KatanaPilot

KatanaPilot

Well Known Member
We are about to take on another build project (RV-7A) while in the midst of building an RV-10. The RV-7A is a roller and could be completed fairly quickly.

The issue is "manufacturer" liability. Our intent is to "sell" the RV-7A to our son in a couple of years when the -10 is completed. The -10 will eventually be his as well. However, if he is not in a position to accept either airplane, we may then want to sell the plane(s).

I know of the fairly affluent individual that crushed his plane rather than sell it.

Is anyone aware of a documented case where an individual (the manufacturer of the plane) was successfully sued by another following an accident or incident involving a plane built by the "manufacturer". I know you can sue a ham sandwich, which is why I specifically asked about lawsuits that found the manufacturer liable.

Links to real cases would be very helpful.
 
Also kind of depends on how you define "successfully". IIRC there have been out of court settlements (John Denver's crash comes to mind).

In any event I think the probability of a suit is low - lawyers tend to go after deep pockets. So I guess it all depends on your net worth and whether you feel you are at risk.
 
Remember that even a successful defense against a lawsuit can still cost you many thousands of dollars...
 
rmartingt said:
Remember that even a successful defense against a lawsuit can still cost you many thousands of dollars...
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Thanks. I am aware of that and have an umbrella liability policy for that reason.

As with most insurance against liability, it needs to be big enough so that the insurance company will vigorously defend you and make the potential litigant think twice about suing.
 
KatanaPilot said:
Thanks. I am aware of that and have an umbrella liability policy for that reason.

As with most insurance against liability, it needs to be big enough so that the insurance company will vigorously defend you and make the potential litigant think twice about suing.
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Does your umbrella liability insurance cover aviation items? Some do not...
 
Selling a Homebuilt

How about the bill of sale that states that you sold "Miscellanious Aircraft Parts" to someone, even if they jump right in it and fly it home?
You can always say that "I just sold him parts" he must have not put them together right.
 
I've sold two RVs and used the EAA sales contract format - and recommend it for anyone selling an RV.

As we venture further into the nanny state, the rule of "anyone can sue anyone for any reason at anytime" becomes more prevalent. I strongly recommend you know the person you are selling to as this is, in my opinion, a good mitigation against unforeseen consequences.

Carl
 
It is just as likely, if not more so that you would be sued by the purchaser's family. Unless they signed some sort of waiver, which is almost never the case, getting a buyer to sign something ain't worth spit. You can't really eliminate the risk. All you can do is manage it by building and maintaining the airplane well and selling it to a person who is competent. Or you can part he airplane out.
 
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TajMahal said:
It's the attorneys for passengers along for the ride with the new owner that worries me more.

http://www.vansairforce.com/community/showthread.php?t=130797

(Not to revive that thread or discussion, just illustrate the point.)
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Yep. Some years ago there was an interesting article in, IIRC, AOPA Pilot. Written by a lawyer, he was proud of the fact that he had won two very similar aviation cases - one as plantiff's attorney, one as defense attorney. He said that in court, facts hardly matter. It's all about emotions and the show that's put on.
Now, that I find scary. I have not decided what I will do when my flying days are over. Probably sell and hope I'm not unlucky.
 
I've sold five experimental aircraft and have a sixth one for sale now. I always employ a sales contract with full indemnification clauses in place. Yes, they can still sue, but it's hard to convince a jury (or a defense lawyer to take the case) when the new owner completely indemnified me as the builder.

As long as you make no promises as to the airworthiness of the aircraft, and you do not mis-represent the airplane, chances are pretty low.
 
f1rocket said:
I've sold five experimental aircraft and have a sixth one for sale now. I always employ a sales contract with full indemnification clauses in place. Yes, they can still sue, but it's hard to convince a jury (or a defense lawyer to take the case) when the new owner completely indemnified me as the builder.

As long as you make no promises as to the airworthiness of the aircraft, and you do not mis-represent the airplane, chances are pretty low.
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I think you meant a plantiff's lawyer.
 
f1rocket said:
I've sold five experimental aircraft and have a sixth one for sale now. I always employ a sales contract with full indemnification clauses in place. Yes, they can still sue, but it's hard to convince a jury (or a defense lawyer to take the case) when the new owner completely indemnified me as the builder.
As long as you make no promises as to the airworthiness of the aircraft, and you do not mis-represent the airplane, chances are pretty low.
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One additional thing I do is try to have the next of kin sign the agreement as witness, as this is the person most likely to bring suit.
 
