Leased Equipment: What You Need to Do First
It is not legal to sell what you don’t own. Everyone knows that, right? Just as you can’t legally sell equipment that your brother-in-law owns, you also cannot sell equipment that is leased.
There is a rise in leases. People are selling their inventory to a leasing company, which then leases it back to the owner. The problem is the “owner” doesn’t actually own it anymore. You are actually purchasing from the leasing company at that point.
If a lien search is not done to find the leasing company and the seller does not disclose the lease or pay off the lease, that leasing company will come to you, just like any other finance company… because the lien follows the machine. Make sure when you ask if there are liens to also ask if the machine is leased. Then request a lien search to verify.