# 51% rule...

Discussion in 'Rules and Regulations / Flight Safety / Better Pil' started by Adam Frisch, Dec 25, 2008.

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1. Dec 25, 2008

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What exactly does it mean?

Let's say as a manufacturer that I want to build an aircraft close to complete.

I can either sell it as a kit and let the buyer do 51% of the work. But let's say for various reasons that I didn't want to do that - could I build the plane, register it to the selling company and then sell it as used to the buyer (you are allowed to sell kitplanes as used, I understand). This is the confusing bit - is there anyway I can be a kitbuild manufacturerer, but make 100% of the plane before the customer takes delivery?

2. Dec 25, 2008

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It depends on what rule you get the plane registered under. For an experimental, the main category is "homebuilt," which requires that the plane be built for entertainment and education. A plane so registered can be sold used, but you cannot register a plane built for the purpose of profit rather than entertainment and education in this category. The other experimental categories are even more restrictive, with the exception of the LSAs.

Edit: The phrasing used is "education or recreation"; see 21.191g. This is the rule that has been interpreted as leading to the 51% rule.

3. Dec 25, 2008

### Midniteoyl

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While there are people who build a kit to completion, register it as E-AB, and then sell for profit, the FAA frowns upon the practice. They are now, in fact, trying to tighten up the rules and enforcements for this and so called 'pro-builders'. Not sure what the actual count is per year, but after building and registering a certain number, I'm sure the FAA would look upon you as a manufacturing company and require the same from you as they do Cessna. Remember also, that you, as manufacturer, would have to hold the Repairman's Cert, and be liable for any defects. Hope you can carry a rather large insurance policy.

Besides, how many do you plane out getting out all by yourself? One I know of took almost 12 years to get four 4-place planes built and sold.

4. Dec 25, 2008

### BBerson

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I disagree. A builder is eligible for a repairmans Certificate but that is not required. The original builder or any buyer could use an A&P mechanic for the required annual condition inspection.
But Midniteoyl is certainly correct about the liability of the builder who has his name listed on the data plate as the manufacturer. It cannot be a corporation name, as far I know, to avoid liability. There is very little that can be done to prevent liability in the case of a seller.
BB

5. Dec 26, 2008

### Midniteoyl

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Agree.. I didn't mean to imply that. Only that you can not, legally, have your buyer receive the repairman's.

Poor wording.

6. Dec 28, 2008

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Thanks.

No, the reason I'm asking is because I was wondering if it was possible to start a "kitplane" manufacturing business, but without it being a kit - it's fully made and you get the keys and fly it off as an experimental aircraft. BTW, the manufacturing would not be done in the US.

Also - does the 51% rule pertain to materials assembly or time spent building?

Last edited: Dec 29, 2008
7. Dec 29, 2008

### Topaz

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My understanding is that while something similar to this was fairly common at one time (factory-supplied "builder assistance" centers), the practice was judged by the FAA to be an abuse of the intent of the 51% rule, and that they've cracked down upon it pretty severely. I don't think you'd be able to get away with it, in today's climate.

As I understand it, the 51% rule is written that "51% of the 'effort' of building the aircraft" must be expended by the customer, and that this is often assumed to be 51% of the build time, overall. However, dancing close to the line can leave you hanging, if the FAA decides that "effort" in your case is not just build-time. There have been a few cases where that's happened, and the kit manufacturers were denied a "51% rule compliance" ajudication. At that point, they either decreased the work that they did for the customer and try again with the FAA, or sell the kits anyway and stick it to the customer to try and get the airplane licensed when the FAA didn't recognize the kit as compliant. The intent of the rule was for amateur, individual builders to construct experimental aircraft "as an educational experience" or somesuch. It wasn't really originally intended to apply to a kit-building situation, which came along later. The origin in the rule was people building, say, a new fuselage and then putting on wings and tails, etc. from a certificated aircraft. The FAA didn't want to allow that practice, since making a 'frankenstein' airplane like that is still essentially a new design process, and some of those people were taking rather frightening shortcuts by using certified airplane parts. Several were killed. Building the airplane in your factory, registering it to your company, then turning around and selling it "used" would run afould of the "educational" intent of the 51% rule, not to mention that I don't believe the FAA would "buy" the airplane being registered to the manufacturer and then being resold - without significant usage - as "used" in the first place. That doesn't even pass a "common sense" test, especially if the final assembly and "initial" registration happens outside the USA.