Log Book Sign Off

Also I think there must be some weight given to the last person who signed off the log books as "Airworthy". Since a new owner is not the original builder he will have to have all future maintenance done by an A&P IA. So I would expect that a new buyer wants to have the plane checked out so let it be an "annual" by an A&P IA and sign the log books. Seems like the whole purpose of signing off log books is to accept responsibility that the airplane is in airworthy condition.

Which brings up the question are folks who sell or buy completed RVs finding it easy for a new owner to get an A&P IA to to sign off and do annuals into the future?

Also, why "sell" it to your son? Why not make him a co-builder/owner so he can be the maintenance person of record into his future?
 
A Little Clarification......

sglynn said:
Also I think there must be some weight given to the last person who signed off the log books as "Airworthy". Since a new owner is not the original builder he will have to have all future maintenance done by an A&P IA. So I would expect that a new buyer wants to have the plane checked out so let it be an "annual" by an A&P IA and sign the log books. Seems like the whole purpose of signing off log books is to accept responsibility that the airplane is in airworthy condition.
Which brings up the question are folks who sell or buy completed RVs finding it easy for a new owner to get an A&P IA to to sign off and do annuals into the future?
Also, why "sell" it to your son? Why not make him a co-builder/owner so he can be the maintenance person of record into his future?
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First, An Experimental amateur-built aircraft can never be "Airworthy". The definition of airworthy is that the aircraft meets it's type certificate, which an amateur-built aircraft does not have.
An amateur-built aircraft is signed off as being "in a condition for safe operation."

Second, An IA has nothing to with an amateur-built aircraft. IAs are strictly involved with "certified" aircraft.

Third, Anyone can perform any and all maintenance on an amateur-built aircraft, up to and including modifications. The only thing a subsequent owner may not do is sign off the condition inspection.

Fourth, If the aircraft is already registered and certificated, co-builders may not be added.

Hope this helps clear things up a little.
 
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bill of sale

EAA used to have a bill of sale that required family members to sign. I had a potential buyer refuse to have them sign it because he said he wanted them to sue if something happened while he was in the homebuilt. I wasn't the original builder but this struck me as odd. Guess I never thought about it but I think that there may be a generation of new pilots that really don't know anything about experimental built airplanes and why they were set up that way from the beginning by some very smart people.
 
Mel said:
First, An Experimental amateur-built aircraft can never be "Airworthy". The definition of airworthy is that the aircraft meets it's type certificate, which an amateur-built aircraft does not have.
An amateur-built aircraft is signed off as being "in a condition for safe operation."
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But don't you, as a Designated Airworthiness Representative issue an Airworthiness Certificate. Everything else I agree with.
 
Jesse said:
But don't you, as a Designated Airworthiness Representative issue an Airworthiness Certificate. Everything else I agree with.
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Yes, It is an "Airworthiness Certificate" but it does not make the aircraft "Airworthy". That is just the title of the form.
For clarification on that issue, you will have to ask the FAA, and they don't answer "why questions"!
 
"Sell" was in quotes

sglynn said:
Also I think there must be some weight given to the last person who signed off the log books as "Airworthy". Since a new owner is not the original builder he will have to have all future maintenance done by an A&P IA. So I would expect that a new buyer wants to have the plane checked out so let it be an "annual" by an A&P IA and sign the log books. Seems like the whole purpose of signing off log books is to accept responsibility that the airplane is in airworthy condition.

Which brings up the question are folks who sell or buy completed RVs finding it easy for a new owner to get an A&P IA to to sign off and do annuals into the future?

Also, why "sell" it to your son? Why not make him a co-builder/owner so he can be the maintenance person of record into his future?
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He is an A&P so he can do the condition inspection regardless. But your point of having him as co-owner may have a lot of merit. That might help us avoid any potential estate or gift tax issues - since there may be some major changes to the tax laws next year.

The more I read about this, the more sense it makes to buy an existing airplane so that selling it in the future reduces my liability risk.

Too bad we have to worry so much about being sued. Kinda takes some of the fun out of this whole thing. And no, I don't spend all my time thinking about it - but I also don't want to make a poor decision.
 
I am one of those that has been hamstrung by the threat of a lawsuit for selling my RV. I'm married to a corporate lawyer, which doesn't make this any easier. And I've seen the video of the RV being scrapped by the jaws of of death and I just dont have the heart to do that.

