How to leave a share
Thread Starter
Joined: May 2001
Posts: 39
Likes: 0
From: Hampshire
How to leave a share
Thinking of buying a share, but have a concern over what happens if I need to get out.
Given the type of industry I am in (Semiconductors) it is very cyclic and have been made redundant 4 times in last 10 yrs.
So what is the usual way or best way of handling this situation, if through a set of circumstances you can no longer afford to pay the monthly subscription.
Any comments or advice would be welcome, or tales of people who have been in similar circumstances
WAL
Given the type of industry I am in (Semiconductors) it is very cyclic and have been made redundant 4 times in last 10 yrs.
So what is the usual way or best way of handling this situation, if through a set of circumstances you can no longer afford to pay the monthly subscription.Any comments or advice would be welcome, or tales of people who have been in similar circumstances
WAL
Moderator
Joined: Feb 2000
Aviation Qualifications: CPL
Posts: 14,480
Likes: 178
From: UK
Nobody is likely, I'm afraid to be sympathetic in any syndicate to any member unable to keep up their monthlies - put bluntly, that'll be your problem.
As to leaving - it's straightforward. Advertise the share, find a buyer, and before completing the sale ensure that the syndicate / syndicate committee is happy that your buyer meets their criteria (whatever they happen to be) for membership.
G
As to leaving - it's straightforward. Advertise the share, find a buyer, and before completing the sale ensure that the syndicate / syndicate committee is happy that your buyer meets their criteria (whatever they happen to be) for membership.
G
Joined: Aug 2002
Posts: 205
Likes: 0
From: northants
Remembering, the new member pays the group for the share, you will then be repaid your share, less any outstanding monies if you have failed to pay the monthly fees.
Ofcourse if you fail to pay the monthly fees, you also forfeit the right to fly the aircraft.
Ofcourse if you fail to pay the monthly fees, you also forfeit the right to fly the aircraft.
Joined: Aug 2000
Posts: 3,648
Likes: 2
From: UK
I used to be in a group where it worked like this:
* You give notice of your intention to sell your share.
* For a 6 month period you are expected to make reasonable efforts (e.g. advertising in mags) to sell it.
* After 6 months without a sale, the rest of the group has the option of either buying out the share or putting the entire aircraft up for sale.
Seemed to work fairly well.
* You give notice of your intention to sell your share.
* For a 6 month period you are expected to make reasonable efforts (e.g. advertising in mags) to sell it.
* After 6 months without a sale, the rest of the group has the option of either buying out the share or putting the entire aircraft up for sale.
Seemed to work fairly well.
Joined: Apr 2003
Posts: 2,359
Likes: 0
From: Midlands
It has never happened to me, but I have been in two groups in which it has happened to other people. In both cases a great deal of sympathy was shown. Monthly payments were suspended. The group sold the share and took out what was owed, returning the rest to the former member. Getting upset about a member losing their job achieves nothing.
Rod1
Rod1
Joined: Jun 2001
Posts: 1,014
Likes: 1
From: England
In an aircraft share be prepared to lose everything you put in. Anything you get back at the end is a bonus. These are not sound investments like bricks and mortar. They should retain their value but don't be surprised if they don't.
In the worst case, if you can't afford the monthlies the goup will sell your share, take the amount owing off then give you the difference, its a bit like repossession. They may simply give your share to someone willing to pay the monthly bills. Some planes are £1000 per share but £200 per month. In this case you will happily walk rather than spend 10 months waiting for a sale. There are syndicates that give non voting shares away just to get the monthly subs in. These can work out well, if the plane becomes US for a while or you don't fancy it any more just walk.
Bear in mind the problem may not be of your making. What happens if your £20,000 aircraft requires a wingspar mod at a cost of £25,000. Or someone dings the prop , shockloads the engine and the insurance won't pay - cost £20,000. If the aircraft is a group of 10 and you all paid £2,000 per share, will you pay another £2,000 to keep the same thing you had before, or will you vote to sell it for scrap and take £300 each, then invest your £2300 in something else.
