You've searched and searched.  You've read every ad on every plane.  Your head is spinning with all of the details but somehow, someway, you've finally found the "perfect" airplane and are ready to make an offer.  Even better, your offer (or the seller's counter offer) has been accepted and you're ready to move to the next phase.  But what is the next step?

In most instances the next step involves placing a deposit on the aircraft.  Sometimes the seller prefers to handle the deposit and sometimes it's the broker or dealer.  Frankly, we prefer that deposits be held by a neutral third-party (i.e., an independent title and escrow company) to give all involved a sense of safety that the funds will be held (and refunded, if necessary) in accordance with the terms of the purchase agreement.  Deposits give the agreement validity.  In most states a contract is not valid unless some type of "consideration" is received from the buyer.  "Consideration," in terms of an aircraft purchase agreement is akin to a deposit.  Without the deposit the seller is unlikely to be legally bound to the agreement and may sell the aircraft to another party.  Check with your attorney.

So, how much of a deposit should you expect to place?  Sometimes it's as little as five hundred dollars.  Other times, depending on the situation (type of airplane, extent of inspections required, distance the plane has to travel to an inspection location, etc.) it may be as much as 10% of the purchase price.  The deposit is normally credited to the purchase price of the plane at closing.

Can a buyer lose a deposit?  In a word, yes.  But that's a rare occurrence.  Deposits are normally there to protect the seller in the event the buyer (or their representative) damages the plane during the inspection, cancels the agreement without paying the inspection facility, or other instances where the seller will have to settle the buyer's unpaid debt.  In any case, make sure any agreement you sign clearly stipulates that the deposit is fully refundable unless any of the aforementioned circumstances arise. 

The seller is putting their airplane on the line for your inspection and they expect something in return for you.  Deposits are perfectly normal, and without them, your "deal" is unlikely to go anywhere.