I have been away from homebuilt/amateur building for sometime now. Personal liability haunts some builders when they sell the airplane. Seems to be more mental that actual lawsuits or loosing lawsuits. Anyway, now that LLC are are available, would it offer any personal protection if I were to build the airplane that the LLC owned. What would be the some factors to consider? I am not that old, but in the past everything that I have done has been on a word and a handshake. Life doesn't seem that simple anymore..... or is it?

Thanks,

larry

The quick answer is an entity (LLC or corporation) will provide no shield against liability that is caused by you. This applies to building or piloting airplanes alike.

For instance, you forget to install the wing bolt and a wing falls off, you are liable for your failure to install the wing bolt. Potentially, the LLC that owns the airplane is also liable for employing you and failing to supervise you properly.

An entity provides protection when a 3rd party causes the injury. For instance, a mechanic is taxiing the airplane and runs someone over. In that case the LLC is sued, and the mechanic is sued. The result is your investment in the LLC is at risk, but your assets outside of the LLC are not. Keep in mind this is a very generic overview. There are different theories of liability that could change the hypothetical, piercing the corporate veil, etc.

I think this provides limited protection within a partnership too. If one of the other airplane partners goes out and causes damage or injury, the LLC should shield the other members so long as they had no direct involvement in the incident.

Good summaries. My understanding is that in these scenarios, the owners can still be liable up to the level of their investment in the LLC, even if they weren't themselves at fault or in any way involved, but their personal assets should be safe. (You can lose your entire investment in the plane and other assets of the LLC, but no more.) In the case of a partner causing the damage, the other partners could be off the hook if the LLC's operating agreement provides indemnification of the not-at-fault partners by the at-fault party. However, you never know . . . the plaintiff's (or your partner's) attorneys could say that you are personally liable because you left the windshield dirty and the mechanic (or your partner) couldn't see the person he or she ran over, which takes us back to Rob's example of something that you (possibly) did.

Just to clarify some terminology.
A "partnership" is not an entity that will provide any protection. The general rule is all partners are jointly and severally liable for their partners negligence/debts. This means partnerships are probably the worst way to own a high liability item like an airplane.

A LLC has "members" the "membership" is the equivalent to stock in a corporation.

Scenario: 3 individuals own memberships in an LLC. The LLC owns an airplane.
LLC Members: A, B, and C.

A is negligently piloting and causes injuries to X. X will likely seek recovery from A for his negligent piloting, and the LLC. B & C will not have personal liability over and above what they have invested into the LLC.
Again, this is a very basic example - different facts could change the liability of the different parties.

Just to clarify some terminology.
A "partnership" is not an entity that will provide any protection. The general rule is all partners are jointly and severally liable for their partners negligence/debts. This means partnerships are probably the worst way to own a high liability item like an airplane.

A LLC has "members" the "membership" is the equivalent to stock in a corporation.

Scenario: 3 individuals own memberships in an LLC. The LLC owns an airplane.
LLC Members: A, B, and C.

A is negligently piloting and causes injuries to X. X will likely seek recovery from A for his negligent piloting, and the LLC. B & C will not have personal liability over and above what they have invested into the LLC.
Again, this is a very basic example - different facts could change the liability of the different parties.

I think this is a complex question that maybe those with more experience will jump in with an answer on. Who is the loss payee in the insurance policy? If there is a loan, it is going to be the lender no-doubt. If the insurance company pays the LLC then it becomes a question of what does the LLC operating agreement say. If the S((* really hit the fan and the insurance was unable to settle within your limits potentially the hull loss proceeds received by the LLC would be subject to collection by the judgment creditor. But you are so deep in the weeds at that point it really is going to depend on the facts, and timing of events.

I’ve heard that you can remove something from the plane, a wing or a flap or the horizontal stabilizer or something. Make it unairworthy and sell it in Unairworthy condition. Then the buyer can reinstall said part.

EAA says no homebuilder has ever been successfully sued after selling a homebuilt. Not sure this is totally true but I’ve never heard of it happening.

That may have more to do with the asset level of the majority of amateur aircraft builders (especially those who sell their projects) than the legal system. I know of more than one fairly wealthy builder who donated their project(s) with conditions that preclude future flight.

I wonder if a LLC can be registered as the official "manufacturer" of a homebuilt aircraft and if so would that provide the person or persons involved in building it from post sale liabilites?

I've seen this question come up several times and the OPs never seem satisfied by the response. I have to wonder, what are they looking for? If you're hoping to hear of some piece of paper or action that will mean you can't be sued, sorry, no such guarantee exists. This is America, pretty much anybody can file a suit against anyone for anything. That doesn't mean they'll get very far, of course, and it's already been pointed out that no such suit is known to have succeeded. Ever. That's as close to a guarantee as is possible to get that if you don't do something egregiously wrong, you won't lose one either.

Short story, nobody's ever had to pay damages, but nothing you can do will guarantee you won't have to pay a lawyer.

Even if it was registered to an LLC, there has to be a person that built the plane with their own two hands. Even if you sell the parts individually, the builder still built the parts.

If I ever sell mine I’m going to make the buyer sign a statement that acknowledges it’s a bad idea to fly it and that he is knowingly buying a plane that was built by a guy that backed into his own garage door..................twice!!!

Robert

Even if it was registered to an LLC, there has to be a person that built the plane with their own two hands. Even if you sell the parts individually, the builder still built the parts.

Set up LLC while you build and fly. Dissolve LLC after you sell. Maybe?