Want to know something crazy?

Want to know something crazy?
The amount of people in the equipment industry, whether dealer, broker, or end user, who have no idea that lien search even exists.

crowd-morgueThat is scary more than it crazy because of how much equipment is re-marketed in the USA. Too many buyers simply trust that the guy they buy from does the right thing. That means you should probably be asking more questions of the folks you are buying anything from.

What do you consider to be the right thing?Do you simply trust that if a creditor visits the seller you bought from that they are not give them your info since the lien follows that machine?

I have stories where people who bought from trusted sources sdisbelief4old each other out down through five dealers and brokers, even a small auction company, to the original seller. How did Ground Clearance get involved? The broker is a customer who called me after the deal was done.

Maybe instead of trusting a note stating the equipment is free and clear of encumbrance you should get one stating they won’t sell you out if they anything comes forward later. (FYI- Those notes are something you take to court, not something that  keeps you out of court. Lien search is a better tool for staying out of court.) Contact Ground Clearance for lien searches on the seller of the equipment you are purchasing! Or tell the seller about Ground Clearance and have THEM get the lien search done before you purchase. Make it their cost of doing business.handshake-morgueGround Clearance had a booth at the Yoder & Frey Auction last February in Florida. We liked that space because for the most part attendees have to go down vendor row in order to get to the field where the auction takes place. No ramping of equipment there.

Besides the attendees looked at us like we were going to jump out and sell them insurance or annuities we did get some interest. The purpose of attending was for exposure to potentially new customers. Mission accomplished. We were seen and some approached.

My favorite was a guy from West Virginia who asked how fast I could get the information to him. I told him the West Virginia takes a few days. He said that wasn’t good enough because the guy he buys from sells on the dime and gets mad if someone does a lien search on him and he won’t sell to them anymore. My response: Find a new guy to buy from. One or more of those purchases will not end well. He doesn’t like it for a reason.

Happily, there were those who could use the service and we swapped business cards and business stories. There were even a few who do their own lien searches but had some questions to make sure they are doing all they can.

inspecting1The last couple days of the auction we spent walking the field of sold equipment and meeting people next to the equipment they had purchased. Most did not know they could even get liens researched when buying equipment. They buy just hoping nothing comes back and get in touch with their lawyerwhen it does go wrong.

They were pleased to know the Ground Clearance is quite a lot less expensive and faster turnaround than their attorney.  We are generally better versed in UCC Article 9 (Personal property) law than most attorneys. Why? Because it is what we do on a daily basis.

My request of you is that you start requesting the seller provide a lien search on the person/entity they bought he equipment from. Request a copy of the bill of sale proving ownership. Does that sound demanding? It is your money, your business, and your peace of mind. It is okay. Ground Clearance is happy to help. Call and ask how.  402-484-5071payphone

Integrating Lien Search into your business – as a matter of policy

Have you been considering using lien search as a company policy? Consider these points when making that decision

  • Make it mandatory                                                                                     Sales persons need to know that lien search is UCC1mandatory on equipment moving within your company. Generally, companies have a policy of liability by dollar amount. i.e.: Any equipment over $5,000 requires a lien search before funds will be paid to the seller. All relevant liens need releases.
  • Have a policy                                             Have a policy on tax lien and civil judgment searches. Some companies require this and let me know. No matter what request I receive from the sales person I know what the company requires.
  • Know your options                                                                                      Knowing that lien searches average costs $78.00 (with Ground Clearance) should be a bottom line cost for your business with each piece of equipment you are interested in dealing (whether purchase to resale, broker, or end user). Note that is an average. The cost is dependent on where documents are coming from, how many names are being searched, what type of search you are needing (UCC, tax lien, judgment) and how many pages of liens are filed.
  • Plan your cost                                                                                              Adding lien search is another cost to the bottom line of a purchase. Let me know the dollar amount you need the lien search to stay within. If it appears it will be outside of that I will contact you and let you know your options. I won’t up charge to meet your maximum. I don’t work for free either though.
  • Due diligence                                                                                                Once the lien search is received have a process in place for following up on liens that are relevant to the equipment. These would be blanket, PMSI, surety bonded projects, specific liens, and possibly tax liens. You cannot legally contact another’s creditors without written authorization. Since the seller is the creditor’s customer a creditor will provide lien payoff or release to their customer faster than someone else inquiring. I can help with this process.

When you implement this type of program you can use the Ground Clearance Debt Verified logo on your website and equipment marketing. Your equipment will sell faster because buyer will see that a lien search was done.

Provide Ground Clearance with a copy of the releases and Ground Clearance will provide documentation for the next buyer – or the bank – that the equipment is free and clear to the best of knowledge.

Let me know how I can help. I will Skype for your sales meeting to answer questions.

Ensure that your integrity is without question.

As someone who has spent a lot of years helping others do business the right way, it really rubs me the wrong way when I am told “the seller won’t sell to me if their creditors will be contacted” or “I’ll lose the sale if they have to wait for a day or two for a lien search”.

For starters, it isn’t legal to contact another’s creditors without written permission. No one but they will be contacting their creditor(s).

Secondly, if they don’t want to contact their creditor for a lien release, there may be bigger problems. How do you know they legally own it? If you don’t care, I feel for the people you pass equipment along to next. There is no integrity and that piece of equipment becomes part of the bigger problem every one else is trying to eliminate by doing the right thing.

