You found the perfect airplane. The seller agreed to your price. Everything looks great. Now comes the scary part: someone needs to hand over a lot of money, and someone else needs to hand over an airplane. But how do you make sure both things happen at the exact same time?

This happens thousands of times every year in the United States. According to the FAA Aircraft Registry, there are over 300,000 registered aircraft in the country, and many of them change hands through sales. When big money and important property switch owners, people need protection. That protection comes from aircraft escrow.

Think of it like this: you wouldn't mail cash to a stranger and hope they send you an airplane. And a seller wouldn't hand you the keys and hope your check doesn't bounce. Both sides need someone they can trust to make sure the deal goes smoothly. 

Let's start by looking at what actually happens when you buy an airplane and why this process can get tricky.

Key Takeaways

Aircraft escrow is when a neutral company holds your money and the airplane paperwork in a safe place until everything is ready. Then, on closing day, they send the money to the seller and the ownership papers to the buyer at the same time. This keeps everyone safe and makes sure nobody gets cheated. The whole process usually takes 3-7 days and costs between $300 and $4,000, depending on the airplane's price.

TopicWhat You Need to Know
What is it?A neutral third party holds money and documents until the sale is complete
Who does it?Special companies in Oklahoma City near the FAA office
How long?Usually 3-7 business days from start to finish
What does it cost?$300-$700 for small planes, up to $4,000 for jets
Who pays?Usually buyer and seller split the fee 50/50
Why use it?Protects both sides and makes sure all paperwork is correct

What Happens When You Buy an Airplane?

Buying an airplane isn't like buying a car or a house. You can't just meet in a parking lot and swap keys for cash. The FAA (Federal Aviation Administration) keeps records of who owns every airplane in America. Those records are in Oklahoma City, Oklahoma. When an airplane changes owners, the government needs to update all those records.

Here's what makes it complicated:

The Distance Problem

Nobody wants to travel to four different places just to buy one airplane. But somehow, everything needs to come together at the same time.

The Money Problem

Airplanes cost a lot of money. A small used plane might cost $50,000. A bigger plane could cost millions of dollars. The seller wants to make sure they get paid before handing over the keys. The buyer wants to make sure they actually own the airplane before sending that much money.

What if the seller takes your money and disappears? What if the buyer flies away in your plane and their check bounces? These aren't just worries. These things have actually happened to people.

The Paperwork Problem

Selling an airplane creates a mountain of paperwork. You need a bill of sale (the main document that transfers ownership). You need FAA forms. You might need papers from banks if someone borrowed money to buy the plane. You need proof that the airplane is safe to fly (called airworthiness certification).

All these papers need to be signed correctly, filed correctly, and sent to the right places. One mistake can delay the sale for weeks or even months. Even worse, one mistake might mean you don't actually own the airplane you just paid for.

Why Aircraft Sales Are Different from Other Purchases

When you buy a car, the title (proof of ownership) gets transferred at the DMV in your state. Takes maybe an hour. When you buy a house, a title company in your town handles everything. But airplanes are different because they fly. They cross state lines. They're registered with the federal government, not your state.

Federal Registration Makes Things Complex

Every airplane needs to be registered with the FAA. Think of it like a birth certificate for the plane. This registration shows who owns it, where it's based, and that it's legal to fly. When ownership changes, the FAA updates their records. But here's the catch: you can't fly an airplane while it's between owners and not properly registered.

That means everything needs to happen fast and at the same time. The old owner signs the papers. The new owner gets registered. The FAA updates their files. All in one day, all perfectly coordinated.

Big Money Means Big Risk

Most people don't carry around $100,000 in their pocket. So money moves by wire transfer (electronic bank transfer) or with special bank checks. But those can be faked or canceled. How do you know the money is real? How does the seller know they can actually cash that check?

Banks want proof too. If you borrowed money to buy the plane, your lender wants to make sure they have first claim on the airplane if you can't pay them back. They need documents filed correctly at the FAA showing they have what's called a lien (a legal claim on the property until the loan is paid off).

