing to the uninitiated. Even experienced aviation, finance or equipment lease advisors can find them confusing on a first pass.
We feel the degree and length of the financial commitment alone merit review of fractional agreements by experienced counsel. Moreover, operating jet aircraft implicates other concerns, such as tax issues, that recommend review and briefing by experts. That being said, we prefer to work with counsel and professionals who are familiar with the buyer. We can either work “second chair” and advise the buyer's or lessee's law firm, corporate counsel, or other advisers, or work directly with the buyer/lessee, as the client or its advisers wish.
The law of fractional jet ownership is essentially Federal; however, there can be state-specific issues and peculiarities. Accordingly, unless the buyer is a California company, or individual, or the transaction occurs in California, we strongly recommend the buyer consider consulting with its local counsel.
Fees for fractional jet transactions vary depending on the scope or complexity of the transaction. We do not and cannot work on a flat fee basis unless the project is extremely limited in scope, and we have the unrestricted right to terminate work on the project if it exceeds that scope. Our fees in all matters are far outweighed by the direct costs of the transaction, and the benefits realized by the client. Our fees are never more than a small percentage of the direct costs and potential liabilities at issue. They rarely exceed the costs of a few hours travel time, or a few months of management fees. Nevertheless, we are willing to work with clients and their advisors on cost control strategies, where appropriate.