When I purchase a used machine, what documents should I require from the seller before cash changes hands? How can I check to make sure the machine is not stolen? How do I determine whether the machine is financed or not and if there is a lien attached to it? Are there registration requirements for the machine that I purchase? I'm a mountain property owner in Colorado who will use the equipment on this property only. I anticipate purchasing a trailer and attachments also. Thanks for the help. Gary
Not sure about ownership, but you can usually take the serial number to a dealer and they will look up to see if it is stolen.
The serial number gets listed with a "UCC" filing. As stated, a dealer should be able to give the information needed. Also, get a receipt from the seller stating the machine is paid in full and free of any liens. At this point it would be criminal to sell it with a lien and claim it's free and clear.
Here is what I've found so far as it relates to looking for liens: All 50 states follow the UCC (Uniform Commercial Code) law to regulate commercial transactions. Article 9 of the UCC allows for a public notice (UCC-1) to be filed in a designated state filing office by dealers or lenders to perfect their security interests in equipment that is bought and/or financed. The UCC-1 filing is valid for five years and can be continued to extend the financing statement for additional terms of five years. Filing is usually with the office of the Secretary of State in the state of residence, incorporation or business formation. As a buyer of equipment, you need to protect yourself and your business from potential losses because of outstanding equipment liens. Conduct a UCC search with the office of the Secretary of State or other agency responsible for UCC filings in your state. Generally, you only need to perform a search in the state where the seller is located or resides using the seller's correct legal name and the following rules: Individual - Search the state where the seller resides; Corporation, LLC, Limited Partnership - Search in the state where the business is incorporated or organized; General Partnership - Search in the state where the partnership has its principal place of business and in the state(s) where its general partners reside. If a lien is specific to a piece of equipment you are purchasing, require the seller to pay off the lien before the sale or have the lien paid off simultaneously with the sale. If the lien is a blanket lien, obtain a written release from the bank (the secured party) on the equipment. A release can be as simple as one sentence. You must use the correct legal name when doing a UCC search: Individuals or sole proprietors - Whether an individual or sole proprietor, always identify the seller by their correct legal names. Never use trade names or d/b/a. Ask the seller for a valid driver's license or other form of identification to determine the legal name. Corporation, Limited Liability Co. (LLC), Limited Partnership - Use the name on the Articles of Incorporation or equivalent filed with the state of incorporation or organization. Contact the appropriate state agency to identify the correct legal name. Obtaining a copy of the Articles of Incorporation and all amendments to those articles is the safe choice. General Partnership - General Partnerships (GP's) are not registered organizations in most states. The correct name of a General Partnership is the name identified on it organization document or partnership agreement. Ask the seller to see the partnership agreement to confirm the correct legal name is used. The best practice is to search under the names of all the general partners in addition to the partnership name.