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Aircraft Lease Agreement with Option to Purchase

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Aircraft Lease Agreement with Option to Purchase

Lease Agreement made on the , between

of , referred to herein as Lessee, and , a corporation organized and existing under the laws of the state of , with its principal office located at , referred to herein as Lessor.

Whereas, Lessor is the registered owner of an Aircraft (the Aircraft) described as follows:

1. Make: ;

2. Year:

3. Model: ;

4. Serial Number: ;

5. Registration Number: ; and

Whereas, the Aircraft is available for lease to a qualified Lessee; and

Whereas, Lessee desires to lease the Aircraft from Lessor under such terms and conditions as are mutually satisfactory to the parties;

Now, therefore, for and in consideration of the mutual covenants contained in this agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1. Lease of Aircraft

Lessor hereby leases to Lessee the Aircraft together with the accessories and equipment listed in Schedule A attached to this Lease. The Aircraft shall be delivered to Lessee at on , at which time Lessee shall inspect the Aircraft to the extent deemed necessary. Lessee shall have hours following delivery of the Aircraft in which to notify Lessor in writing of any defects in the Aircraft or its equipment or accessories.

2. Term

This Lease shall commence on the date the Aircraft is delivered to and accepted by Lessee. Unless terminated sooner as provided in this Agreement, the Lease shall be for a term of months, that is, until . This Agreement may be terminated by Lessee on or after , provided the rent for the Aircraft to the date of termination has been paid in full to Lessor, and provided further that Lessee gives Lessor at least days' written notice of intention to terminate.

3. Rent

The rent payable by Lessee to Lessor shall be calculated at the rate of $ per hour for each hour the Aircraft is flown while in the possession of Lessee, provided, however, that the total rent for any month shall not be less than $. The minimum monthly rent shall be due and payable in advance on the day of each month, the first such payment to be due on delivery of the Aircraft. As to each month during the term of this Agreement, the excess of the amount calculated at the hourly rate over the minimum monthly rent shall be due and payable no more than days after the close of that month.

4. Option to Purchase and Purchase Price

Lessor grants to Lessee the option to purchase the Aircraft in its then-current condition at any time prior to the expiration of this Agreement. If Lessee exercises this option to purchase, Lessee shall pay to Lessor for the Aircraft $. If Lessee exercises the option to purchase, the purchase price shall be reduced by . If Lessee desires to exercise the option to purchase, Lessee shall do so by giving Lessor written notice of such intent no less than days prior to the date for the next scheduled lease payment under this Agreement.

5. Indemnification of Lessor

Lessee agrees to indemnify Lessor against all losses, including costs and expenses, by reason of claims for injury to or death of persons and loss of or damage to property arising out of or in any manner connected with the possession, use, or operation of the Aircraft by Lessee during the term of this Lease.

6. Risk of Loss

Lessee shall be liable for any loss or damage to the Aircraft during the term of this Lease and, at Lessee's own expense, shall keep the Aircraft, together with all its equipment and accessories, insured against loss or damage from crash, fire, windstorm, collision, or other casualty. The amount of such insurance shall not be less than $. If the Aircraft is damaged while in the possession of Lessee under this Lease, Lessee will repair the damage at Lessee's own expense. In the event of the loss or damage beyond repair of the Aircraft, Lessee, at the option of Lessor, either will replace the Aircraft with an Aircraft of the same type and value in good operating condition or pay to Lessor $.

7. Restrictions on Use

A. Lessee may operate the Aircraft only for the purposes, and within the geographical limits, set forth in the insurance policy or policies obtained in compliance with Section 5 and Section 6 of this Agreement.

Lessee shall not use Aircraft in violation of any foreign, federal, state, territorial, or municipal law or regulation and shall be solely responsible for any fines, penalties, or forfeitures occasioned by any violation. If such fines or penalties are imposed on Lessor and paid by Lessor, Lessee shall reimburse Lessor for the amount of such fines or penalties within days of receipt by Lessee of written demand from Lessor.

Lessee will not base Aircraft, or permit it to be based, outside the limits of the United States of America, without the written consent of Lessor.

B. The Aircraft shall be flown only by licensed and qualified pilots and shall be maintained only by licensed and qualified mechanics.