Hidden Problems Can Sink a Deal

An airplane might look perfect on the outside. But what if:

You need someone to dig into the aviation records and check everything. This is called due diligence. It means doing your homework before you buy. A title search looks at all the FAA records to make sure the airplane's history is clean and the seller really owns it.

Without this research, you could pay for an airplane and then find out you can't legally own it.

Enter the Middle Person: What Makes Aircraft Deals Safe

This is where the escrow agent comes in. Think of them as a trusted referee in the middle of the deal. They don't work for the buyer or the seller. They work for both of them by following the rules everyone agreed to.

What Does an Escrow Agent Do?

An escrow agent is usually a special company that handles airplane sales all day, every day. They know all the rules. They know all the paperwork. They have people who work right next to the FAA office in Oklahoma City. Some of these companies have been doing this for 50 or 60 years.

Here's what makes them so helpful:

They Hold Everything Safely

Think of it like putting everything in a locked safe. The key doesn't turn until both sides say they're ready.

They Check Everything

The escrow agent does the hard work of making sure all the documents are correct. They run the title search to check the airplane's history. They contact any banks that have a lien on the plane to get payoff amounts. They review the purchase agreement (the contract between buyer and seller) to make sure they follow all the rules.

This matters because one tiny mistake in paperwork can cause huge problems. If the seller's name is spelled wrong on the bill of sale, the FAA might reject it. If a bank's lien doesn't get released properly, you might not fully own your new airplane.

They Coordinate the Closing

On closing day, the escrow agent becomes like an orchestra conductor. They make sure everything happens in the right order at the right time:

  1. They confirm the buyer's money is real and ready
  2. They confirm all documents are signed and correct
  3. They get approval from both the buyer and seller
  4. They send the money to the seller by wire transfer
  5. They file all the papers with the FAA at the same time
  6. They make sure any old loans get paid off

All of this happens in minutes, not days or weeks. The seller gets their money. The buyer gets their airplane. The FAA records show the new owner. Everyone can relax.

How the Aircraft Escrow Process Works Step by Step

Let's walk through exactly what happens from the moment you decide to use escrow until you own your airplane. This process usually takes about a week, but it can be shorter or longer depending on how complicated the sale is.

Step 1: Opening an Escrow Account

First, someone needs to call an escrow agent company. Usually the buyer does this, but the seller can do it too. You'll need to give them some basic information:

The escrow company opens an account for your sale. Some companies do this for free. Others might charge a small setup fee. They'll send both sides a document called an escrow agreement. This lays out all the rules for how the sale will work.

Step 2: The Title Search Begins

Here's where things get interesting. The escrow agent orders a title search from the FAA records. Think of this like a background check for the airplane.

A trained expert looks at every document ever filed for this airplane:

This search usually takes 24 to 48 hours. It might cost $85 to $190, but often it's included in your escrow fee. The title search tells everyone if there are any problems that need to be fixed before the sale can happen.

Step 3: Putting Your Money in Safe Hands

Now the buyer needs to show they're serious. Most deals require a deposit of 5% to 10% of the total price. So if you're buying a $100,000 airplane, you might put down $5,000 to $10,000.

This money goes into the escrow account. It sits there safely. The seller can't touch it. The buyer can't take it back (unless the deal falls apart for a good reason listed in the purchase agreement). The money is insured and protected, usually by companies that have millions of dollars in insurance coverage.

Step 4: Collecting All the Papers

While the title search is running, everyone starts gathering their paperwork. This is like collecting all the ingredients before you start cooking.

From the Seller:

From the Buyer:

From Banks (if there are loans):

All these papers go to the escrow agent. They review everything to make sure it's complete and correct.

Step 5: The Inspection Period

Most purchase agreements give the buyer time to inspect the airplane. You want to make sure it's actually in good condition before you commit your money.

The buyer usually hires a mechanic to do a pre-purchase inspection. This can take a few hours to a few days. The mechanic checks the engine, the structure, all the systems. They look at the maintenance records to make sure work was done properly.