As far aw waiting for the lien search, I get that equipment deals move fast. I really do. But that shouldn’t ever be a compromise for doing business right. The people that own the equipment after you deserve no less than you should as a buyer. Don’t do dirty and questionable deals. It’s possible that they guy will wait in order to do business with you but wants to see if you are going to do the right thing and get the lien search done.

Here is a different frame of reference – I get those frequent phone calls for vacations or a cruise I have been “chosen to receive” knowing full well that nothing is free. I always ask if I can contact them at a later date and discuss it with my husband. We are both self employed and don’t get X of vacation days a year. Our coordination of time off takes a little longer. If their answer is “No. This is a one time opportunity. We can only offer this to you right now.” I will not be cruising with them. No one should have to compromise in the moment.

NOTHING in life is the only opportunity. If “that guy” selling the equipment is willing to compromise your integrity for their greed, you are dealing with the wrong guy and there are better opportunities to buy. If “that guy” has the best deal on the market – it might be too good to be true and might have other problems that will come back to bite you later. Is that the kind of business you want to run and have pass along to the next guy?

For every piece of equipment on the market    trucked 1a

another is coming around behind it.trucked eq 1

Don’t go where your integrity in business can be questioned later. Everything depends on that curious mixture of character and competence called trust. Never let it be questioned.

Why blanket liens matter

I realize this post looks like the beginning of a nap, but..hang in there. You won’t regret it. It’s good info if this is the question you wonder about or discuss with others.

Blanket liens are frequently questioned.   For instance…UCC1

  • Are they really relevant to the equipment when they don’t list any specific equipment?
  • Will a release be filed or how do I know they released the equipment I am paying for?
  • Why contact if the owner is selling in the ordinary course of business?
  • If a different creditor has terminated their lien, do I still needs a release from the blanket lien holder?
  • If there are multiple blanket liens filed by the same creditor how many releases do I need?

Blanket liens are always relevant. They involve all of the equipment or assets of a business. Because equipment does turn over in a business it would be time consuming and expensive if the lien was amended each time the collateral list was amended. The lien search would be ridiculous to pull for most any company, whether dealer, construction company or contractor.

In most cases you will not receive an actual release of lien in the form of a UCC but you should receive a statement from the creditor on their letterhead stating the creditor has no interest in the specified* equipment or the proceeds from the sale of that equipment. * specified by year, make, model, and serial number. If the equipment list is not correct, send it back until it right. The creditor wants their collateral list as accurate as you want your release!

The letter will state the owner of the equipment as the creditor as on their books. Make sure this is the name on the bill of sale and not someone else’s name. It is not legal to sell another’s equipment even if that person owns the company. The legal owner is the legal seller. Period.

Why contact the blanket lienholder if the equipment is being sold in the ordinary course of business? Because your primary job is protect your business. Flat out. If the guy you have done business with for years has a problem with his creditor being contacted, you should start asking more questions.  The only one who truly knows if it is ordinary is the seller. The buyer and banker are the last to know if someone is in financial trouble.

Liens are filed in order of relevance. In general, blanket liens are the oldest. Once the creditor for the lien showing the equipment listed specifically has been contacted, the blanket lienholder gets to check their collateral and make sure they do not need a portion of the proceeds.

If a lienholder has multiple liens filed that read like blanket liens (i.e.:  “including but not limited to…” ) they can produce a statement on their letterhead that they do not have interest in the equipment you are interested in purchasing/brokering/etc.

Anytime you receive a statement from a creditor where they needs funds to release their interest, you should pay that creditor directly. You will receive a release on interest once the payment has been received or processed. Any remaining funds at that point can go to the owner/seller.

Another good reason that blanket liens matter is 2008. Remember 2008? How about 2009? Remember going to the bank with a check for equipment you sold to apply it to your line of credit as was your normal course of business? And then the banker called you and said they needed $20K more to release their interest. They were lowering the lines of credit and you no longer had wiggle room to rearrange collateral against the amount owed. But the equipment was sold and there wasn’t an extra $20K for the release. You would have known that ahead of the sale if the blanket lienholder would have been contacted – even though it was in your normal course of business. There was a new normal on the way. Your banker and you need to be in communication about what you both consider “normal”.

Searching on your own company

I get many calls from people wanting to do a search on their own company and wonder if they should. Definitely! It is always good to know what is filed on your company – or yourself if you operate as a DBA (Doing Business As) and not a separate entity.

In fact, I encourage customers to forward the file they get on to the seller of the equipment. After all, we think we know what it filed but until eyes are laid on the documents, it’s just a guess. You can do that at the lien search page link.

Sometimes creditors will file terminations and sometimes they wait for the lapse which is a minimum of 5 years after the filing date! Notes which are paid off might show up in your mailbox when the creditor sends a letter with a copy of the termination. At that point it is the responsibility of the owner to file it. There are usually instructions on how to file it. But, hey, business owners are busy people and there is never a shortage of the usual paperwork. So, it gets shuffled around on the desk until it falls into the circular storage never to be seen again.

If you get those letters from your creditors, you can contact Ground Clearance , e-mail a copy and we will file it for you. For a small fee, of course. The creditor didn’t file it because filing is rarely free.