liens

[Capricious]

A bit of info on how ag dealers avoid buying/trading for, used tractors with outstanding liens.

Would also be applicable to the private individual purchasing a used tractor from a non-dealer.



http://www.naeda.com/files/ucc-summary.pdf



What is important to note is that the lien would be filed under the name of the current "owner." and it is necessary to get the name correct; i.e. a lien filed under the name "John Allen Doe" may not show up in a UCC-1 search under "John Doe." Likewise, a search under "John Smith Farms" may not show liens filed under the name "John Allen Smith Farms."

If there is a lien that the buyer does not discover, the buyer loses unless he can prove in court that the lien was filed under the
wrong name, and not that the buyer searched under the wrong name.


http://www.ccsb.com/Newsletters/2013_Summer_Capital_Newsletter/You Need to Sweat the Small Stuff.pdf


It is my understanding that the biggest problems do not arise with financing the purchase price of a specific piece of equipment, but rather with "blanket liens" arising from financing agricultural/construction activites, where the borrower signs financing papers providing for liens on all his existing equipment and possibly all future equipment. So, just because he said he paid cash for a tractor, that does not mean there is no lien against that tractor.

Something to think about before buying an expensive tractor.

Or, you can do as I did, and buy a cheap, abused tractor which I could afford to lose if a lien-holder knocked on my door some day.

 

[Poopdeck Pappy]

That's why doing UCC searches on tractors is almost a joke. You would have to search for every conceivable variation of a name, such as:

John Allen Doe
John A. Doe
John Doe
Allen Doe
J. Allen Doe
J.A. Doe
J. Doe
A. Doe

And everyone of those searches is a separate search that costs money.

And then you still wouldn't know if the tractor was actuall bought in a corporate or LLC or partnership name.

If someone wants to screw you and/or their bank, chances are pretty good they can do it.

They should set up the UCC filing system to allow searching for serial numbers. That would simplify things a lot.

 

[wanacab]

I bought a tractor from a fellow got a bill of sale stating it was free and clear. Two years later I got a call from a repo company to arrange a time to pick up the tractor. Talk about a shocker!!

 

[Capricious]

"....That's why doing UCC searches on tractors is almost a joke. You would have to search for every conceivable variation of a name, such as:

John Allen Doe
John A. Doe
John Doe
Allen Doe
J. Allen Doe
J.A. Doe
J. Doe
A. Doe

And everyone of those searches is a separate search that costs money.

And then you still wouldn't know if the tractor was actuall bought in a corporate or LLC or partnership name.

If someone wants to screw you and/or their bank, chances are pretty good they can do it.,,,"







In Missouri I can do UCC-1 searches online all day for free- I can not speak to the situation in other states.

No bank or other lending institution is going to lend to a closely-held LLC or corporation without getting a personal guarantee from the stockholder(s), and if the bank does not file UCC-1's in the name of the stockholder(s) then a good faith buyer has a pretty good shot at defeating the lien, in my (non lawyer) opinion, but it would involve going to court and the associated costs of that.

If you search under any name that you discover associated with the seller, and document those searches, you will be in a much better position than if you did not, and an undiscovered lien surfaces.

Probably the safest route is to buy from a (large, reputable) dealer; in other words, a dealer who would (and could) make things "right" if there is a problem. But then you pay the dealer's profit.







"....They should set up the UCC filing system to allow searching for serial numbers. That would simplify things a lot..."


I agree. But there are those who would argue that such a system would be an intrusion on their personal rights/liberties, and a needless source of government red tape/ fees.

Considering that the State of Missouri used to title and register electric trolling motors (it no longer does), titling and registering a $20,000.00 tractor does not seem unreasonable to me.

 

[RollingsFarms]

I've wondered why tractor dealers won't trade for equipment with liens on it and just pay off the loan like car dealers do. I guess tractors don't sell as fast as cars?