If the inspection finds problems, three things can happen:

The escrow agent holds onto everything during this waiting period. Nothing moves until the buyer says "yes, let's close the deal."

Step 6: Final Funding

Once the buyer approves the airplane, they need to send the rest of the money to escrow. Most people do this by wire transfer because it's fast and secure. The escrow company verifies that the money arrived and that it's real and cleared.

If the buyer is using a lender (borrowing money to buy the plane), the bank sends its portion directly to escrow. The bank usually wants to see proof of insurance first. They need to know their investment is protected.

Step 7: The Big Closing Day

This is when everything happens at once. Both the buyer and seller give the escrow agent written permission to close the deal. The escrow company checks one final time that they have everything:

✓ All the money ✓ All the signed papers ✓ All the approvals ✓ Payoff amounts from any old loans

Then they spring into action. Within minutes:

Because the escrow companies are in Oklahoma City, they can walk the papers right into the FAA office. They don't have to mail them and wait. The registration happens immediately. This means the buyer can actually fly the airplane that same day.

How Much Does Aircraft Escrow Cost?

Let's talk about money. Using an escrow agent costs money, but it's usually a very small percentage of what you're spending on the airplane itself.

Typical Escrow Fees

For a small airplane (under $100,000): $300 to $500 For a medium airplane ($100,000 to $500,000): $400 to $700 For a large or business jet (over $500,000): $400 to $4,000+

The fee depends on how expensive the airplane is and how complicated the sale is. A simple sale between two people costs less than a sale involving multiple banks, trade-ins, or international buyers.

What's Included in That Fee?

Your escrow fee usually covers:

Who Pays?

In most aircraft sales, the buyer and seller split the escrow cost 50/50. So if the fee is $600, each person pays $300. But this is negotiable. Sometimes the buyer offers to pay the whole thing to make the deal more attractive. Sometimes it's written into the purchase agreement that the seller pays.

Extra Costs to Know About

Some situations add extra fees:

Is It Worth the Cost?

Think about it this way: if you're spending $100,000 on an airplane, $400 is 0.4% of that price. Less than half of one percent. That tiny cost protects you from huge problems like:

Most people in aviation say escrow is absolutely worth it. It's cheap insurance for peace of mind.

What Could Go Wrong Without Escrow?

Some people think they can save money by skipping escrow. They figure they can handle the paperwork themselves. But this can lead to disasters. Here are real problems that happen when people try to do aircraft sales without an escrow agent.

Hidden Liens Come Back to Haunt You

Imagine you buy a plane for $80,000. Six months later, a bank contacts you. They say the previous owner owed them $30,000 and they have a lien on your airplane. They want their money, and legally, they might have a claim on your plane.

Without a proper title search before the sale, you didn't know about this debt. Now you have three bad choices:

An escrow agent would have found that lien before you handed over your money. They would have made sure it got paid off as part of the closing.

The Seller Takes Your Money and Runs

You wire $50,000 to a seller. They promise to send you the bill of sale and airplane keys after the money arrives. Then they stop answering your calls. Your money is gone. You have no airplane. You have no paperwork.

This is rare, but it happens. And once the money is in their account, getting it back is very hard. You'll need lawyers. You might never see that money again.

With escrow, the seller never touches your money until you have the airplane and all the paperwork in your hands.

Paperwork Mistakes Cause Months of Delays

You try to register your new airplane with the FAA. They reject your application. The seller's name on the bill of sale doesn't exactly match the name on the old registration. Maybe they signed "Robert Smith" but the registration says "Robert J. Smith." The FAA won't accept it.

Now you need to track down the seller again. Get them to sign new papers. Submit everything again. Wait weeks for the FAA to process it. During this time, you can't legally fly the airplane you paid for.

A good escrow agent reviews every document before filing. They catch these mistakes and fix them before they become problems.

Banks and Liens Get Tangled Up

Let's say the seller still owes $20,000 to a bank. You're getting a loan from your own lender. Both banks need to file paperwork with the FAA to protect their interests. But they need to do it in the right order.

