An escrow agent is an independent third party, generally an aircraft title service, who facilitates the closing of an aircraft purchase transaction. The title services are usually located near the FAA Aircraft Registry in Oklahoma City.
The escrow agent collects the required funds from either the buyer and/or the representative finance company. These funds are then deposited into an escrow account, which may be an interest bearing account. If the purchase is financed, any and all necessary documents that establish its future lien will also be collected by the escrow agent. The buyer will submit the FAA registration application at this time as well. All of the buyer’s funds and required documentation, including the application for registration are held by the escrow agent.
Simultaneously, all of the seller’s necessary funds and aircraft title documentation are also given to and held by the escrow agent. The seller’s documents should include an executed FAA bill of sale.
Once all of the required paperwork and monies are collected, the escrow agent will submit the required paperwork to the FAA, pay off the existing liens and remit any proceeds owed to the seller, using the money that was placed into the escrow account. Once all of these items are distributed and filed, the escrow agent most likely will perform a final title search, ensuring that a clear title has been recorded to the buyer.
The use of an escrow agent ensures the buyer that all documentation and funds are transacted in accordance with the FAA and that there are no surprises before, during or after the transaction, while making certain that the seller and lienholder are paid as appropriate.
