Fletch’s Mailbag: A used equipment purchase

By | June 25, 2019

So I got this question in my e-mail the other day. Usually I don’t have the time to respond to these personally, but this one asked about an issue I posted about a few months ago, so it was still fresh in my mind.

Section 179 is a stimulus for the economy.

Dear Fletch,
I want to buy equipment from a local company that’s going out of business – can I get financed? And what should I look out for, if anything?
Keith H


This is a great question, because not only is it common, it’s also one that could prove perilous for the buyer. Here was my answer:

Dear Keith,

Yes, you can get financed. That said, it’s up to you to make sure a few things are in place.

The first thing you need to do is find out if the business you are buying the equipment from is the original owner. If they are, they likely have the original paperwork – get that. 

If they are not the original owner, then who did they buy it from, and are THEY the original owner? And is there paperwork? And so on. 

In other words, you need to be able to trace the equipment back to the manufacturer, and account for every owner. Here’s why:

Once you have all owners accounted for, you should make sure the equipment has no liens on it, from any of them. This is because liens on purchased equipment can be a serious pitfall. If you buy a piece of equipment that has any kind of lien on it – even one from years back and two owners ago that almost everyone has forgotten – the lienholder can legally claim (and take) that equipment. And no, you won’t get your money back. I’ve seen it happen. 

This is why I always stress to used equipment buyers that they should be sure of the seller. This is easy when you’re buying from an authorized dealer or large re-seller, because they usually do the detective work (search public records, etc. It’s a mess.) 

But in the case of buying used equipment privately, it’s buyer beware. Your lender might do some of this detective work for a fee, but even then, they can’t/won’t take responsibility. The liability is yours, and yours alone. 

My advice? If you’re not 100% sure of the seller and the equipment being lien-free, consider passing and going to a reputable used equipment dealer, or simply buy new. It’s a lot safer in situations where the seller can’t produce the invoice(s) from the original purchase.  

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