How to Verify There Are No Liens on Used Manufacturing Equipment

Lenders place liens on equipment to secure commercial loans.
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A lien is a legal encumbrance that impedes the property holder from selling or otherwise disposing of property. Commercial lenders can place liens on manufacturing equipment in consideration for money loaned to the owner of the equipment. A contractor also can take a security interest (place a lien) on manufacturing equipment for work being done for the equipment holder. Government authorities also can place a lien on equipment for failure to pay taxes. To verify that used manufacturing equipment is not subject to a lien involves searching in the state and local databases.

Step 1

Get a description of the equipment, including the models, serial numbers and the location of the equipment, as well as the name and address of the equipment owner or holder. This information is necessary to determine in which jurisdictions you must conduct your searches. This information is also necessary to properly identify the equipment that is subject to a lien.

Step 2

Search for the Uniform Commercial Code financing statement of the used manufacturing equipment. Use the online UCC search tool available on the Coordinated Legal Technologies website and check the jurisdictions where the manufacturing equipment is located. UCC filings are used by commercial banks to notify the public that the equipment is subject to a lien. There are several types of UCCs, including original financing statement. Check each filing to see which type of UCC it is and read the description of property on the UCC to see if the equipment you are researching is listed on the statement. If the equipment is listed on a UCC-1 original financing statement and is not removed by amendment or termination, then there is an existing lien on the manufacturing equipment.

Step 3

Check for notices of liens that might have be filed against the owner or holder of the manufacturing equipment at the clerk of courts in the county where the equipment is located. Tax liens, judgments and mechanics' liens are filed against debtor's in the county where property is located, Check the records using the name and address of the equipment holder (or in the case of a company, the county of its headquarters). If you find a lien with the debtor's name, you must still verify whether the equipment you are researching is attached to the lien, which only can be done by checking a description of the property against which the lien is filed.

Step 4

Buy a lien search online or hire an attorney to carry out a search. Online companies like Intelius offer lien search services. Attorneys with expertise in collections and judgments will know how to uncover any liens and encumbrances against the manufacturing equipment you are researching.