 

[Capricious]

I bought a tractor from a fellow got a bill of sale stating it was free and clear. Two years later I got a call from a repo company to arrange a time to pick up the tractor. Talk about a shocker!!

So, what happened then ?





EDITED TO ADD:


More people who got "the call":

FARM CREDIT SERVICES OF AMERICA INC v. WILSON - FindLaw

and a related note:

FBI

 

[Piston]

I bought a tractor from a fellow got a bill of sale stating it was free and clear. Two years later I got a call from a repo company to arrange a time to pick up the tractor. Talk about a shocker!!

How did they know you owned the tractor now?

This is why when I bought my tractor from the previous owner, I didn't fill out any paperwork of any sort, I just had him sign a bill of sale that I kept, not leaving him a copy. In fact, he never even knew my last name.

 

[Capricious]

"...How did they know you owned the tractor now?..."



If you ever take "your" tractor in to a dealer for service, most likely the serial number will be entered into their computer system, and if the lien holder has asked the manufacturer to "flag' that serial number , "your' tractor is not yours any more.





EDITED TO ADD: This involves a stolen tractor, rather than a lien, but this is what can happen if the serial number is "flagged:"


1973 tractor, stolen in 1978, turns-up in 1987

1973 John Deere 4030 Tractor, In re - 1991 OK 79 :: 1991 :: Oklahoma Supreme Court Decisions :: Oklahoma Case Law :: US Case Law :: US Law :: Justia

 

[Piston]

"...How did they know you owned the tractor now?..." If you ever take "your" tractor in to a dealer for service, most likely the serial number will be entered into their computer system, and if the lien holder has asked the manufacturer to "flag' that serial number , "your' tractor is not yours any more. EDITED TO ADD: This involves a stolen tractor, rather than a lien, but this is what can happen if the serial number is "flagged:" 1973 tractor, stolen in 1978, turns-up in 1987 1973 John Deere 4030 Tractor, In re - 1991 OK 79 :: 1991 :: Oklahoma Supreme Court Decisions :: Oklahoma Case Law :: US Case Law :: US Law :: Justia

Oh okay that makes sense. I've never taken mine in for service but that doesn't mean I never will.

Thanks for the explanation.

 

[Capricious]

Also; don't know about tractors, but on occasions that I have needed parts for other types of machinery, the parts man has asked for a serial number as well, so just buying a replacement part could be an issue.

 

[DavesTractor]

I've wondered why tractor dealers won't trade for equipment with liens on it and just pay off the loan like car dealers do. I guess tractors don't sell as fast as cars?

We take trade-ins with liens. We just pay off the lien. For example if the tractor trade value is $7500 and it has a $6000 lien, we cut a check to the lienholder for $6000 and the $1500 in equity is used as a down payment.

Dealers that avoid trades often have cash flow issues. When a customer drives off the lot with a new $30k tractor, the dealer has to pay off the floor plan, lets say that is $28k. He retains the profit to pay for overhead, wages, etc. But if a guy trades in a $15k tractor the dealer still needs to pay of the $28k cost...so his cash flow just shrank by the value of the trade less the profit made. Do that a dozen times in a month and it affects the old bank account. Most dealers are properly capitalized and it really isn't an issue. And there are some dealers that simply do not like selling used equipment, which amazes me. Profit margins on a used piece can be quite good, whereas profit margins on new equipment are quite slim.

 

[RollingsFarms]

We take trade-ins with liens. We just pay off the lien. For example if the tractor trade value is $7500 and it has a $6000 lien, we cut a check to the lienholder for $6000 and the $1500 in equity is used as a down payment. Dealers that avoid trades often have cash flow issues. When a customer drives off the lot with a new $30k tractor, the dealer has to pay off the floor plan, lets say that is $28k. He retains the profit to pay for overhead, wages, etc. But if a guy trades in a $15k tractor the dealer still needs to pay of the $28k cost...so his cash flow just shrank by the value of the trade less the profit made. Do that a dozen times in a month and it affects the old bank account. Most dealers are properly capitalized and it really isn't an issue. And there are some dealers that simply do not like selling used equipment, which amazes me. Profit margins on a used piece can be quite good, whereas profit margins on new equipment are quite slim.

