Re: Watch Who You Buy From

Posted by Mike (WA) on September 24, 2010 at 08:56:42 from (69.10.196.7):

In Reply to: Re: Watch Who You Buy From posted by John T Country Lawyer on September 24, 2010 at 06:00:57:

Don't know if I'm the Mike you're referring to, but I'll give it a shot.

Sounds like the seller was the actual owner of the tractor, but still owed JD Credit on it. Of course, he stopped making the payments, hence the attempted repo.

First, I agree that you should lock it away so the repo guys would have to break and enter to get it. In my state (and John's), they can only take it peaceably, and cannot breach the peace. That will give you time to explore your legal options, and decide what to do.

JD Credit always files a "security interest" in the proper method for the state, usually a UCC filing. Your lawyer should have already done a UCC search. If he hasn't, or doesn't know how to do one, get a smarter lawyer. Most states have central filing through the state, I think, so going to the county courthouse will get you blank stares. I would imagine every state can now be searched "on line", so its not a difficult process.

Now, to the crux of the matter. The good news, if my analysis of the facts above was correct, is you now own the tractor. Fair and square. The bad news is, you bought it subject to the JD Credit loan, which you must pay if you want to keep it. If it had been a private loan from another individual, and he showed up with a Note and Security Agreement but he had not filed them with the proper agency, you would be a "bona fide purchaser" (bought for value, without knowledge of a defect in title) and you would be in the clear. But if the creditor filed the lien (which JD Credit almost certainly did), you're stuck, because if you fail to search the public record before you buy, you are not a bona fide purchaser- purchasing "without knowledge" presupposes you have done some investigation, and checking the public record is the minimum requirement. The Ostrich Defense doesn't work.

You can certainly go after the seller, and you should look into that- if he had a fairly new tractor, he probably has other assets that you could execute against. But find out early on what all this will cost, because it may well be more than the value of the rig, and your first loss might be your least loss.

Please don't listen to all the righteously indignant guys who advocate "self help", stripping the tractor, etc., unless they volunteer to serve your time for you. It will only make a bad situation worse.

Mike (WA), another "country lawyer" (and previously Farm Credit loan officer for 15 years).

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