8. Inspection by Lessor

Lessee agrees to permit Lessor or an authorized agent to inspect the Aircraft at any reasonable time and to furnish any information in respect to the Aircraft and its use that Lessor may reasonably request.

9. Alterations

Lessee shall not have the right to alter, modify, or make additions or improvements to the Aircraft without written permission from Lessor.

10. Maintenance and Repair

A. Lessee, at Lessee's own cost and expense, shall repair and maintain the Aircraft so as to keep it in as good and safe operating condition as when delivered by Lessor to Lessee, ordinary wear and tear from use and ordinary deterioration excepted.

Lessee shall pay all costs and expenses of new parts and accessories for replacement, including the transportation charges on the same.

Lessee shall be entitled to any and all salvage from broken or worn out parts.

Lessee agrees to indemnify Lessor against any liability arising from the negligent repair and maintenance of the Aircraft, as well as from the failure to repair and maintain the Aircraft, and also against any claim or liability arising out of the work, while being done, and the delivery of material to and from the place where the repair and maintenance work is performed.

B. All inspections, repairs, modifications, maintenance, and overhaul work to be accomplished by Lessee shall be performed by personnel licensed to perform the work and shall be performed in accordance with the standards set by Federal Aviation Administration regulations and requirements.

11. Title

The registration of, and title to, the Aircraft shall be in the name of Lessor, and the Aircraft, at all times during the term of this Agreement, or any extension, shall bear United States registration markings.

12. Payment of Taxes

Lessor shall pay or cause to be paid all taxes incurred by reason of ownership of the Aircraft during the term of this Agreement, including personal property taxes, but Lessee shall pay all operating taxes, fees, and charges, including gasoline sales taxes, and any tax or fee assessed or charged for the use of any airport or facilities or for the use of premises occupied in forced landings.

13. Assignment

Lessee shall not assign this Lease or any interest in the Aircraft, or sublet the Aircraft, without the prior written consent of Lessor.

14. Accident and Claim

Lessee shall immediately notify Lessor of each accident involving the Aircraft, which notification shall specify the time, place, and nature of the accident or damage, the names and addresses of parties involved, persons injured, witnesses, and owners of properties damaged, and such other information as may be known.

15. Return of Plane to Owner

On the termination of this Lease by its expiration or otherwise, Lessee shall return the Aircraft to Lessor at in as good operating condition and appearance as when received, ordinary wear, tear, and deterioration excepted.

16. Default

If Lessee fails to make any payment of rent or other charges within days after such amounts are due and payable, or if Lessee fails to comply with any provision of this Agreement, Lessor shall have the right to take possession of the Aircraft wherever it may be located, without demand or notice and without any court order or other process of law and to pursue any other remedy available to Lessor at law or in equity.

17. Severability

The invalidity of any portion of this Agreement will not and shall not be deemed to affect the validity of any other provision.

18. Governing Law

This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of .

19. Notices

Any notice provided for or concerning this Agreement shall be in writing and shall be deemed sufficiently given when sent by certified or registered mail if sent to the respective address of each party as set forth at the beginning of this Agreement.

20. Attorney’s Fees

In the event that any lawsuit is filed in relation to this Agreement, the unsuccessful party in the action shall pay to the successful party, in addition to all the sums that either party may be called on to pay, a reasonable sum for the successful party's attorney fees.

21. Mandatory Arbitration

Any dispute under this Agreement shall be required to be resolved by binding arbitration of the parties hereto.

22. Entire Agreement

This Agreement shall constitute the entire agreement between the parties and any prior understanding or representation of any kind preceding the date of this Agreement shall not be binding upon either party except to the extent incorporated in this Agreement.

23. Modification of Agreement

Any modification of this Agreement or additional obligation assumed by either party in connection with this Agreement shall be binding only if placed in writing and signed by each party or an authorized representative of each party.

24. Assignment of Rights

The rights of each party under this Agreement are personal to that party and may not be assigned or transferred to any other person, firm, corporation, or other entity without the prior, express, and written consent of the other party.

25. Counterparts

For the convenience of the parties, this Agreement has been executed in several counterparts, which are in all respects similar and each of which shall be deemed to be complete in itself so that any one may be introduced in evidence or used for any other purpose without the production of the other counterparts.

