Lien filing and the Rental/Leasing Industry
An article from American Rental Association (ARA) states “Equipment rental operations are in the business of renting equipment, so when it’s stolen, they have been deprived of more than just equipment — they’ve lost current and future revenue as well as possibly incurred additional costs.
In response, several state associations have worked hard to secure stronger theft-of-services legislation that makes failure to return equipment and pay rental fees a criminal offense.”
In addition to the rental agreement, do you file a UCC (lien) for the term of the rental? Is it written into your rental agreement that you can do this? If not, you might want to consider amending your document to include the option.
You say you would not file a lien on those you rent to – you trust them, or you wouldn’t be doing business with them. But you still have the rental agreement signed, right?
Much like taking out a note at the bank, there is a paper stating they can (and will) file against you with the equipment as collateral. The equipment you are renting out is your collateral. You should be filing this too.
What does this have to do with equipment being stolen? It might be the guy you rented to, that doesn’t return it or it might be the equipment was not secured and stolen from your renter. Having a lien filed is one more way your interest is perfected. If your renter’s insurance doesn’t pay the full value of the stolen piece, your lien stays in place until you are financially whole again.
A lien may also keep the machinery from being sold out from under you. If your renter attempts to sell the equipment and a lien search is conducted your security is shown.
Filing a lien can be a preventative measure, just as your rental agreement is a preventative measure.
How can Ground Clearance help? With a copy of your rental agreement and the FILING FORM submitted, we will file the lien and terminate it at the end of the agreement or when the equipment is returned to you, whichever comes first. You will be billed upfront for the filing. The fee for the termination is included.