Has anyone had any success selling their RV abroad? I suspect that, while the liability issue may not go away entirely, selling abroad may mitigate the exposure.
 
You know, everybody has their own thresholds of pain. Some fly night IFR & are terrified of acro. Others (me) have opposite thresholds.

I find it helpful to remember that risk, and perception of risk, are not the same thing. Most people think that as US citizens we are at more risk from crime, disaster, mayhem, etc than ever before. But the truth is, we are safer now than at any point in our history.

Every lawsuit over a homebuilt seems to 'make the news' in our circles, but no one seems to count up all the homebuilt crashes that *didn't* result in a suit.

FWIW...
 
I was third owner of a homebuilt that I sold as scrap. It was subsequently returned to flight and then has changed hands a few times.

I may have missed it, but I don't see mention in this thread about the issue of being named in a suit by subsequent owners (or subsequent owner next of kin, victims, etc) of the project. Person A might receive a hold-harmless agreement from buyer B, but if B then sells it to C, and C crashes...I must assume that persons A and B (and any subsequent owner or mechanic who did any construction on the project) is subject to be named in a suit from C's attorney, particularly if A (and/or B) has deep pockets, regardless of the merits.

Risk = likelihood of hazard occurrence x consequence of hazard occurrence. Certainly the likelihood of litigation is low, but you don't have to be co-named in very many Mickey Mouse deep pocket fishing expeditions to heavily consider the consequence of the litigation aspect of the equation as not worth the dollar value that you receive in selling the project. YMMV.
 
Jesse said:
But don't you, as a Designated Airworthiness Representative issue an Airworthiness Certificate. Everything else I agree with.
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The DAR issues an "Airworthiness Certificate" not a "Type Certificate". Can't meet the standards for a certificate that doesn't exist hence never "Airworthy".
:cool:
 
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Mel said:
Yes, It is an "Airworthiness Certificate" but it does not make the aircraft "Airworthy". That is just the title of the form.
For clarification on that issue, you will have to ask the FAA, and they don't answer "why questions"!
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Just to add a little info to Mel's accurate post. Our airplanes have a 'Special" Airworthiness Certificate because they have been deemed safe to fly but have no type design to conform to.

Similarly a certified airplane can receive a "Special Flight Permit" "Ferry Permit" if it is deemed safe for a particular approved flight but does not conform to it's type design for reason of equipment failure or damage, etc.
 
12 year rule?

Wasn't there a law passed several years ago that held aircraft manufacturers liable for 12 years from the date of manufacture and not thereafter? Is that true, and does it apply only to certified aircraft builders? John
 
You Americans are weird. I'd hate to go through life having to worry about this stuff :)

I bought an RV from someone who won't get sued. Will sell it when I'm done with it, and I won't get sued either.

I reckon hundreds of RVs are sold every year, and that'd stop in a nanosecond if lawsuits became an issue. I know you folks live in a litigious society, but is it really this litigious?

- mark
 
jpowell13 said:
Wasn't there a law passed several years ago that held aircraft manufacturers liable for 12 years from the date of manufacture and not thereafter? Is that true, and does it apply only to certified aircraft builders? John
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18 years and the bill was passed in 1994 -

https://www.gama.aero/advocacy/issues/product-liability/general-aviation-revitalization-act

There is a good EAA discussion here on liability -

http://www.eaa.org/en/eaa/aviation-...r-homebuilders-buying-and-selling-a-homebuilt
 
newt said:
You Americans are weird. I'd hate to go through life having to worry about this stuff :)

I bought an RV from someone who won't get sued. Will sell it when I'm done with it, and I won't get sued either.

I reckon hundreds of RVs are sold every year, and that'd stop in a nanosecond if lawsuits became an issue. I know you folks live in a litigious society, but is it really this litigious?

- mark
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No doubt there is a certain risk in the US compared to other parts of the world. However some of this is perception and the perception is highly influenced by flamboyant plaintiff's attorneys (who advertise incessantly), absurd lawsuits that get publicized (and rarely go anywhere in the justice system), and occasional outrageous jury awards which tend to be highly publicized. And in some ways our system is broken. In Canada and UK, "loser pays" (loser of a lawsuit pays the legal costs of the other party) helps keep down "frivolous" lawsuits. (Not sure about Australia but wouldn't be surprised if it is similar to UK).

