Looking for advice

[Mike B]

My son as found a Bonanza that he really likes and is affordable to him. Struck a deal with the owner, got insurance and financing. From what I understand he went through AOPA for the financing, and they directed to to a company (I don't know which one). He was approved and sent a $5,000 non-refundable deposit. This gave the seller a piece of mind and took the plane down from advertising. He then sent the loan company another $5,000 as down payment. Now, three weeks later the loan company tells him they aren't going to release any money because the engine is 400 hours from overhaul, and it's last overhaul was in the '80's. Aircraft is due for an annual in November.
Can anyone give advice on what his next step should be? Since it's the loan company is "backing out of the deal" should he get the $5,000 non-refundable deposit back? Find a new loan company, and start over? Hire a lawyer to force the loan company to release the funds?
Thanks for any guide line.

[2ndsegment]

In the slang "piece of mind" is a world of hurt away from the more humble "peace of mind."

[Bill Greenwood]

Tell him to file his claim in small claims court, where the loan co is located/ Will he wiin? Not too sure, but not much risk to trying it. No lawyer needed, in fact none is allowed. Hearing is before a judge, no jury. Bring any WRITTEN EVIDENCE, hearsay is not proof. the loan co or seller may have some leverage with 'nonrefunable " clause. but maybe it will be disallowed as unfair. The cost to file is usually about $75 and nothing else is at risk.
The loan co is not going to take him seriously until he actualally fiiles. Just complaining over the phone will likely be ignored, make sure you have written a certified letter to them first.
Short story, the shop replaced my vac pump with the wrong part, similar number but not right., and failed. For 6 months I was ignored, and out about $2200 parts and labor. Not even any answer to my letters. SUDDENLY LIKE A MIRALCLE , AT 11 PM THE NIGHT BEFORE court I get a phone call from the co President from Chicago. He offered reimbusrement only for the parts, sounded like an old gangster movie.
I went to court. had proof, a letter from Beech dealer shop with correct part numbers. and I was awarded my full cost.
If you don't file you dont even exist for the defendant, like a guy in a bar griping bout the weather.
I have been to small claims court 6 or 7 times, I won 6 and tied one. One caveat. even if you win, the defendant may not have assets you can recover from. One guy had 23 previous claims against him.
I might also ask AOPA legal dept if you have bought that perk as part of your membershiop. it has worked for me., worth every $. Good luck

[Mike B]

Thanks for the info Bill. I will pass this on to him.

[DaleB]

So far he's $10K deep, right? That may well be above the limit for small claims.

If it were my money, I'd send them a demand letter for the $10K. Hire an attorney to write it if you want, but make it clear that you're not going to just quietly go away and let them keep the $10K for doing nothing. I would also send a CC to AOPA to let them know what's going on, and ask them for help in getting the lender to live up to their promise or return the money.

[Bill Greenwood]

Dale , one advantage of small claims court is that you get a definite court date, and are not dependent on goodwill of the loan company. Until you actually file, the defendant can and most likely will ignore him, just as in my case. If they wanted to do the right thing they would have already returned his deposit or at least made some kind of offer. Of course send a "demand letter" , but what then when they dont respond? Our max limit is $7500 , but that would be 75% if he wins. I won once when the defendant didn"t show up.
He might hire an attorney to take a brief look, a half hour or so at his claim and advise of pros and cons. $10k may be too low for a lawyer to do on a contingency basis unless he has that AOPA option.
The loan co probably doesnt want to have to have an officer take time to go to that court, Once he files, I think chances are good they will make an offer to settle, even if that offer comes only at 11pm the night before court as mine did. If they have a weak case, they may not even attend. I think this probably hinges on that claim of "nonrefundable" by the company. There is probably precedent and maybe case law on that. and I'd guess it in not without recourse, but I am not a lawyer nor familirar with his state.
one thing is pretty obvious, do nothing and the loan co keeps the money.

[DaleB]

I won a case in small claims court once. I was awarded every penny I asked for. Now try collecting, if the losing party doesn't want to pay up. Good luck with that, especially if the other party is in another state. Anyway, just my advice. Do what you want, it's not my fight.

[ahramin]

Mike if I understand correctly your son will get his $5000 downpayment back from the loan company but is worried about getting the $5000 deposit back from the seller.

Was the non-refundable deposit sent with the understanding that financing was not yet in place and the deal would depend on it? If that is the case then I would echo the small claims route. If on the other hand the deposit was sent to secure the aircraft with no subjects then I would suggest he explain the situation to the seller and plead for a return of the deposit. Might get lucky.