On the bright side this rarely happens. Shares in established groups pretty much change hands regularly at the standard rate. Accidental damage is usually covered by insurance and everyone is happy.PA28s and 152s change hands fast because there are lots of new ppls looking for something to fly. Try selling a half share in a Hunter and you may be waiting a little longer.
Good Luck
In the worst case, if you can't afford the monthlies the goup will sell your share, take the amount owing off then give you the difference, its a bit like repossession. They may simply give your share to someone willing to pay the monthly bills. Some planes are £1000 per share but £200 per month. In this case you will happily walk rather than spend 10 months waiting for a sale. There are syndicates that give non voting shares away just to get the monthly subs in. These can work out well, if the plane becomes US for a while or you don't fancy it any more just walk.
Bear in mind the problem may not be of your making. What happens if your £20,000 aircraft requires a wingspar mod at a cost of £25,000. Or someone dings the prop , shockloads the engine and the insurance won't pay - cost £20,000. If the aircraft is a group of 10 and you all paid £2,000 per share, will you pay another £2,000 to keep the same thing you had before, or will you vote to sell it for scrap and take £300 each, then invest your £2300 in something else.
On the bright side this rarely happens. Shares in established groups pretty much change hands regularly at the standard rate. Accidental damage is usually covered by insurance and everyone is happy.PA28s and 152s change hands fast because there are lots of new ppls looking for something to fly. Try selling a half share in a Hunter and you may be waiting a little longer.
Good Luck
A little less conversation,
a little more aviation...
Joined: Jun 2003
Posts: 696
Likes: 0
From: Bracknell, UK
Ask to see the written shareholders/partners agreement
for the specific group you are interested in joining - it should
set out the process for the circumstances you describe.....
for the specific group you are interested in joining - it should
set out the process for the circumstances you describe.....
Joined: Feb 2001
Posts: 647
Likes: 0
From: UK
If there is a syndicate/group agreement, it should cover the eventualities in there. If there is no agreement, or there is but it is deficient in this respect, you could try to use their desire to get you in as justification to adopt a suitable clause with effect from the point of you entering into it.
There are probably some model agreements about, or actual ones that you could use or suggest, as a basis for the group in question.
I have one for gliding (which is not that much different, but may not cover in some respects things like engine funds). Feel free to email me if you want the text to have a look at.
Chris N.
There are probably some model agreements about, or actual ones that you could use or suggest, as a basis for the group in question.
I have one for gliding (which is not that much different, but may not cover in some respects things like engine funds). Feel free to email me if you want the text to have a look at.
Chris N.
Joined: Jun 2002
Posts: 1,085
Likes: 0
From: Canada
Before entering into a partnership, keep in mind that it is often easier to sell an entire aircraft than a fraction thereof; especially if the aircraft is 'exotic' (cf. 18greens' Hunter comment), or based in a location somewhat distant from large population centres. I have seen other agreements with clauses like the one summarized by bookworm, and I think they are fair and equitable to all parties.
The above may sound awfully harsh, but really it's good advice. That said, although you should psychologically prepare for the worst, many syndicates operate without problems, particularly in cases where the aircraft concerned is relatively simple and inexpensive to insure and maintain. In my experience, problems are more likely to arise where the aircraft is susceptible to hefty maintenance costs, or where one can anticipate disagreements about how much upgrading is warranted (avionics, GSP, interior, props, exterior paint, etc.).
P.S. If you have experienced multiple redundancies in your industry, personally I wouldn't even consider entering into an aircraft partnership unless and until I had first built up - in addition to the capital cost of the partnership share - a sufficient liquid cash reserve to cover at least six months' living expenses, including monthly partnership fees.
In an aircraft share be prepared to lose everything you put in. Anything you get back at the end is a bonus. These are not sound investments like bricks and mortar. They should retain their value but don't be surprised if they don't.
P.S. If you have experienced multiple redundancies in your industry, personally I wouldn't even consider entering into an aircraft partnership unless and until I had first built up - in addition to the capital cost of the partnership share - a sufficient liquid cash reserve to cover at least six months' living expenses, including monthly partnership fees.
