Navigating Used Equipment Purchases: A Closer Look at Hidden Liens

By Dan Furman, Crest Capital While most used equipment purchases go off without issue, there is a circumstance that buyers should be aware of, and that’s whether the used equipment in question has a hidden lien on it. Companies of all sizes buy used equipment. In the asphalt industry, it can represent a fantastic value, especially for up-and-coming companies, as the larger machines needed for paving jobs can be costly. And while most used equipment purchases go off without issue, there is a circumstance that buyers should be aware of, and that’s whether the used equipment in question has a hidden lien on it. Because having a hidden lien can be problematic. Here’s an example: your paving company is looking for a used steamroller. You stumble upon one offered by another company. After a thorough inspection, you determine it checks all the boxes and is perfect for your needs. The seller has owned it free and clear for a few years, and even has a payoff letter they show you. You buy it. Fast forward six months: The seller’s bank reaches out to you. It appears the seller defaulted on a different loan, and the steamroller you purchased was part of a blanket lien. The bank is claiming ownership and will move to repossess it. An immediate call to your lawyer confirms the bank is correct – they can legally take your steamroller. Even worse, unless the loan-defaulting seller is going to give you a refund, you’ll lose the money you paid, too. I don’t have to tell you there’s a slim chance of a refund happening. This scenario, though rare, demonstrates that buying used equipment is sometimes not as straightforward as it first appears, especially when you are buying from a private seller. READ FULL ARTICLE >>