Clearing liens on machinery sold by a used machinery dealer is an essential process to ensure that the buyer of the machinery is not burdened with any outstanding financial obligations related to the machinery. A lien is a legal claim made by a lender or creditor on an asset, in this case, machinery, as security for a debt. Until the debt is paid in full, the lender has a security interest in that machine and that includes the right to seize the machinery. This can pose a risk to the buyer of used machinery, as they may be unaware of any liens or debts attached to the machinery they have purchased. and yes the equipment you purchased and paid cash for can be seized, legally, from you if there was an existing lien on it that the lender intends to enforce. 

In the case of used machinery dealers, they often purchase machinery from various sources, including auction sales, bankruptcy proceedings, direct purchases and trade-ins from other dealers or manufacturers. As a result, the machinery may have outstanding liens attached to it, which a reputable dealer is responsible for clearing before selling the machinery to a new buyer. Knowing this is critical to you the buyer, and dealing with an ethical used machinery dealer that performs their due diligence on your, and their, behalf is crucial. Even if a machine is brokered (sold from one plant floor to another through a dealer) a lien search needs to be done and if found, must be cleared prior to removal.

Clearing Liens on Machinery

To clear liens on machinery, the used machinery dealer must first determine if there are any outstanding liens on the machinery. This can be done by conducting a lien search, which involves reviewing public records related to the machinery, company that purchased the machinery, or individual if it was purchased as such, to identify any liens or debts attached to the machinery. The lien search should be conducted before the machinery is purchased by the dealer and before the dealer sells the machinery to a new buyer.

Once the dealer has determined if there are any outstanding liens on the machinery, the next step is to negotiate with the lien holder to have the lien released. In most cases the liens found are from old debt or are supplanted by new equipment that has been purchased and are thus lien'd against. A simple request to the lien holders usually results in a letter of release. Other ways to have liens released can be done by paying off the outstanding debt in full or by negotiating a repayment plan with the lien holder. If the lien holder is unwilling to release the lien, the dealer may have to seek legal assistance to resolve the matter.

Providing Lien free Sales Guarantees

When the lien is successfully removed, the dealer will be able to provide the new buyer with a lien-free bill of sale, which states that the machinery is being sold without any outstanding liens (encumbrances) or debts. The bill of sale (invoice) should also include the names and addresses of all parties involved in the sale of the machinery, the date of the sale, and the description of the machinery being sold. This document serves as proof of the lien clearance and can be used by the buyer if any disputes arise in the future. Further a reputable machinery dealer like Southern Fabricating Machinery Sales will state specifically in the conditions of sale that the machine is delivered free and clear of all Liens & Encumbrances assuming any liability should a lien later be found in effect.

In summary, clearing liens on machinery is a critical step in the sales process for used machinery dealers. By conducting a lien search and negotiating with the lien holder, the dealer can ensure that the machinery is sold without any outstanding financial obligations, and the buyer can purchase the machinery with confidence. It is essential for the dealer to provide the buyer with a lien-free bill of sale to serve as proof of the lien clearance and to protect their investment and interests in the future. While the process of clearing liens can be complex, it is a necessary step to ensure a smooth and successful sale of used machinery. When your shopping for used machinery make sure you are buying from a trusted machinery dealer that performs a lien search as part of their due diligence ensuring a trouble free purchase in the present and the years to come. 

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