26. In this Agreement, any reference to a party includes that party's heirs, executors, administrators, successors and assigns, singular includes plural and masculine includes feminine.

WITNESS our signatures as of the day and date first above stated.

________________________________

(Name of Lessor)

By:

Signature:

Title:

________________________________

(Signature of Lessee)

Name:

Signature:

Attach Schedule A

(Acknowledgment form may vary by state)

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What the Aircraft Lease Agreement with Option to Purchase Is

An Aircraft Lease Agreement with Option to Purchase is a contract where an owner (lessor) leases an aircraft to a lessee for a defined term and grants the lessee an option to buy the aircraft under pre-agreed conditions. The document sets lease payments, maintenance and insurance responsibilities, delivery and acceptance procedures, default and cure rights, and the option exercise mechanics including purchase price, exercise window, and closing steps. It can include security interests, escrow instructions, FAA registration and title warranties, and conditions precedent to closing.

Why this Agreement Matters for Lessees and Lessors

This form protects both parties by documenting operating responsibilities during the lease term and preserving a clear, enforceable path to ownership if the lessee exercises the option. It clarifies transfer of title, tax and registration treatment, and remedies for default while reducing ambiguity in high-value aviation transactions. The ESIGN Act (15 U.S.C. ch. 96) and UETA support electronic execution where permitted, enabling remote signing consistent with federal and most state laws.

Why this Agreement Matters for Lessees and Lessors

Typical Parties and Professionals Involved

Include aviation counsel and a qualified maintenance/inspection provider to confirm compliance with FAA rules and to document condition at delivery, transfer, and exercise of the option.

  • Owner-Lessor: Individual or company that retains title and sets warranty and inspection conditions during the lease term.
  • Lessee-Operator: Corporate or private operator who uses the aircraft and may exercise the purchase option under agreed terms.
  • Lenders and Lessors' Counsel: Finance parties, escrow agents, and attorneys who prepare security filings and closing deliverables.

Core Sections to Include in a Professional Lease-Option

A complete Aircraft Lease Agreement with Option to Purchase organizes responsibilities, safeguards title, and defines the option mechanics so closing proceeds smoothly if exercised. The following six sections are standard and reduce later disputes when drafted clearly.

Parties and Recitals

Identify lessor, lessee, aircraft by N-number, make/model, serial, and state intent and background facts.

Lease Terms

State commencement, term length, rent schedule, late fees, permitted use, and maintenance obligations.

Option to Purchase

Specify exercise period, method of exercise, purchase price calculation, option consideration, and closing conditions.

Title and Liens

Warranties of title, covenant to keep aircraft free of liens, and obligations to satisfy or disclose encumbrances.

Insurance and Indemnity

Minimum liability and hull insurance limits, named insureds, loss payee clauses, and indemnity allocation.

Default and Remedies

Events of default, cure periods, repossession rights, and allocation of repossession costs and sale proceeds.

How to Complete the Agreement: Step-by-Step

Follow these sequential steps to assemble the agreement, confirm compliance, and prepare for execution and closing.

  • 01
    Gather Aircraft Data: Collect N-number, serial, registration, maintenance logs, and lien search results before drafting.
  • 02
    Draft Core Terms: Negotiate lease length, rent, option price, and exercise mechanics with counsel input.
  • 03
    Confirm Insurance and Escrow: Set required insurance, name loss payees, and open escrow for deposits or option payments.
  • 04
    Execute and File: Sign, notarize if required, deliver copies, and record any required UCC filings or registration updates.

Configuring an Online Workflow for Completion and Signing

Set up fields and signer order to streamline review, authentication, and final delivery when using an eSignature platform.

Field Configuration
Signature Blocks Place for lessor, lessee, and witness/notary if required; require date stamps.
Attachment Fields Require upload of maintenance log excerpt, registration, and insurance certificates.
Conditional Fields Show closing checklist only if option exercised to avoid signer confusion.
Authentication Use at least email + SMS code or higher for finance-related signers.

Digital Signing and eSubmission Considerations

Maintain original signed copies securely and ensure the chosen provider supports regulatory needs such as HIPAA BAA if health data is included, 21 CFR Part 11 for FDA records if applicable, and ESIGN/UETA legal equivalence.