If you file your bank's lien first, and then the old lien gets released, your bank has first position. That's good. But if someone files things in the wrong order, your bank might end up in second position. That means the old bank's claim is more important than your bank's claim.

Your lender probably won't accept second position. They might cancel your loan. Now you can't buy the airplane, even though you already started the process.

Escrow agents handle this kind of coordination every day. They know exactly what order to file things. They work with both banks to make sure everyone's protected.

Closing Day Chaos

Everything is supposed to happen at the same time: the seller gets money, you get the airplane, the FAA gets the new registration. But without an escrow agent, coordinating all of this is nearly impossible.

What if the seller's bank takes three days to process the payoff? What if your wire transfer gets delayed? What if the FAA office is closed when you try to file papers? Without someone managing the timeline, the sale can fall apart at the last minute.

Who Needs to Use Aircraft Escrow?

Almost everyone should use escrow for an airplane sale. But let's look at specific situations where it's extra important.

When Escrow Is Absolutely Necessary

If You're Using a Lender Any time a bank is involved, they'll probably require escrow. Your lender wants to know their money is protected. They want a professional escrow agent to handle the lien paperwork and make sure it gets filed correctly with the FAA. Most loan agreements actually require escrow as part of the deal.

If the Airplane Has Existing Debt When the seller still owes money on the airplane, escrow is critical. The escrow agent coordinates the payoff with the seller's lender. They make sure the old lien gets released at the exact same time you become the new owner. Without this coordination, you could end up owning an airplane that legally still belongs to someone else.

For Expensive Aircraft The more money involved, the more important escrow becomes. If you're spending $200,000 or more, the escrow fee is tiny compared to the risk you're taking. The peace of mind alone is worth it.

For International Buyers or Sellers When one party is in another country, escrow is essential. Currency exchange, international wire transfers, import/export paperwork—it all gets complicated. You need professionals who handle international aviation deals regularly.

For Business Jets and Larger Aircraft Planes that seat 8+ people usually fall under something called the International Registry. This adds a whole extra layer of paperwork and requirements. An escrow agent who knows this system can save you from expensive mistakes.

When You Might Skip Escrow (But Probably Shouldn't)

Cash Deal Between Friends If you're paying cash (no banks involved) and you personally know and trust the seller, you might be able to do the sale face-to-face. You hand them a cashier's check. They hand you a signed bill of sale. You both go to the post office and mail the registration papers to the FAA together.

But even then, you should still get a title search first. You need to know if there are any hidden liens or problems. And you need to be 100% sure you're filling out all the forms correctly.

Very Cheap, Simple Aircraft For a basic ultralight or small experimental aircraft under $20,000, some people handle the sale themselves. The risk is lower because you're not risking huge money. But you're still vulnerable to title problems and paperwork mistakes.

The Smart Choice

Most aviation professionals say: just use escrow. The cost is tiny. The protection is huge. Even experienced pilots and aircraft owners use escrow for their own personal plane purchases. It's simply the smart, safe way to buy an airplane.

Choosing the Right Escrow Company

Not all escrow agents are the same. Some have been doing this for decades and close thousands of deals each year. Others are newer or less experienced. Here's how to pick a good one.

Location Matters: Oklahoma City

The best escrow companies are in Oklahoma City, Oklahoma. Why? Because that's where the FAA Aircraft Registration office is located. Companies there can literally walk your paperwork into the FAA office on closing day. Your registration happens immediately, not weeks later.

Compare that to a company in another state. They have to mail everything and wait. During that waiting time, you can't legally fly your airplane. You're paying insurance and hangar fees on a plane you can't even use.

Experience and Volume

Look for companies that:

The major companies often close 2,000 or more escrow deals every year. That means they've seen every possible problem and know how to solve it.

Insurance and Bonding

Your escrow agent should be fully bonded and insured for millions of dollars. This protects your money if something goes wrong. Ask them:

Reputable companies will tell you this information proudly. If they hesitate or won't answer, that's a red flag.

