This was the question posed, and answered, in a November 10, 2011 FAA Legal Interpretation. As you may know, FAR 91.409(a) precludes operation of an aircraft unless it has had an annual inspection under FAR Part 43 within the preceding 12 calendar months. However, if a flight instructor is going to give flight instruction for hire in an aircraft he or she provides, then FAR 91.409(b) requires that the aircraft must have had an annual or 100-hour inspection under FAR Part 43 within the preceding 100 hours of time in service. Although FAR 91.409(c) lists four exceptions to these maintenance requirements, they were not applicable in the context of the question presented to the FAA.
The Legal Interpretation stated that “the 100-hour inspection requirement applies when the instructor provides both flight instruction for hire and the aircraft used for instruction.” If the person receiving the instruction provides the aircraft, then the aircraft only needs to have had an annual inspection under FAR 91.409(a). The FAA went on to note that “the person receiving instruction could provide an aircraft he or she owns or an aircraft he or she leases,” but “if the person receiving instruction does not own the aircraft, the FAA may review the manner by which that person provided the aircraft to ensure the instructor, or an entity represented by the instructor, did not effectively provide the aircraft.”
Once again, it is important to note that the FAA will investigate the substance of a transaction, rather than simply relying upon the form or documents and it will make a determination based upon the unique facts and circumstances of each case. The bottom line is that the student needs to obtain the aircraft under circumstances that don’t include the involvement or control of the instructor. Only then would the 100-hour inspection requirement not be applicable.