  • Authentication Methods: Email, SMS code, KBA, or advanced signer verification for higher-risk deals.
  • Recordkeeping: Audit trail with timestamps, IP, and document version history for enforceability.
  • Integrations: Connectors for CRM, cloud storage, and escrow systems reduce manual uploads.

Where to File, Send, and Deliver the Completed Agreement

The signed document must be distributed to all parties and certain filings or recordings may be required depending on lien or registration needs.

  • To Parties: Provide each signer with a fully executed copy and certificate of completion.
  • Escrow Agent: Deliver option payment and closing instructions to escrow per escrow agreement.
  • UCC Filing: File UCC‑1 in appropriate state for security interest in the aircraft or related equipment.
  • FAA Matters: Coordinate with FAA registry for any required registration updates upon transfer of title.

Download, Save, and Supporting Documents to Include

Keep machine-readable copies and supporting exhibits with the executed agreement. Preserve originals in secure storage and provide electronic copies to the closing parties.

Download Formats

Save signed copies as PDF/A and preserve the audit trail; export editable DOCX for internal records if needed.

Maintenance Records

Attach recent logbook entries and AD compliance records as exhibits to document condition at delivery.

Title and Lien Documents

Include prior registration, existing lien release letters, and current UCC search results to support title warranties.

Insurance Certificates

Attach certificates showing required hull and liability coverage with named insureds and loss payee clauses.

Key Deadlines and Timing Expectations

Track critical dates for option exercise, inspection, insurance, tax reporting, and any filing deadlines to avoid penalties or loss of rights.

Option Exercise Deadline:

Exact final date by which lessee must deliver written exercise notice.

Inspection Period:

Window for lessee inspections before exercising; typically short to limit condition changes.

Closing Date:

Scheduled date for payment, delivery of title, and registration transfer.

Insurance Effective Date:

Date insurance must be in force to satisfy coverage covenants.

UCC Filing Deadline:

File UCC within negotiated timeline to perfect a security interest.

Typical Transaction Milestones from Lease to Purchase

A sequential milestone view helps parties manage inspections, escrow, and FAA/registration steps before and after exercise of the option.

01

Delivery and Acceptance

Lessor delivers aircraft; lessee inspects and accepts condition per checklist.

02

Option Notice

Lessee issues written option exercise notice within the contractual window.

03

Escrow Closing

Escrow agent receives funds, releases payoff letters, and coordinates transfer documents.

04

Title Transfer

Execute bill of sale, update FAA registry, and file or discharge UCC liens as required.

Consequences of an Incorrect or Incomplete Agreement

Lost Option Rights: Missed exercise dates can forfeit the purchase opportunity.
Unsecured Lien: Failure to file UCC may allow creditor priority claims.
Tax Exposure: Incorrect reporting can trigger IRS penalties or backup withholding.
Insurance Gaps: Insufficient coverage can leave parties liable for hull damage.
FAA Noncompliance: Improper registration or title transfer can block sale or impose fines.
Enforcement Difficulty: Vague terms increase litigation risk and enforcement costs.

Common Preparation Mistakes to Avoid

  • Using informal or handwritten amendments without signatures can create enforceability disputes and impede title transfer.
  • Failing to perform a current UCC and FAA title search before signing risks undisclosed encumbrances surviving closing.
  • Leaving the option price formula vague invites disagreement and can derail closing or cause costly appraisal disputes.
  • Neglecting to name the correct loss payee or to align insurance effective dates can void coverage during transit or closing.

Essential Data Elements to Include

Aircraft N‑Number: Tail number and serial.
Parties: Full legal names and addresses.
Term: Commencement and expiration dates.
Option Price: Fixed amount or formula.
Insurance: Policy limits and carriers.
UCC Details: Filing state and docket info.

Typical eSignature Platform Pricing and Capabilities

Compare entry costs and core features relevant to completing and managing high-value documents such as aircraft lease-options; signNow is listed first for clarity.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial Varies Varies Varies Varies
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No

Frequently Asked Questions About Lease-Option Execution

Answers to common questions about enforceability, electronic signing, notarization, and recording help reduce execution errors and post-closing disputes.


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