If you end up on the receiving end of a questionable looking email from a Nigerian prince, who just so happens to have this can’t-miss, once-in-a-lifetime opportunity for you — all you have to do is go buy this used baler, sell it for thousands of dollars more than you paid for it, and then send a few thousand dollars to your new friend in Africa and you get to pocket the rest — you’re probably going to laugh, delete that email and move on with your day.
It would be nice if all used equipment scams were that easy to spot in the wild, but scammers are becoming increasingly sophisticated in how they put their grifts in motion.
One recent, well-publicized case appears really concerning on its face, because the fox was loose in the hen house.
Dustin Echelbarger, 43, was arrested in June on 17 felony counts of fraud and forgery in Indiana. Echelbarger, who is presumed innocent until proven otherwise, is accused of using his position as a sales rep at the local John Deere dealership, Truland Equipment, to rope a handful of farmer customers across two states into a used farm machinery buying and selling scheme. You can brush up on the sordid details here. The case is set for jury trial this fall.
Zach Bosely, founder and CEO of TractorTuesday.com, and Aaron Fintel, used equipment specialist with 21st Century Equipment, spoke with us about issues they have encountered in the used market and how buyers can protect themselves.
Here are a few common issues farmers should be aware of:
- Lien Complications: Many transactions involve blanket liens, and sometimes multiple liens, which can complicate or invalidate a deal if the equipment is not cleared for transfer. Some sellers might even be unaware of existing liens on machinery.
- Bankruptcy Issues: When sellers file for bankruptcy it can lead to hiccups with the sale and ownership transfer. For example, if farm equipment was sold before a seller’s bankruptcy declaration but still carries a lien, the buyer could find themselves entangled in a legal dispute with creditors.
- Long Processing Times: When a lien needs to be cleared, it often involves lengthy delays in the transaction. Buyers might even find themselves unable to secure financing.
Here are some insider tips to help you stay safe in the used equipment marketplace:
- UCC Diligence: Buyers should conduct UCC (Uniform Commercial Code) searches to identify existing liens, just as many of the big online auction houses will do before listing a machine for auction. To search for Uniform Commercial Code (UCC) filings related to farm equipment, locate the state’s UCC database and search for filings using the previous owner’s name. In Ohio, for example, you can perform online UCC searches on a database maintained by the Secretary of State office.
- Research the Seller: Before making a purchase, ensure you are dealing with reputable sellers or auction houses. Do your homework by conducting online research (social media, local court records, Google searches) before you sign anything binding.
- Verify Equipment History: Use the equipment’s serial number to perform online searches, looking for issues or conflicts. This includes checking for outstanding liens or claims.
- Engage Local Dealers: Consult local dealerships and sales representatives that you trust. Bring the serial number with you so the dealer can verify the history of the machine and pull any service records.
- Obtain a Lien Waiver: If there is a lien, the previous owner should seek a lien waiver from the lender, confirming they are authorized to sell the equipment and plan to satisfy the lien once the transaction goes through. Proper, open communication between buyer, seller and lender is key here.
- Still Red Flags? Walk Away: If there are confusing terms or conditions that just don’t feel right, trust your intuition and take some time to review everything. Walk away from the transaction if your concerns aren’t satisfied.
- Legal Advice for Large Purchases: You can save yourself from headaches if you have a trusted local attorney look over any large equipment purchase deal before signing on the dotted line.
“It is really important you do your due diligence as a buyer, and it could be as simple as getting the serial number and using a search engine. Start there and see if there’s any smoke,” Bosely advises. “And even if there’s not, continue down the path — talk to your local dealer and ask them to help you out, help make sure you’re not buying a lemon, because you’re going to use them for service anyways.”
“My final point to hammer home on all of this would be, there are ways to check things out when you’re buying equipment, so utilize them. Take your time and do your do your due diligence,” Fintel adds. “And keep this in mind: there is no such thing as having too many things in writing, whether it’s an email, a text message or whatever. Those are all documents that can be shown in court.”
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