Blog

Updated Feb 1, 2026

A practical guide for piston, turboprop, and jet owners

Selling an aircraft is already a detailed process. Selling a financed aircraft adds an additional layer that many owners underestimate: you don’t just have to transfer the airplane — you must also properly clear the lender’s recorded security interest so the buyer receives clean title.

When handled correctly, this is routine. When handled casually, it is the number one reason aircraft deals fall apart at closing.

This guide walks through timing, preparation, lender coordination, escrow mechanics, FAA paperwork, and common pitfalls for both private sellers and brokers.

Why financed aircraft sales fail (and how to prevent it)

Most failed transactions come down to one issue:

The seller waits until closing week to figure out payoff details, lien release mechanics, or title problems.

Buyers, lenders, and escrow agents do not like surprises. The earlier you prepare the financial and title side, the smoother and faster your sale will be.

Step 1 — Understand what “financed” changes

You can market, negotiate, and conduct a pre-buy inspection exactly like any other sale.

What changes is the closing logistics. The lender has a recorded security agreement on file with the

Federal Aviation Administration Aircraft Registry. That must be formally released before the buyer can obtain clean title.

This means the buyer’s funds do not go directly to you. They go through escrow, which pays the lender first, then you, and coordinates the lien release and FAA filings at the same time.

Step 2 — Timing the market vs. timing your readiness

Market timing (external)

Watch:

• Avionics demand (WAAS, ADS-B, glass panels)
• Engine time to TBO
• Interest rates (affects buyer financing)
• Comparable listings on Controller, Trade-A-Plane and Skyfarer

Readiness timing (internal — more important)

List when you have:

• Complete logs
• A clean title search
• A payoff plan ready
• A realistic price supported by comps

This alone can increase buyer confidence more than any cosmetic upgrade.

Step 3 — Call your lender before you list

Ask for:

• 10-day payoff statement
• Wire instructions
• Prepayment penalties (if any)
• Required notice period
• Whether loan assumption is allowed (rare, but possible)

This takes 15 minutes and prevents weeks of delay later.

Step 4 — Order a title search early

Have an aviation escrow/title company run an FAA title search before listing.

This catches:

• Old unreleased liens (“title clouds”)
• Name mismatches
• Recording errors
• Chain-of-title issues

Organizations like AOPA and most aviation escrow firms strongly recommend this before you ever accept a deposit.

Step 5 — Prepare the documents buyers and lenders care about

Buyers and their lenders judge aircraft value by documentation quality.

Have ready:

• Airframe, engine, prop logs
• STCs and 337s
• AD compliance summary
• Last annual
• Damage history disclosure
• Avionics list and photos
• Registration copy

Step 6 — Use aviation escrow (this is non-negotiable)

Escrow synchronizes:

1. Buyer funds
2. Lender payoff
3. Seller proceeds
4. FAA filings
5. Lien release recording

Without escrow, someone is exposed to unnecessary risk.

Typical flow:

1. Purchase agreement signed
2. Escrow opened
3. Title search confirmed
4. Payoff received from lender
5. Closing day:
   • Escrow pays lender
   • Escrow pays seller
   • Escrow files documents with FAA

Step 7 — What a proper lien release actually means

Many sellers think:

“The loan is paid, so the lien is gone.”

Not true.

The lender must execute a formal release document that references the original recorded security agreement and send it for FAA recording.

The FAA commonly uses:

• AC Form 8050-41 (Conveyance Recordation Notice) as a release instrument when properly signed.

Simply stamping “PAID” on a document is not sufficient.

Step 8 — FAA paperwork involved in your sale

You will be involved with AC Form 8050-2 (Aircraft Bill of Sale) and the buyer will file AC Form 8050-1 (Registration Application). In addition, the lender’s lien release must be recorded.

The seller’s name on the Bill of Sale must match the current registration exactly.

Step 9 — Special scenarios sellers often face

If you have equity, the sale price exceeds the payoff and you receive the difference.

If you are upside-down, you must wire the shortfall into escrow at closing.

If the buyer wants to assume your loan, this is only possible with lender approval and proper documentation.

Be aware that some tax liens or mechanic liens may not appear in FAA records and additional searches may be required.

Step 10 — Pricing a financed aircraft correctly

If you overprice the aircraft, the buyer’s lender appraisal may come in lower than your asking price. This reopens negotiation during escrow and often causes buyers to walk away.

Support your price with comparable listings from Controller and Trade-A-Plane.

Step 11 — Marketing practices that help buyers get financing approved

Include in your listing:

• Total time airframe/engine/prop
• Avionics details
• Damage history transparency
• High-quality logbook photos
• Clear ownership status
• Statement that sale will be handled via aviation escrow

This signals professionalism to buyers and lenders.

Seller Checklist

Before Listing

• [ ] Call lender for payoff info
• [ ] Order FAA title search
• [ ] Organize logs and documents
• [ ] Research comps
• [ ] Select escrow company

During Sale

• [ ] Use written purchase agreement
• [ ] Open escrow immediately after deposit
• [ ] Provide payoff to escrow
• [ ] Confirm lien release process with lender

At Closing

• [ ] Escrow pays lender
• [ ] Escrow receives lien release
• [ ] Escrow files FAA documents
• [ ] You receive proceeds

Sample Purchase Agreement Language (Escrow and Payoff)

“Closing shall be conducted through a mutually agreed aviation escrow service. Buyer’s funds shall be applied first to satisfy Seller’s outstanding lender payoff per written instructions from the lender. Seller authorizes escrow agent to remit payoff funds directly to lender and to record all necessary lien release documentation with the FAA Aircraft Registry as part of closing.”

Sample Lien Release Coordination Email to Lender

“We are preparing to sell the aircraft N_____. Please provide a 10-day payoff statement, wire instructions, and the required documentation your institution will provide to release the recorded security agreement upon receipt of payoff funds. Escrow contact details are below for coordination.”

The advice most sellers wish they had earlier

The aircraft sale itself is straightforward.

The paperwork and timing around the lien is what determines whether you close smoothly or watch the buyer walk away in the final week.

Handle the financial and title side first, and the rest of the sale becomes easy.