ANSWERS: 1
  • The sale and purchase of heavy equipment often requires financing to complete the transaction, similar to a mortgage to purchase real property. The commercial lender involved in the transaction will place a lien on the title to the equipment and perhaps on the buyer's assets in general, as collateral for repayment of the mortgage. When you purchase heavy equipment, you need to search the public records for evidence of a lien indicating there is a mortgage on the equipment.

    UCC-1 Financing Statement

    Mortgages are essentially a promise to repay a loan used to purchase property and the lender will want to record a public record to give notice to any future purchasers of the property of the existence of the mortgage. For most heavy equipment sales, the lender will create a lien on the equipment by filing a UCC-1 Financing Statement with the Secretary of State in the state where the borrower does business. The lender may, but not is required to, file a UCC-1 in any other state or even all states. The easiest way to locate a filed UCC-1 is to search the Secretary of State records using the name of the person or business from whom you intend to purchase the equipment. In some cases, a UCC-1 may be found that specifically lists the equipment on the document; however, often times the UCC-1 may simply generally identify all of the borrower's property as being subject to the lien.

    DMV Records

    If the heavy equipment requires a vehicle identification number (VIN), such as a trailer, the record of the lien for any mortgage will most likely be located through a title search at the DMV in the state where the equipment is registered. As a measure of caution in the transaction, request that the seller go to the DMV with you as part of closing the sale so that you can verify the title is not encumbered by a lien. If there is a lien, you can find out the name and address for the lien holder.

    Commercial Database Aggregator

    You can conduct a comprehensive, nationwide search for liens against the heavy equipment by performing a background search on the seller by using a commercial company that aggregates public record information in a searchable database form. Such companies, like Intelius or GAPRS, acquire public records on individuals and companies across the country from public sources like those maintained by the Secretary of State and county recorder. Purchase a lien search using your seller's name. This will not only locate voluntary liens on the seller's property, such as a UCC-1, but also involuntary liens such as judgments and tax liens.

    Source:

    California Secretary of State: UCC Connect

    Intelius

    GAPRS

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