Question on liability of leasing a private airplane

[Jim Logajan]

I plan to lease a personally owned airplane to an incorporated non-profit flying club for its exclusive use. I've been pondering what needs to be done, if anything, to limit my liability if harm is caused by the airplane while used by a club member. According to 49 U.S. Code § 44112 - Limitation of Liability I believe I am not be legally liable so long as I am not "operating" the plane.

And as I understand it, the lease would not be a "wet" lease in the FAA sense of the concept, so that regulatory restriction doesn't seem a concern.

Yet I see recommendations that for maximum liability protection the plane should be placed in an LLC or corporation. Given the protection offered by Federal law I'm not sure what that extra layer provides. One can't be protected from being the target of a futile lawsuit, and for that I believe liability insurance can help pay for defense costs since the insurance company has (I think) a duty to defend. Likewise liability insurance is my best bet when I am personally operating the plane when flying it as a member of the club.

So the question is: am I missing some good reason for placing an airplane inside another entity which I in turn own?

 

[rotorwrench]

am I missing some good reason for placing an airplane inside another entity which I in turn own?

The only person that can answer that with 100% certainty is an attorney with aviation experience and practices in your state. It would be in your best interest to pay for a couple hours of advice from one to ensure you cover the all the bases as you are missing some general ones in your post.

For one, each state has their own liability laws as well and cover aircraft. Plus the FAA has regulatory control over all types of leases to include "dry" leases which is the type you are implying. Unfortunately most FAA guidance/rules only cover large aircraft leases, however, there are portions that can apply to private Part 91 owners who lease their aircraft especially when it comes to "operational control" of the maintenance requirements. Regardless, so long as your name appears on the registration as owner you still maintain the responsibility for the regulatory requirements of the aircraft unless "severed" by an appropriate agreement. But as you noted there is no guaranty any agreement will provide complete protection.

 

[PeterNSteinmetz]

I concur with rotorwrench that for a definitive answer a consultation with an aviation attorney is likely in order.

I believe the AOPA does offer legal advise to members and they may have some guidance on these sort of leases.

OTOH, in general no amount of legal trapeze with LLCs is going eliminate liability in the event one does something wrong. I should think that insurance for your ownership of the plane, insurance of the plane by the club, and an appropriate lease agreement where the club assumes all responsibility as the operator is your best protection.