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Renting from an owner
Posted: Wed Feb 15, 2012 7:02 pm
Is there a way to rent from an owner?
I'm particularly interested in how to arrange the agreement, how to handle the insurance. [/i]
Posted: Wed Feb 15, 2012 8:01 pm
It is my understanding that any plane that is rented out to a non-owner or non-partner is subject to 100 hour inspections. As for insurance requirements, if there's only one renter involved, the easiest way to do this is to ask your existing insurance provider to add an additional named insured. Depending upon that person's experience, license, and time in type, the premium may be adjusted.
Posted: Wed Feb 15, 2012 10:27 pm
What kind of trouble would I be opening myself up to if I do a $1 buy in to make me an owner then any payment I make to my partner based on hourly usage would be me paying my share of expenses. We're not a commercial enterprise because we are not trying to make a profit, just pay expenses. Probably splitting hairs too closely.
Posted: Thu Feb 16, 2012 9:37 am
Frank, something pretty close to your idea was recently addressed here in another thread - use 'search' to find 'non-equity partner'.
When you use the term 'rent', I think you mean that you would pay an hourly rate for an a/c's use that is sufficient to cover the costs associated with your use, thereby incenting an a/c owner to allow you to use his/her a/c. That's the concept behind an a/c owner's choice to have a non-equity partner, where the partner has no vested monetary interest in the a/c but pays an agreed upon amount to use the a/c. The amount is negotiated between owner and N/E partner, can be based on all the fixed and hourly costs associated with the a/c (or only some of them), and so long as your use of the a/c (as the N/E partner) is not for commercial use, the FAA has no restrictions on this financial arrangement.
Insofar as insurance, as Paul mentions you could be named as an additional named insured on the owner's policy...but with the companies I recently shopped for coverage, there really was no restriction on coverage of non-named pilots (beyond the owner) being covered under my policy, provided they met the same minimum hours and use restrictions that applied to me. In your case, it would be best for the prospective owner and you to talk with the broker of the existing policy, seeking clarification from the underwriter on what is required. Be aware that you might be increasing the premium the owner pays, should you be less experienced and/or rated, but that can be addressed in the 'cost of use' negotiations.
Personally, I would recommend a formal agreement that spells out your obligations and the a/c owner's remaining rights with such an agreement. E.g. you wouldn't want to be liable for equipment, cabin and/or paint 'upgrades' and an agreement could make that clear. AOPA can provide you with some time-tested guidelines and a very practical co-ownership agreement, from which you can borrow what you wish, should you wish to research this further.
Good luck - given today's costs in aviation and the painful dormancy of most of the GA fleet, I think this is a worthwhile idea.
Posted: Thu Feb 16, 2012 11:10 am
Jack: Thorough and most insightful post, as always. Thanks!
Frank: Think about that "non-equity partner" option, maybe with a small monthly commitment, say $$$ per month + $$$ per hour over XX hours per month. It's probably a lot easier to approach an insurance company saying, "I am considering taking on a partner" (clarify non-equity partner in further discussion), than saying, "I'm considering renting my airplane out to someone by the hour".
All: There seems to be good interest in LSA sharing and pertnership options, which if done right could really make flying affordable to more pilots!
Posted: Thu Feb 16, 2012 11:23 am
All: I notice that this thread was started in the "Ask the Insurance Agent" forum. Although there are, of course, insurance implications, we seem to be discussing broader aspects of the partnership question. We have a "Partnerships" section of SportPilotTalk, to which this thread could likely be moved. I'm going to PM the domain owner, and ask if the thread can readily be transferred. Stay tuned.
Update 16 Feb 2012: Thread moved to "Partnerships".