What's new
Van's Air Force

Don't miss anything! Register now for full access to the definitive RV support community.

Experimental Cost Sharing (Whats legal)

J

JamesClarkIV

Active Member
What costs can I share in the following scenarios:

#1) 50/50 split ownership of experimental RV7A. 50/50 split of hangar cost, 50/50 split of maintenance costs, 50/50 split insurance cost, each owner buys own fuel, kitty for overhaul priced by hour flown by each co-owner.

#2) 100/0 non-split ownership (1 owner) of experimental RV7A. Can owner accept help from friend for hangar costs, for friend fuel costs, for friend induced maintenance costs? Can owner charge some fixed rate for friend to fly per hour?

If 1) is OK and 2) is NOT, is there a way friend can fly owners airplane (if owner willing), at no cost to owner?

I'd like to let my friend fly (with appropriate insurance & transition training) but want to do so without incurring extra cost. Can this be done?

Thanks.
Very respectfully,
Jim Clark
 
JamesClarkIV said:
What costs can I share in the following scenarios:

#1) 50/50 split ownership of experimental RV7A. 50/50 split of hangar cost, 50/50 split of maintenance costs, 50/50 split insurance cost, each owner buys own fuel, kitty for overhaul priced by hour flown by each co-owner.

#2) 100/0 non-split ownership (1 owner) of experimental RV7A. Can owner accept help from friend for hangar costs, for friend fuel costs, for friend induced maintenance costs? Can owner charge some fixed rate for friend to fly per hour?

If 1) is OK and 2) is NOT, is there a way friend can fly owners airplane (if owner willing), at no cost to owner?

I'd like to let my friend fly (with appropriate insurance & transition training) but want to do so without incurring extra cost. Can this be done?

Thanks.
Very respectfully,
Jim Clark
Click to expand...

#2. Yes, it's called cash.
 
I think that is funny, but can you help educate me about which parts of #2 are not allowed?

If 1) is legal, and 2) is not, where is the dividing line? What about 2/3 & 1/3 split?
 
Last edited:
Have him buy his own gas at the pump. Have him put a couple lawn chairs in your hangar and charge him hangar rent at what ever you think is appropriate for how he is using the "hangar". Have him keep the frig full of cold drinks. Have him buy "himself" a tool (mag timer, spark plug tray, parts washer, jack stands, shop dolly, etc) that just happen to be permantely stored at your hangar.
 
Last edited:
James,
As usual with these questions the only answer that matters is the one that would be given by your local FAA people (and even then it is hard to get multiple answers that match).
Having said that I will add that the general position of the FAA is that anything received from someone else (even them mowing your lawn for you) in exchange for use of your airplane is considered compensation for use of said airplane, which as you probably know is not allowed under E-AB operating limitations.
 
I am grateful for the reply's but I think people are missing what I am asking.

Is #1 allowed?

What part of #2 is not allowed?

I can turn #2 in to #1 by having the friend purchase 1/2 of the aircraft right?

Thanks,
Jim
 
You're way overthinking this... I have a 172 that started as a project plane and was a 50/50 partnership and we split everything as you have laid out in #1. Worked out so well we added two more friends to the mix and now it's split 4 ways. It's been over a year and has worked out great.

When you start talking about non-equity partnerships they can be laid out however you want. if you're talking about 'renting' the plane out as far as I know that can't be done with an experimental... and if it can that would have different insurance and inspection cycles.
 
Last edited:
There should be no problems with # 1
If all users names are on the registration as owners, no one is being compensated by a non-owner for use of the airplane. The typical arrangement is each owner pays for the expenses directly related to the hrs they fly (fuel, etc.) and the rest are shared equally though that is some times adjusted if one parter flys a lot more than the other(s).

# 2, there is no way to legally do it. Some just hide the money arrangement and keep quiet about it.
 
Regarding the #2 scenario, it is not the FAA that is concerning, it is the lawyers and insurance companies that dictate. All it takes is one accident.
 
Co-ownership for experimental

There is an easy way to do this process. Create an LLC which you can do online. Then create the ownership agreement and register the airplane as a corporate ownership. The FAA will ask for the members of the corporation and you specify the two owners and certify they are both US citizens. The corporation will have one property which is the airplane and since each of you own an equal share of stock then all expenses are shared. The insurance and the hanger should also be in the name of the corporate owner with named insured coverage in the policy.

This works and was advised by my attorney. The FAA then has no issue with shared expenses. This how my partner and I set up 7 years ago.

Tyler
A&P, GROL, EAA Tech advisor
 
Flying Club

Philip,

I know at least one group that has a flying club with an RV as it's plane. Then the members of the club are paying for the upkeep of the plane, hangar etc. I don't know how you would structure the club so that if and when it dissolved you would wind up with the plane again.

In terms of item 1, I was a member of an LLC with one other person, and we each paid 50% for the plane and all the fees. That worked fine.

As usual, legal questions and their answers are complex, and you have to judge risk versus reward.

All the best

Geoff
 
I don't see the problem

I don't see a problem with either scenario. For number 2, anyone can rent hanger space from you or pay for half your hanger expenses. He is not renting your airplane. If he is named as an insured pilot on your insurance he will be covered like you would be. I would not charge him a per hour charge (that might be construed as rent). If he happens to buy more gas than you, that would be a way to cover some of your other expenses.

I was a non equity partner for about a year before I bought into my airplane.

-Andy
 
JamesClarkIV said:
What costs can I share in the following scenarios:

#1) 50/50 split ownership of experimental RV7A. 50/50 split of hangar cost, 50/50 split of maintenance costs, 50/50 split insurance cost, each owner buys own fuel, kitty for overhaul priced by hour flown by each co-owner.
Click to expand...
I believe this is legal, if they are part owner.

JamesClarkIV said:
#2) 100/0 non-split ownership (1 owner) of experimental RV7A. Can owner accept help from friend for hangar costs, for friend fuel costs, for friend induced maintenance costs? Can owner charge some fixed rate for friend to fly per hour?
Click to expand...
Probably not legal. As I read this, you renting the plane to him.

JamesClarkIV said:
If 1) is OK and 2) is NOT, is there a way friend can fly owners airplane (if owner willing), at no cost to owner?
Click to expand...
Totally legal. There is nothing stopping a friend from letting his buddy fly his plane. The friend can even pay for the fuel and oil he/she uses.

JamesClarkIV said:
I'd like to let my friend fly (with appropriate insurance & transition training) but want to do so without incurring extra cost. Can this be done?

Thanks.
Very respectfully,
Jim Clark
Click to expand...
Insurance is typically based on the person with the lowest qualifications. Contact your insurance agent and ask them what they recommend.
 
rvbuilder2002 said:
There should be no problems with # 1
If all users names are on the registration as owners, no one is being compensated by a non-owner for use of the airplane. The typical arrangement is each owner pays for the expenses directly related to the hrs they fly (fuel, etc.) and the rest are shared equally though that is some times adjusted if one parter flys a lot more than the other(s).

# 2, there is no way to legally do it. Some just hide the money arrangement and keep quiet about it.
Click to expand...

IF I were to let someone else use my airplane, it would be for them to go use. If they happen to put gas in it while they were using it that would be ok with me but it may not be legal.
 
RV6_flyer said:
IF I were to let someone else use my airplane, it would be for them to go use. If they happen to put gas in it while they were using it that would be ok with me but it may not be legal.
Click to expand...

That's perfectly legal. You can loan your plane to whomever you like assuming their qualified to fly it. And they can pay for 100% of the operational cost of the flying they do.
 
You must log in or register to reply here.
Back
Top