AX-O

AX-O

Well Known Member
My buddy is thinking about going into a partnership on an RV. He does not know much about it. I told him I would post and see if someone could provide some feedback. He is interested in the plus and minuses of partnership. Also, if you have an agreement that you and your partner are using (that works for you), could you please send it to me via email? Thank you for any help or guidance you can provide.
 
AX-O said:
My buddy is thinking about going into a partnership on an RV. He does not know much about it. I told him I would post and see if someone could provide some feedback. He is interested in the plus and minuses of partnership. Also, if you have an agreement that you and your partner are using (that works for you), could you please send it to me via email? Thank you for any help or guidance you can provide.
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From the forum search engine:

http://www.vansairforce.com/community/showthread.php?t=57861&highlight=partnership

http://www.vansairforce.com/community/showthread.php?t=35138&highlight=partnership

http://www.vansairforce.com/community/showthread.php?t=30599&highlight=partnership
 
One note of caution on partnerships

AX-O said:
My buddy is thinking about going into a partnership on an RV. He does not know much about it. I told him I would post and see if someone could provide some feedback. He is interested in the plus and minuses of partnership. Also, if you have an agreement that you and your partner are using (that works for you), could you please send it to me via email? Thank you for any help or guidance you can provide.
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I recently read an article on partnerships on AVWeb which really cooled me on the idea of a partnership. I didn't realize that as a partner you are 100% legally responsible for the actions of your partner. In the article the author related a story about a man who was completely wiped out financially, lost his home, everything, because his partner ran out of fuel, crashed and killed himself and a passenger. The partner, who wasn't in the airplane at the time, was held legally responsible for the accident.

Not saying that a partnership can't be a great thing, but just be aware of the legal ramifications of your agreement.
 
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I was in a partnership before owning my RV. They work well if set up correctly. I would be happy to talk to your friend about how ours was set up. PM me to exchange numbers if he is interested.
Tim
 
jtrusso said:
I recently read an article on partnerships on AVWeb which really cooled me on the idea of a partnership. I didn't realize that as a partner you are 100% legally responsible for the actions of your partner. In the article the author related a story about a man who was completely wiped out financially, lost his home, everything, because his partner ran out of fuel, crashed and killed himself and a passenger. The partner, who wasn't in the airplane at the time, was held legally responsible for the accident.

Not saying that a partnership can't be a great thing, but just be aware of the legal ramifications of your agreement.
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One of the partnerships I was in (and it worked very well) was set up as a corporation specifically to shield individual shareholders from personal liability.

A partnership is a business agreement, treat it with the same respect and caution you would use if going in business with someone. Be sure it is a solid legal arrangement with all specifics spelled out per by-laws.
 
partnerships

jtrusso said:
I recently read an article on partnerships on AVWeb which really cooled me on the idea of a partnership. I didn't realize that as a partner you are 100% legally responsible for the actions of your partner. In the article the author related a story about a man who was completely wiped out financially, lost his home, everything, because his partner ran out of fuel, crashed and killed himself and a passenger. The partner, who wasn't in the airplane at the time, was held legally responsible for the accident.

Not saying that a partnership can't be a great thing, but just be aware of the legal ramifications of your agreement.
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I recently bought a 1/3 share of a Cherokee 160. It is held in a LLC which is "supposed" to shield the other partners. That said, anyone can be sued anytime for anything and I really hope I don't have to test the LLC issue. The partnership sure makes airplane ownership affordable for me. :) As with everything else, it's all about risk management.
 
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Careful Does It

My first taste of personal ownership was in a two-person partnership. That was a great experience. Several things that made it work well -- we created an LLC to own the plane. We hammered out a usage agreement ahead of time that spelled out everything we thought would realistically come up. It was a new partnership so we started on equal footing. We chose the plane together and made maintenance decisions together. We had different flying habits -- different times and places that we tended to fly. We hammered out the financial side of things pretty thoroughly and had few surprises.

Most importantly, though we were quite different in some ways, we turned out to be quite compatible. We could communicate well, and when it came time to part ways, we were able to do it amicably.

On the flip side, after a move to a different part of the country, I'm now in airplane search mode again. I went a long way down the road with an existing partnership. I would have been the third partner. The other two are LONG term owners of the plane. After quite a few conversations, I backed out because, while I know and consider both men friends, I wasn't comfortable with the dynamics of the partnership. It would have been uncomfortable too many times to be worth the cost savings.

So, in my experience, careful does the trick. Think things through ahead of time. Put the ownership in an LLC. Have written agreements ahead of time. At the end of the day, is the partner someone with similar values about property, someone you enjoy shooting the breeze with, working on the plane?
 
I was in a partnership on our first RV with a really good guy. Only time we disagreed was over panel upgrades when one wanted it and the other did not, resolved when we sold out. But a bone of contention for awhile.

Many, many benefits while partners, like cost sharing, maintenance ditto, friendship still alive and well. I would do it again with a like minded individual.
 
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I'm currently in a co-ownership with a partner in our RV-6. Great guy, working out very well. The hard part has been finding someone equally compatible now that he wants to sell his half interest; we'll end up putting the airplane on the market instead, since I can't afford to buy him out. Too bad, but meanwhile I've been able to fly a much nicer plane than I otherwise would be able to.

As long as you're asking about possible partnership arrangements, there's an interesting one a friend of mine up at Palo Alto has been using for 20 years.

Rob is the sole owner listed on the aircraft's registration. He showed me the one-page partnership agreement that basically says "Each of the undersigned has equal ownership in Nxxxx and has equal vote in major alterations and will split fixed costs."

I read it and said "No LLC? No S-corp? No registered co-ownership? No nothing?!"

He said "This way there's no incorporation fees or tax returns, and moving someone in or out of the partnership doesn't show up as a taxable event."

I said "What if something bad happens?"

He said "We talk about it and try to do the reasonable thing. If things get to the point where lawyers get called in, an LLC isn't really going to help anyway. And things have never got to that point."

I said "You must have good partners, how can you be sure someone will work out?"

He said "I fly with them first. You can tell a lot about someone by flying with them..."

FWIW.

--Paul
 
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