by Glenn Graham
“A deed, a bond, money, or a piece of property held in trust by a third party to be turned over to the grantee only upon fulfillment of a condition” is the Merriam-Webster definition of Escrow.
A question often asked is should I use an Escrow Agent or not? As the seller of an aircraft you may not have a choice and the buyer may not agree to the sale unless an Escrow Agent is involved. That being said, if the seller or the buyer suggests escrow, if agreed upon, the agent of choice should be one that is mutually acceptable to both parties. I have been part of many aircraft transactions that have had an Escrow Agent involved and many without. All have gone smoothly and both the buyer and seller have walked away very happy, but there are benefits to escrow.
In short, during the aircraft purchase or sales transaction, the Escrow Agent assists with the transaction, acts as a neutral third party, and is independent of the seller, buyer and broker. They help to avoid a conflict of interest during an aircraft sale. It is very important however, that the seller and buyer jointly agree on the steps or conditions in the escrow process as this will alleviate any surprises at closing.
During the sale process, Escrow Agents will hold “In Trust” the buyer’s funds as well as the appropriate ownership documents from the seller. This will be agreed upon in the letter of intent or purchase agreement. The funds and appropriate documents will be held until closing. At closing, by way of written instructions from both the buyer and seller, the buyer’s funds are released to the seller and the ownership documents are released to the buyer. If Escrow is not used, and I am not saying you have to, but things could get messy when documents are missing, brokers are asked to hold funds and monies take longer than expected to clear at the bank.
Not only the bridge between the seller and the buyer, other services provided by Escrow Agents are title and lien searches; title clearing and filing of documents with Transport Canada or the FAA; Import/ Export document support and International Registry registrations or discharges; only to name a few.
Like everything in aviation, escrow services do cost. Speak with the escrow agency and they will explain their fee structure. I have found that most fees are based on the size of the transaction; the sale price of your aircraft will dictate the fee but don’t worry, if both you and the buyer agree to escrow the fees are usually split 50/50; but again make sure this is agreed upon.
If you are looking for aircraft title and escrow services, most are found in Oklahoma City, Oklahoma. This is where the FAA Civil Aircraft Registry is located and it makes registering an aircraft after a sale easier, as the FAA office is right there. That is great if you are in the United States but we Canadians buy and sell aircraft all the time. Here in Canada, the first and only escrow service is EscroAir, located in Toronto, Ontario. I have used and recommend EscroAir’s Services;’s and I can say they are very knowledgeable, professional and do a great job.
As the seller of an aircraft you may or may not have a choice when it comes to escrow, but just like the aircraft broker, the escrow agent’s job is to make sure the aircraft sales transaction is a positive experience, but more importantly, it goes smoothly for both the seller and the buyer.
If you are in the market to Sell or Buy an aircraft, contact us through our website or telephone me directly at
1-(705) 923-1552.