Services They Offer

Good escrow companies offer more than just holding money:

Questions to Ask Before You Hire Them

Call two or three escrow companies and ask:

  1. How many aircraft escrow deals do you close per year?
  2. Are you located in Oklahoma City near the FAA office?
  3. What is your typical timeline from opening escrow to closing?
  4. What's included in your escrow fee?
  5. Do you handle International Registry if needed?
  6. Can you provide references from recent clients?
  7. What happens if the deal falls through?

Their answers will tell you a lot. The best companies are friendly, patient, and happy to explain everything. They understand that buying an airplane is a big deal for you.

Red Flags to Watch For

Avoid escrow companies that:

Cost Isn't Everything

The cheapest escrow agent isn't always the best choice. Saving $100 on the escrow fee doesn't help if they make mistakes that cost you $10,000 in legal fees later. Choose based on reputation, experience, and service, not just price.

Most aircraft sales professionals say the escrow fee is the best money you'll spend on the whole purchase. It protects your investment and gives you peace of mind that everything will be done right.

Conclusion

Buying an aircraft is exciting, but it comes with real risks. You're spending a lot of money. You're dealing with federal regulations. You're trusting someone you might not know very well. Aircraft escrow solves all these problems by putting a professional, neutral party in the middle of the deal.

For a few hundred dollars, an escrow agent protects both the buyer and seller, makes sure all the paperwork is perfect, coordinates with banks and the FAA, and ensures everyone gets exactly what they're supposed to get. The process takes less than a week in most cases, and you end up with an airplane you truly own, with clean title, ready to fly.

Thousands of planes change hands this way every year. It's the standard way to buy and sell aircraft in America. Now that you know how it works, you can move forward with confidence.

Want to learn more about buying your dream airplane? Visit Flying411 for expert guides, aircraft listings, and resources to help you navigate every step of the aviation ownership journey.

Frequently Asked Questions

Can I be my own escrow agent to save money?

Technically yes, but it's a very bad idea for most people. Being an escrow agent requires knowing all the FAA regulations, understanding lien law, coordinating multiple banks and parties, and having the ability to file documents correctly in Oklahoma City. One mistake could cost you thousands of dollars in legal fees or even cause you to lose the aircraft. The small amount you'd save isn't worth the enormous risk. Professional escrow companies have been doing this for decades and have insurance to protect you if anything goes wrong.

What happens to my deposit if the deal falls apart?

It depends on what your purchase agreement says and why the deal failed. If the buyer backs out during the inspection period (before accepting the aircraft), they usually get their full deposit back. If the seller can't deliver clear title or the airplane isn't in the promised condition, the buyer gets the deposit back. But if the buyer backs out after agreeing to buy (after technical acceptance), the seller might keep some or all of the deposit as compensation for taking the plane off the market.

How long does the escrow process take from start to finish?

A straightforward aircraft escrow typically takes 3-5 business days, but this can vary. Simple deals between two people with no banks involved might close in 3 days. Complicated deals with multiple lenders, International Registry requirements, or year-end tax timing might take 7-10 days. The inspection period isn't included in this timeline—that's separate and usually takes several days to weeks depending on the purchase agreement terms and mechanic availability.

Do I need escrow if I'm buying from a reputable aircraft dealer?

Yes, even reputable dealers use escrow for their sales. In fact, established dealers prefer escrow because it protects them too. It proves they delivered clear title and followed all the rules. It protects their reputation. Most dealers have relationships with specific escrow companies they work with regularly. Using escrow actually makes the dealer look more professional and trustworthy. The only time you might skip it is for very small aircraft purchases under $20,000 between individuals, but even then it's risky.

Can the escrow agent help if the seller and I disagree about something during the sale?

The escrow agent acts as a neutral referee, but they can't force either party to do anything. If you and the seller disagree about inspection results, repair costs, or other terms, the escrow agent will follow what the purchase agreement says. If the agreement doesn't cover the specific disagreement, the escrow agent will hold everything (money and documents) until both parties work it out or until one party legally cancels according to the contract terms. They won't take sides or make decisions for you.