[Stolch]

No reputable company would accept a deposit, decide to terminate based upon an arbitrary circumstance such as you describe, then refuse to refund the deposit. What does the contract (terms and conditions) your son signed with the loan company state regarding refunds, deposits, or termination at will by the lender?

[Tralika]

From a sellers point of view, "non-refundable deposit" is pretty clear. It's not the sellers fault the buyer was not able to get financing. $5000 is a pretty big deposit. Normally earnest money on a home purchase is only one or two thousand. If the seller is a nice guy he might refund some portion of that but I don't think he is obliged to do so. As for the $5000 sent to the loan company, it seems like the loan company should refund that since they are the one that cancelled the deal. If your state has a Consumer Protection agency, usually associated the the State Attorney General's office, you might file a complaint with them. Also check to see if loan companies are regulated by the State and file a complaint with that agency. It might be worth a few hundred bucks to get some advice from an attorney to find out exactly where you stand but small claims may be the only option.

[Bill Greenwood]

Read what Mike wrote again. "He then sent the loan co another $5000." Did Both deposits from Mikes son go to the loan company, neither one to the seller? It's not that clear!
As for Stolch, "no reputable company" while I am not familar with this or other aircraft loan companies, there are a number that will charge and take advantage of a consumer like payday or other short term high interest loans.
I recall once in business class we took the newspaper ad from a "rent to own" tv company and calculated the real interest on tvs or furniture was 150%.
If the loan company is so fair and reputable as to never hold a buyers deposit in a case for sale not going through, why even have the "nonrefundable clause"? Or was that the seller not the loan co?

[Dave Stadt]

How about simply asking the loan company to return the deposit. I don't understand why the loan company would ask for $5,000 in the first place. As for the agreement with the seller it depends on how the purchase agreement was worded.

[Mike B]

Thanks for all the advice, everything is coming together. From what m son told me that according to the person he talked to at AOPA said that they're seeing more and more of this. The loan companies are turning down loans for an engine that hasn't had and over haul in many, many years. I don't understand it because if something happened to the aircraft, the loan company would get their money.

The money he laid out actually went to an escrow company, and not the loan company, so he wasn't out anything.

He wound going with a company recommended by several people in a Bonanza group he's a member of and had zero problems.

Money is on it's way to the owner, and my son has enlisted a flight instructor to go with him to pick up the plane, and get him safely checked out in it.

[Sam Buchanan]

Thanks for all the advice, everything is coming together. From what m son told me that according to the person he talked to at AOPA said that they're seeing more and more of this. The loan companies are turning down loans for an engine that hasn't had and over haul in many, many years. I don't understand it because if something happened to the aircraft, the loan company would get their money.

The money he laid out actually went to an escrow company, and not the loan company, so he wasn't out anything.

He wound going with a company recommended by several people in a Bonanza group he's a member of and had zero problems.

Money is on it's way to the owner, and my son has enlisted a flight instructor to go with him to pick up the plane, and get him safely checked out in it.

So.....there actually wasn't a problem, right?

[rwanttaja]

Thanks for all the advice, everything is coming together. From what m son told me that according to the person he talked to at AOPA said that they're seeing more and more of this. The loan companies are turning down loans for an engine that hasn't had and over haul in many, many years. I don't understand it because if something happened to the aircraft, the loan company would get their money.
Not necessarily. Insurance doesn't cover normal wear and tear. If the engine starts making metal and the IA refuses to sign off the annual, the airplane has lost a tremendous amount of value which insurance won't cover (it's not an "accident").

There's usually a "betterment" clause in insurance contracts, as well. If the engine fails in flight and the airframe is damaged on a forced landing, insurance will pay to fix the broken airframe but may decline to pay for a new engine if the old one failed due to age.

You see the betterment clause in car insurance all the time. If you total your 2010 Chevy with 70,000 miles on it, the insurance company gives you enough money to buy a used 2010 Chevy with 70,000 miles....not a brand new 2020 model.

Ron Wanttaja

[Bill Greenwood]

Mike, good! You dont say where you are, but if I can be of any help, as to pick up or orientation, I'd do it for just expenses like air fare there, no charge for my time> I own a B36TC and also have time in several V tails and T-34 (fun and easy to fly). Im not multirated like Barons, etc. If he is ever out this way I'd also be glad to take him flying in my plane, (Colo)
Two checkout items are for v talis, care in C of G loading, and for all, he needs to experience the door popping loose on takeoff. Not dangerous but very noisy and distracting.

[Mayhemxpc]

Beechcraft door popping open on takeoff.:) Barons have the same endearing trait. "Noisy and distracting" is a good way to put it. It is also likely to clean out the cockpit of any loose articles. Maps, knee boards or at least the stuff on the kneeboard, checklists, etc.