FAR 91.1003 — Fractional Ownership Contracts
FAR 91.1003 explains what must be in the management contract between a fractional owner and program manager, including audit rights and FAA notice agency.
In Plain English
FAR 91.1003 sets the minimum contents of the management contract between a fractional owner and the program manager in a fractional ownership program. This rule matters because it defines the legal backbone that keeps fractional operations safe, transparent, and accountable to the FAA.
Each contract must:
- Require program conformity — The program manager must ensure the program meets all applicable requirements of 14 CFR Chapter I.
- Grant audit and inspection rights — The owner (or a designee) can inspect and audit the program manager's safety and compliance records, including management specifications, authorizations, approvals, manuals, log books, and maintenance records.
- Designate the program manager as agent for FAA notices — The program manager receives FAA notices on behalf of the owner, and the FAA is authorized to send notices to the manager in that capacity.
- Acknowledge FAA direct contact — The FAA retains the right to contact the owner directly when the Administrator decides it's necessary.
In short, the contract ties the owner to the program manager while preserving FAA oversight.
Regulation Text
14 CFR § 91.1003§ 91.1003 Management contract between owner and program manager.
Each owner must have a contract with the program manager that—
(a) Requires the program manager to ensure that the program conforms to all applicable requirements of this chapter.
(b) Provides the owner the right to inspect and to audit, or have a designee of the owner inspect and audit, the records of the program manager pertaining to the operational safety of the program and those records required to show compliance with the management specifications and all applicable regulations. These records include, but are not limited to, the management specifications, authorizations, approvals, manuals, log books, and maintenance records maintained by the program manager.
(c) Designates the program manager as the owner's agent to receive service of notices pertaining to the program that the FAA seeks to provide to owners and authorizes the FAA to send such notices to the program manager in its capacity as the agent of the owner for such service.
(d) Acknowledges the FAA's right to contact the owner directly if the Administrator determines that direct contact is necessary.
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Oral Exam Questions a DPE Might Ask
Q1In a fractional ownership program, what must the management contract between the owner and program manager require regarding regulatory compliance?
Per FAR 91.1003(a), the contract must require the program manager to ensure the program conforms to all applicable requirements of 14 CFR Chapter I.
Q2What inspection or audit rights must the owner have under the management contract?
FAR 91.1003(b) requires that the owner (or a designee) have the right to inspect and audit the program manager's records pertaining to operational safety and compliance, including management specifications, authorizations, approvals, manuals, log books, and maintenance records.
Q3Who receives FAA notices on behalf of a fractional owner, and can the FAA still contact the owner directly?
Under FAR 91.1003(c), the program manager is designated as the owner's agent to receive FAA notices, but FAR 91.1003(d) preserves the FAA's right to contact the owner directly when the Administrator determines it is necessary.
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Related Sections in Part 91