Thanks for the explanation Mr. Dave! I can't think if a single dealer around my area that takes in trades with liens on them. Even the really big dealerships won't touch them. We have what I call "third party tractor dealers" that read the papers and scour craigslist for tractors and such and buy then from people for less then they're worth and then slap on an outrageous price on them to sell. I had two contact me about my tractor I have for sale and they offered me $22k which is a slap in the face to be honest.

 

[Piston]

22k is definitely cheap for that tractor. I keep trying to figure out ways to buy it for your asking price, but it's just not happening. For 22, I'd make it happen :laughing: Your smart not to sell it to them.

 

[wanacab]

ok longstory i cant type so ill make it short. talked to a lawyer he said i had no legal right to the tractor. he called the sherriff asked them to bring the seller in to try to squeeze the money out of him because its a felony to sell mortgaged property. well surprise he was no where to be found. it had been 18 months since i bought tractor. anyway they found his mother (bless her heart) she borrowed money and paid off his loan to keep him out of trouble. and me i was happy happy happy

 

[RollingsFarms]

22k is definitely cheap for that tractor. I keep trying to figure out ways to buy it for your asking price, but it's just not happening. For 22, I'd make it happen :laughing: Your smart not to sell it to them.

Well I know how they operate around here and I see the prices the put on what I'd consider worn out junk.

You'd be surprised how few calls I'm getting on my tractor. I've had about 4 or 5 people call on it and no one has come to look at it yet. What's even more surprising is not one call has come from tractorhouse.

 

[balzerja]

Just got a call from Deere financial today. I bought a 3520 from a guy 4 years ago. Apparently he did not pay off loan when he told me it was free and clear. They want to know when I want to make arrangements to surrender tractor. Am I up a creek without a paddle?

 

[DavesTractor]

Just got a call from Deere financial today. I bought a 3520 from a guy 4 years ago. Apparently he did not pay off loan when he told me it was free and clear. They want to know when I want to make arrangements to surrender tractor. Am I up a creek without a paddle?

Did you get a super duper deal when you bought it? What is it worth now vs what is the payoff? I wonder why it took 4 years? Do you think the guy continued to make payments for a while? Or did they just now figure out you were the owner?

Probably better talk to an attorney. But yes, JD Financial can come get it. You can then take action against the guy you bought it from, but generally when a guy does that, he leaves the county and is hard to find. I would ask JD to hold off a little. Ask them if they can give you contact information for the seller. Find out what is owed on it also, perhaps the best thing to do is to pay it off, might be better than turning it in. JD doesn't really want the tractor, they want the loan paid off.

So you have a few options, but not doubt you are going to take a hit. Sorry this happened.

 

[balzerja]

Pd 27k for it. Probably worth 21 or so. They said the lien is for 36k. Don't know if that is all the interest and penalties added to it or if he bought other stuff.. I'm thinking he paid around 30k for it. Deere said their attorneys will be contacting me.

 

[DavesTractor]

Pd 27k for it. Probably worth 21 or so. They said the lien is for 36k. Don't know if that is all the interest and penalties added to it or if he bought other stuff.. I'm thinking he paid around 30k for it. Deere said their attorneys will be contacting me.

That really stinks. I hope they (JD) realize that you are a victim as well, at least in the manner and timing of how they deal with you on this. At $36k, it doesn't make sense to try to satisfy the lien. The guy that did this to you committed a crime obviously, but that does not change the fact that JD Finance has a right to this collateral. Keep us informed please.

 

[coobie]

WOW..very sorry to here about your situation.My friend is a big JD collector before he buys any JD tractor he contacts a JD dealer with serial # and asks if there is a lien on the tractor before buying.From my understanding ALL brands of tractor dealerships can supply this information.