Did Your Creditor File a Termination When You Paid Off the Note?

It’s sad but true. Most creditors do not file terminations when lien notes are paid off. Some creditors will mail a copy of the termination to the customer to file, but most just don’t follow through. Why is this important?

It’s important because an open lien can be used again. If the lien language reads “The following and all substitutions, replacements, additions and accessories thereto now owned or hereafter acquired and proceeds thereof,” this allows the creditor a legal way to reuse the lien.

How can you protect yourself? Two ways:

  1. When you pay off a piece of machinery that holds a note, whether it is a piece you own or a piece you’re buying, verify the creditor has terminated the lien and request a copy of the filed termination.
  2. Always request a lien search when buying, brokering, or taking a piece in on trade to verify there are no open liens that might be relevant to the machine.

Buying from a dealer, dedicated or not and regardless of size, does not guarantee you’re buying free and clear. Ask the dealer if they search further than their own database. They shouldn’t be offended by the question and will still do business with you. If they don’t search outside their own database, tell them about Ground Clearance. We can help them do a better job with lien search and help customers like you have a better buying experience too.

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