The fact that no one on this forum has answered the question of a documented successful lawsuit against an individual builder is interesting to me: I suspect that the perception of risk is higher than the actual risk. A big problem of course is that it's hard to know if you're insured against a potential lawsuit - I have a substantial umbrella policy but have no idea whether it would cover me in this situation.

For me the best "defense" is to carefully document my build using photos and other records, having qualified experts look over my shoulder, and reaching out to Van's support (by email) when I have questions about the plans or an issue during building. I took a similar approach in my 30 years of medical practice - good clinical medicine and careful documentation - and was never sued, despite being in a high risk specialty (emergency medicine).


If I ever find myself considering selling the airplane I'm building, I'll have to assess the risk, but ultimately there is some risk in any decision along these lines. However, my point is that the perception is much worse than the reality.
 
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Minimizing risk during build

During construction, following the plans can help with risk management. If the plans call for a castle nut and cotter pin and you determine that a nylon lock nut will suffice, that change has moved the risk from Vans to you the builder. It's true that it's experimental and you can do what you want but maybe we should bounce changes off our peers and solicit feedback before making changes and substitutions. Just a thought.
 
Vans never had the risk, he didn't build the airplane. Whether you use a nylon locknut or a cotter pin, you're the manufacturer.

Having said that, see the previous post: I reckon there's a lot of jumping at shadows happening here. If this was a real problem, there'd be no market for second-hand homebuilts; it would have been sued out of existence years ago.

And yes: Australia is "loser pays." If you sue someone, and your case is without merit, you're going to be paying your victim's costs; so plaintiffs only "try it on" if they think they have a coherently argued chance of winning, and there are fewer opportunistic ambit claims. It seems to me that in the USA you can win yourself into bankruptcy if faced with a persistent litigant who drives up your legal costs. Much more difficult in countries with legal systems descended from the British Commonwealth.

When I'm done with my RV-6, I'll sell it, and that'll be the end of it for me.

- mark
 
One way to look at this is by putting the risk in perspective. I am flying an RV-8 and there have been at least 18 fatal accidents in RV-8s. There are about 1300 RV-8's built so that give me a probability of 1.3% of killing myself in an RV.

I heard of one (JD) incident where the manufacturer/builder of an experimental aircraft has actually been sued. There are about 33000 experimental airplanes licensed. So that makes it a 0.003% chance of being sued after I sell my airplane.

So it's about 400 times more likely that I kill myself then that somebody takes some of my money.

So looking at this I focus my efforts and energy on minimizing the first risk and don't worry to much about the second.

Oliver
 
spatsch said:
I heard of one (JD) incident where the manufacturer/builder of an experimental aircraft has actually been sued. There are about 33000 experimental airplanes licensed. So that makes it a 0.003% chance of being sued after I sell my airplane.
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Not to quibble your point, but you need the number of experimentals *sold* for the denominator, not the number of experimentals in toto.

Still going to be a tiny fraction, of course.
 
By far your best defense from a lawsuit is not being rich. Pretty simple really. Lawyers working on contingency (i.e. they get a % of the award and nothing upfront) are doing so hoping for a big payout. If you are Dow Chemical or Boeing or GE or a tobacco company then they see $$$$ signs at night in their dreams. If you are some working schlub (like me) they see a modest house, one suit (10 yrs old), a tatty old car and a lot of riveting tools. That's not exactly going to make their mouths water. ;)

And I don't know of a builder who has been successfully sued, but that is kind of like the guy who jumps off the empire state building and you hear him shout as he goes by the 20th floor "so far so good!". Being unsuccessfully sued would still be very stressful and financially devastating. So like flying, we do what we can to manage risk, but it is always there.
 
sblack said:
By far your best defense from a lawsuit is not being rich. Pretty simple really. Lawyers working on contingency (i.e. they get a % of the award and nothing upfront) are doing so hoping for a big payout. If you are Dow Chemical or Boeing or GE or a tobacco company then they see $$$$ signs at night in their dreams. If you are some working schlub (like me) they see a modest house, one suit (10 yrs old), a tatty old car and a lot of riveting tools. That's not exactly going to make their mouths water. ;)

And I don't know of a builder who has been successfully sued, but that is kind of like the guy who jumps off the empire state building and you hear him shout as he goes by the 20th floor "so far so good!". Being unsuccessfully sued would still be very stressful and financially devastating. So like flying, we do what we can to manage risk, but it is always there.
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Which is why I posed the question to begin with. I don't want to ignore the risk if there are steps I can take to reduce or eliminate that risk.
 
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