Protecting Your Construction Company Against Heavy Equipment LiensProtecting Your Construction Company Against Heavy Equipment Liens

Of the many interdependent segments that make up the construction industry, few are as strongly correlated as contractors and heavy equipment. When contractors thrive, they expand and require more equipment, driving the demand for heavy machinery. However, the flip side is that contractor failures may equally impact the heavy equipment business. This means a portion of all heavy equipment entering the used market potentially have liens.

One significant issue is that equipment liens stay with the machine regardless of who owns it. Liens are not directly filed against the machine but against the seller, whether they operate as a business or an individual. This means you can’t search for liens using machine details such as make, serial number, or VIN. Sometimes, a seller's lien might not specifically mention the machine, but blanket all assets, which still legally allows repossession of the asset. These facts make the process of dealing with heavy equipment liens challenging.

Taking a step back to look at the bigger picture, 65% of contractors fail within 10 years, according to the U.S. Bureau of Labor Statistics (2024). Despite this, it's relatively easy to enter the market due to factors like grants from trade unions, upfront payments from contracts, borrowing against assets, and leveraging profits from other jobs. While these help facilitate growth, they can also lead to overextension without careful planning.

Many contractors look profitable but may be operating at a loss due to inaccurate financial projections and outdated pricing. However, new contractors continue to enter the market, contributing to its dynamism. Establishment of private specialty contractors has increased by 20% over the last decade. (U.S. Bureau of Labor Statistics, 2024). To put that in perspective, Q3 2013 to Q3 2023 shows an increase of 97,218 establishments. Of those, 58,330 have, or will fail.

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