For your purposes, the Light Sport Aircraft rule would probably be the way to go. It's the only way you can sell completed airframes that are higher performance than a Part-103 compliant ultralight, and not have to go through the entire Part-23 certification process. The aircraft have to meet LSA performance constraints, however, and there still are some sort of certification standard you have to meet for LSA, but I think it's more in terms of manufacturing process and repeatability, rather than a single objective aircraft strength and performance standard. Other people here are much more knowledgeable about this than I. Perhaps one of them will clarify.

Last edited: Dec 29, 2008
8. Dec 29, 2008

### kent Ashton

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You can't do that legally. The U.S. rule says a person (not necessarily the builder) can license the airplane in Exp-Amateur Built catagory only if the aircraft was built for "solely" for education or recreation. If you or anyone else built it to make money it can't be licensed as E-AB. Of course, many builders make money when selling an airplane they built but it can only be incidental to building solely for their own education and recreation. If the inspector/DAR believes the aircraft was built overseas for profit, they don't have to give you or your buyer an E-AB license.

-Kent

9. Dec 29, 2008

### Jman

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I suppose it might be possible to Partner with a kit manufacturer to develop and certify an S-LSA based on their kit. Something similar to to what AMD does for Zenith: Light Sport Aircraft for Sport Pilots: The ZODIAC XL S-LSA: American-made Certified Production Aircraft from AMD. This would require (I believe) that both their kit factory and your assembly facilities would need to conform to the S-LSA manufacturing standards and be certified by the FAA. I'm no expert but it might be possible under the right circumstances and a very liberal application money and paperwork. Any thoughts?

10. Dec 29, 2008

### Midniteoyl

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11. Dec 29, 2008

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But the LSA rules only permit one engine - mine has two.

There must be a legal way to manufacture a plane that's NOT certified and sell it, no?

12. Dec 29, 2008

### wally

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Hi, from what I understand:

If the airplane you build and sell meets part 103, ultralight requirements, then you can build and sell all the completed planes people will buy. It can be any configuration you wish, one engine or even ten. If it meets the ultralight requirements, it isn't an airplane according to the FAA and they don't care. Just make sure it meets the UL requirements.

Other than that, you can fairly easily sell plans or kits. If you sell kits, they have to be 49% or less complete as approved by the FAA so the builder of record builds 51% of the plane. They have a list of approved 51% kits.

You can manufacture and sell completed aircraft larger than an ultralight but if you do, they must be certified by the FAA.

It can be done but it is a HUGE task.

Best wishes,
Wally

13. Dec 29, 2008

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One revision to what wally said -- the kit does /not/ need to be officially approved as "51% compliant," although it's something customers look for these days. And of course, if you try to get it approved and fail, you're in a worse situation than never having tried. If the kit is not officially approved (or if it didn't receive approval), it falls to the builder to demonstrate compliance.

14. Dec 29, 2008

### etterre

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I'm still stuck on "Why do you want to do this?" I'd think that by the time you get to the less-than-one-percent of the US pilot population with the $,$$,$$$ and need/desire for a twin, then you'd have a hard time finding even one or two who would want an experimental aircraft in any of the FAA categories.

