Legal Question in Business Law in Iowa

Re: Seller/Agent/Buyer Auction-Not a clear title

It gets down to 'who knew what, and when did they know it, and what did they do after they had the knowledge'.

Generally speaking purchasing things at auction is 'as is, where is'. The auctioneer should have announced that the equipment was encumbered and let people make up their own minds as to whether they wanted to risk it.

However you have not said whether the auctioneer knew that the equipment was encumbered-that's quite a different thing. If he knew that the equipment was subject to a security interest and did not announce the same, you have a cause of action against him. And if he knew that the owner/seller was buying it on contract common sense would suggest that there was a lender somewhere in the background.

The secured party's interest trumps pretty nearly everything else.

On the other hand, you now know that it was encumbered and you have since disposed of it, which means the problem is going to land on your doorstep and you're going to have some explainig to do unless you were under the good faith impression that the equipment was NOT encumbered.

Any way you slice it you're in a pickle and there's no easy way out of it. I suggest that you contact an attorney with specifics to see if you can salvage anything out of this deal.