In the equipment finance world, we take a lot of things for granted. One of those things is that a private party transaction with a titled piece of equipment is every bit as safe as a similar transaction with a vendor. Sure, vendors can have internal corporate hierarchies that can be difficult to deal with, but at least with a vendor there’s no mistaking that they’re able to pass a clear title. Typically, as part of our due diligence when we complete a transaction, we ask for a copy of the title (front and back) before funding. Verifying that there are no liens or brands on a title is central to protecting our collateral interest in a transaction; however, we often forget that when it comes to private party deals all bets are off.
After funding a recent truck and trailer transaction, we were in the process of performing our standard title transfer protocol, when we discovered that a title which we held (and which was completely unbranded) would have to carry a salvage brand. Apparently, years ago, the trailer had been in an accident that left it totaled. In our State, notification to the DMV isn’t sufficient to result in the issuing of a new title. In this particular case, the trailer was rebuilt and never changed hands, leaving the physical title clear of any brands that could tell the real story, but leaving the VIN flagged permanently.
Long story short: don’t assume you know anything about a title. In a private party transaction, it is important to ask the seller to attest to material facts about the equipment in addition to providing a Bill of Sale and clear title. After all, what you have in front of you may not tell the whole story. For more information on titling and registering your vehicle in the State of Oregon, visit the DMV website here.
