Due Diligence in Aircraft Sales: Do You Know Who You’re Selling To?

June 10, 2025

Aircraft transactions involve many players – buyers, sellers, brokers, financiers and legal teams – all working to ensure a smooth and compliant sale. But one of the most important steps is also among the easiest to overlook: verifying who you’re selling to and how they plan to use the aircraft.

Failing to conduct basic due diligence can lead to legal liability, financial loss or even civil or criminal penalties if the aircraft is misused or exported in violation of export control and sanctions laws.

Due diligence does not have to be complex. It starts with basic research, asking the right questions, and maintaining records.

“Aircraft are heavily regulated, and aircraft transactions are subject to, among other things, U.S. export controls and economic sanctions,” said attorney Katie DeLuca, a partner at law firm Harper Meyer who specializes in business aircraft transactions. “Conducting due diligence and documenting due diligence that was performed is a crucial step in every aircraft sale transaction.”

Vetting the Buyers

A buyer may appear legitimate on paper, but are they who they claim to be? A few simple steps may uncover inconsistencies and reduce risk of fraud, non-compliance or future legal trouble. Here’s a brief, abbreviated, non-exhaustive to-do list:

• Identify the parties to the transaction. Who are the company’s officers or other principals? Who are the ultimate beneficial owners? Obtain copies of passports.
• Check the company’s website. Does it match the type of business they conduct? A vague or generic website with little information could be a red flag.
• Confirm the provided address. Is it a physical location? Verify it using online maps or business registries.
• See if the buyer’s company is registered and active. Obtaining a certificate of good standing and other company documents can assist to confirm legitimacy of a company.
• Run a check of the company, its beneficial owners, officers and directors, against restricted party lists. Are they listed on sanctions or other export control lists?
• Identify the end user of the aircraft. Find out what the aircraft will be used for and where it will be based and operated.

Red Flag: Reluctance to Disclose Information

“If a red flag comes up in the course of conducting due diligence, it does not necessarily mean that you can’t proceed with the transaction,” DeLuca said. “But it would necessitate further investigation and additional due diligence.”

If a potential buyer is hesitant to answer questions about ownership, the end-user or intended use of the aircraft, this could indicate an attempt to conceal a sanctioned buyer or misuse.

“If the buyer is reluctant to provide information about its beneficial ownership or the future use of the aircraft, it would be a major red flag,” DeLuca said. “If the buyer ultimately refuses to provide this information, it would be inadvisable for a seller to proceed with that transaction. Purchase agreements should be drafted with due diligence considerations in mind, so the seller has a clear ‘out’ if the buyer does not comply.”

Ask the Right Questions

Obtaining information about the end user of the aircraft and its intended end-use is critical to mitigate risks. Here are some key questions to pursue that may help:

• Will the buyer be the end user of the aircraft, or will they be leasing it or re-selling it after purchase?
• Where will the aircraft be based? What countries will it be operated in?
• What will the aircraft be used for?

“While all aircraft transactions involve risk, there is enhanced risk in cross-border transactions in light of U.S. export controls, sanctions and export customs clearance requirements,” said DeLuca. “Even if a deal does not seem to have an international angle because the buying entity is a U.S. entity, this may not be the case. The entities’ ultimate beneficial owners may be foreign persons, or the buyer may intend to export the aircraft from the U.S. It is critical to perform due diligence early in the transaction, so you know who you are really dealing with.”

By asking the right questions early in a transaction, sellers can spot inconsistencies and assess risks before committing to a deal.

Due Diligence Is a Continuous Process, Not a One-Time Check

Verifying the buyer should not just happen at the beginning of a transaction; it should continue throughout the negotiation, payment and closing process.

Here are a few tips that may help with that:

• Reconfirm buyer details if there are changes in ownership, payment sources or intended use mid-transaction.
• If a new entity is suddenly introduced to complete the deal, investigate why.
• Ensure all parties involved in financing and escrow are legitimate and aligned with compliance requirements.

Also, a sudden shift in buyer structure or financial arrangements could indicate an attempt to disguise the true buyer.

“If there is a change during the process, check again,” said Jeffrey Towers, general counsel with TVPX.

Maintain Due Diligence Records for 5 Years

Once the sale is completed, your responsibility as a seller does not end there. Keep in mind that regulatory agencies may audit past transactions and if an issue arises later, having a well-documented record of your due diligence can protect you from liability. In fact, maintaining records for five years aligns with many regulatory and industry compliance standards, ensuring that sellers can respond if authorities review the sale.

Experts say key documents to retain include, but are not limited to:

• Buyer verification records (emails, online research, business registration confirmations)
  Sanctions list screenings at the time of sale
• Aircraft use and end-user statements from the buyer or end user
• Payment records (to confirm no suspicious financial structuring)
• Correspondence and contracts showing due diligence steps taken

Overall, conducting due diligence when selling aircraft doesn’t require complex legal knowledge. However, it does involve asking the right questions, conducting basic verification and keeping records.

For more information, review NBAA’s Aircraft Transactions Guide.

“Getting to know who you are transacting with is key,” said Towers. “By doing a little bit more homework you can avoid risk.”