Partnership in an RV Question

Capflyer · #1 03-29-2007, 04:18 AM

I was asked if I would be interested in a 25% partner on my still under construction RV7. I'm currious to hear from those that are partners how you structured them and how you valued the plane. Since this individual will not be doing much of the work on the build since it's almost completed, how to handle it. It would be nice to get an infusion of cash into the project and he probably wouldn't fly enough to hamper my enjoyement.

smenkhare · #2 03-29-2007, 04:36 AM

Quote:

Originally Posted by Capflyer

I was asked if I would be interested in a 25% partner on my still under construction RV7. I'm currious to hear from those that are partners how you structured them and how you valued the plane. Since this individual will not be doing much of the work on the build since it's almost completed, how to handle it. It would be nice to get an infusion of cash into the project and he probably wouldn't fly enough to hamper my enjoyement.

get a lawyer!

it will save a lot of headache

Bob Martin · #3 03-29-2007, 06:21 AM

I had a flying buddy as a 50/50 partner in my -6. we bought it together already built. The partnership went along great, until one day, he really understood the limited insurance we can get on the expermentals (100,000 per pax seat only). Knowing how little 100,000 is in a "claim". He started putting limits on who we took flying ie:family or known RV buddies.....people that may have known the risk. Well, eventually it lead to me buying him out of the partnership. He was bothered by the exposure "I" would be exposing him to as a half owner and vice versa. He bought a 182...for family flying.
If you look too close and think about it too much.....you won't fly at all.
but better to know what you are getting into before you enter a partnership.
I don't really like lawyers, they are a necessary evil in my book.
That said, partners are great, having someone to share flying with and motivate you to fly instead of work, etc etc....
Good Luck

Low Pass · #4 03-29-2007, 08:18 AM

The AOPA co-ownership agreement is very good. Have used a derrivative of it for a flying AC partnership. Check it out.

jclark · #5 03-29-2007, 11:39 AM

Quote:

Originally Posted by Capflyer

I was asked if I would be interested in a 25% partner on my still under construction RV7. I'm currious to hear from those that are partners how you structured them and how you valued the plane. Since this individual will not be doing much of the work on the build since it's almost completed, how to handle it. It would be nice to get an infusion of cash into the project and he probably wouldn't fly enough to hamper my enjoyement.

Keep it simple and be sure it is someone with whom you can get along with on ordinary things.

If he becomes a partner before it is finished, don't try to count hours of work.

If he is going to help, jointly decide what he is going to do and then help each other as needed.

If he is not going to help (and that is OK) then value the plane fairly and let him purchase based on the valuation. Make it so that any partner can buy out the other at some value that is either set in advance or has a means of determination.

Don't sweat the small stuff. Remember, you are **partners**!

Agree to respect each other's desires and needs to fly the plane.

Determine **IF** there are any MUST HAVE times for either partner.

Decide how annual condition inspections will be done ...hopefully together but don't over analyze it.

Have fun flying the plane!

James
... in a happy partnership for many years now

TSwezey · #6 03-29-2007, 01:47 PM

The only problem I see is you are paying 75% of everything and he will probably be able to fly whenever he wants and only paying 25% of maintenance, insurance, blah,blah,blah. I would calculate the TBO on the engine and add an hourly fee for an engine repair fund. I would either switch him to 50% or I would go get two additional partners at 25% each. This would give you money for another plane, hangar, or what ever you want and you will probably be able to fly the plane as much as you want. Upgrades are a lot nicer when you only have to pay for half or a quarter of them.

jmbaute · #7 03-29-2007, 02:06 PM

In my partership agreement, I wish we had a 'butthead clause', to be inacted when one of the parters is being a pain. Something like, if all other partners unamimously agree that he is a problem, he has 30 days to either buy all of them out or sell his share to them.

I can promise I would have one less partner in my Mooney by now if that were the case.

Better advice would be: no partners, if you can afford it. I'm guessing if you are 75% into the rv, you've had that discussion with your inner self already.

Good luck!

kentb · #8 03-29-2007, 03:19 PM

I was in a partnership with my C172 and use a version of the AOPA agreement. I didn't know the guy very well when I bought into his plane. After a little over a year I had had enough of him and proposed that he set a price and I would either buy or sell at that price. He didn't want to do that then I suggested a price that I would be willing to sell at (or buy) and he said that it wasn't enough.
Long story short I ended up paying about $2000.00 more than the plane was worth just to get rid of him.
The most important thing about a partnership, is that everyone has the same approach to owning the plane and that they get along.

Kent

Mike S · #9 03-29-2007, 03:33 PM

Quote:

Originally Posted by Bob Martin

I don't really like lawyers, they are a necessary evil in my book.

Evil, agreed, still not sure about the "necessary" part.

Mike

dav1111 · #10 03-29-2007, 05:48 PM

Here is some free Texas Legal Advise. Since I am licensed to practice law only in the State of Texas and the Federal Court system my advise is limited to only individuals in Texas.

First you should never have a partnership unless it is a limited partnership. A corporation or limited liability company is OK as well. That way neather party is liable for any actions or obligations created by the other party, except to the extent of the value of the airplane.

Second, any agreement should have a buy sale agreement that specifies that if one party wants to sale his interest that the other party has the right of first refusal at a specified price (usually the intial investment amount put into the deal by each party.

Third, try and find an attorney who is an RV builder/pilot. He will understand lots more about how to help protect you than some joe blow off the street.