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OWNERSHIP: As a buyer, farmers are advised first to ask to see the purchase invoice or other purchase documents from the dealership or prior owner to establish ownership.

Protect yourself when buying machinery on the internet

Country Counsel: A background check on the seller can also be beneficial.

The internet has changed many farming practices, including the purchase of machinery. It is now common to buy machinery through online auctions and advertisements on websites.

One issue that has arisen regarding online purchases is verification of ownership. Machinery is not titled, so it is not always easy to determine ownership. Even without titles, there are a few ways to help ensure you are buying machinery with good title.

Potential problems

Let’s start with a scenario to explain the potential problems with an online purchase. Buyer sees a tractor listed for sale on a website for $100,000. The tractor is exactly the make and model Buyer has been looking for, and it’s at a good price. Buyer pays the purchase price and receives the tractor. Later, however, Buyer receives a letter from a leasing company stating that the tractor was leased, that the leasing company is the owner of the tractor, and that the tractor must be returned. Buyer also finds out that the seller was in financial difficulties and was engaging in unscrupulous behavior.

Bypassing difficulties

What could Buyer have done to help prevent this issue? First, ask to see the purchase invoice or other purchase documents from the dealership or prior owner. The seller should be able to provide you something verifying that he is the valid owner of the machine. If the seller is unable to provide any documentation, it doesn’t necessarily mean he doesn’t own the machine, but it certainly should put the seller on notice of potential problems.

Another fairly easy proactive step to take is to check Uniform Commercial Code (UCC) filings. When a lender provides a loan for a piece of machinery, it typically files a UCC notice stating that it has a lien on that specific piece of equipment. In Ohio, the filing can be found by going to the Ohio Secretary of State website and searching for the owner’s name. If there is a lien on the piece of equipment you are interested in purchasing, you should be able to find the UCC filing. If you don’t find the seller’s name, you should also check for the seller’s spouse’s name and any business entity names that the seller may have. The item you are purchasing may have been purchased under a name related to the seller or a business entity owned by the seller.

Background checks

A background check on the seller can also be beneficial. The background check does not need to be done by a private investigator or other paid service. The easiest background check to do is to contact people who know the seller. If the seller is far away, this may not be practical. Doing an internet search on the person’s name and location can also provide valuable information. If the person has a history of bad business dealings or complaints by other buyers, it likely will show up on an internet search. Also, if the county in which the seller lives has court records available online, a search can be done on the seller’s legal history. Any criminal actions or civil lawsuits in the county will be on the record. A seller with many lawsuits against him or criminal actions for bad business practices should be avoided.

Online escrow services

Another issue related to online purchases can be sending payment before receiving the machine. Sometimes payment and delivery or pickup do not happen simultaneously. When purchasing an item and the item will be delivered to you, the seller may demand payment upfront. It’s hard to blame the seller for wanting payment first to avoid not being paid. On the other hand, the buyer may not want to send money first and risk not having the item be delivered.

To overcome this situation, there are online escrow services. The buyer deposits the purchase price with the escrow service, and the seller can confirm the funds are available. When the buyer receives the item, the funds are released to the seller.

Contact Moore, an attorney with Wright & Moore Law Co. LPA, at 740-990-0751 or rmoore@ohiofarmlaw.com.

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