Quick show of hands - Is there anyone here who has $X00,000+ that would want to buy an experimental twin? This board probably has your biggest potential audience... Now, you could probably get sneaky and do the construction and certification testing and paperwork under non-US rules (Brazil or Indonesia, maybe?), save a few bucks on the initial round, sell a few airframes, and then do any extra testing/paperwork that the FAA will want... but my brain is still stuck on figuring out who would buy the completed airplanes... 15. Dec 29, 2008 ### Topaz ### Topaz #### Super ModeratorStaff Member Joined: Jul 30, 2005 Messages: 13,964 Likes Received: 5,587 Location: Orange County, California Only as an ultralight, as has been said. Other than that, no, there isn't, at least in the USA. You may find the situation to be different in other parts of the world, such that you may be able to build and sell your airplane overseas in countries that don't have the certification environment of the USA. I'm sure you know, however, that most of those countries that might allow such an operation will probably not be appropriate for a high-performance twin. If you've got an STOL design suitable for 'bush' use, you may be able to put a market and a design together. Gotta go with etterre here, though, from a marketing standpoint in the USA. Twins are a very specialized market. The very few twin-engine kitplanes that were developed came back off the market fairly quickly for lack of "takers." Your competition in this country is not Cessna, nor Piper, or any of the other manufacturers. Your competition will be used twins from those manufacturers being sold by private parties, which are still relatively easy to find and probably about in the price range of your un-certified airplane, if not less. As Etterre has said, why would someone spend such a significant sum on your experimental airplane when an FAA certified airplane can be had for a similar amount of money? Do you have a really huge performance advantage? Very large cabin? Some other unique capability that makes the risk worthwhile? Also recognize the liability exposure you'll be under, selling completed airframes. The insurance to cover that exposure is not cheap, and will add significantly to the sell-price of your aircraft. Have you developed a business case for your venture yet? 16. Dec 29, 2008 ### Dana ### Dana #### Super ModeratorStaff Member Joined: Apr 4, 2007 Messages: 8,831 Likes Received: 3,178 Location: CT, USA Back in 1980, when I was still in college,a friend and I thought of doing something like this (we weren't clear on the rules, either). Our scheme was to built VariEZ's, several at a time, under the theory that we could build jigs and fixtures that wouldn't be cost effective for a single build, but would significantly reduce the build time for multiple aircraft. The idea was to form a flying club, with the members being co-owners of the airplanes, to fly off the test hourse, then sell them. Yes, I know there are all sorts of reasons (legal and otherwise) why this wouldn't work, but we were 20 year old dreamers. We just couldn't understand why anybody would buy a Cessna 152 when they could have double the performance for the same cost. Well, I still can't understand entirely, but now I understand that that's the way it is. -Dana If vegetarians eat vegetables,..beware of humanitarians! 17. Dec 31, 2008 ### Adam Frisch ### Adam Frisch #### Member Joined: Jul 23, 2008 Messages: 21 Likes Received: 2 Location: London and Los Angeles I'm not trying to reinvent he wheel - yet that's what I want to do. All the LSA's follow a boring formula and they all look the same. I want to build an electrical plane. It's the future, that's for sure. But in order to capitalize on the huge developments done from the big RC planes (like the Electra Flyer C and the upcoming Twister Electrical), I want to have 2 electrical engines mounted pretty much as they are on a Learjet 60XR. Fanjets in pods. Plane will be tiny - like a Cri-Cri. But it's still got 2 engines. I could get away with one engine and have a gearbox and drive train to drive the fanjets, but that would get FAAs pants in a twist: they never did accept the Learfan (who had two engines, but one fan - this would be the opposite). What's a dreamer to do? 18. Dec 31, 2008 ### Topaz ### Topaz #### Super ModeratorStaff Member Joined: Jul 30, 2005 Messages: 13,964 Likes Received: 5,587 Location: Orange County, California Build a prototype, demonstrate that it's a significant and saleable advance over existing aircraft in its niche, and then go look for investors to support your company through the certification process for the airplane and startup process for the company. Or sell unassembled kits. Here in the USA, those are your options. 19. Jan 4, 2013 ### macdonca ### macdonca #### Active Member Joined: Jan 25, 2010 Messages: 29 Likes Received: 1 Location: Nowhere The 51% rule has to do with professionals selling kits, or amatures hiring "professionals" to complete the work. Here lies the grey area. Your buddy that comes over to your house who has built 20 other RV kits to help you build your RV kit. Everything you do together is amature-built. Now you find a local guy who has built 1 RV before and you pay him$10 an hour to help you construct your RV kit. Everything that guy does is "proffesional" since he is getting paid and not "recreational and educational". You could buy a completed wing from one amature builder, a completed fuselage from another, a tail group from another and bolt them all together and register the contraption as "amature built".

The FAA stance on repairmans certificates

"Eligibility for a repairman certificate is not based on percentage of work accomplished on an amateur-built project. The eligibility for the certificate requires that the applicant was one of the builders and “show to the satisfaction of the Administrator that the individual has the requisite skill to determine whether the aircraft is in a condition for safe operations.” The FAA is not required to issue a repairman certificate to any builder regardless of the percentage of work he or she may have done on a project unless it can determine the individual has the skills necessary to determine the aircraft in question is in a condition for safe operation."

Amateur Built 51% Q and A

20. Jan 7, 2013

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