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Dear Ms. Craig:

On behalf of the Dorcas Fire District, you ask the following question:

May the Dorcas Fire District purchase a fire truck under an installment agreement in which the lender holds a lien against the fire truck?

In sum:

While the Dorcas Fire District is authorized to purchase equipment by an installment sales contract if funds are available to pay the current year's installments on the equipment and to pay the amounts due that year on all other installments and indebtedness, it may not use an installment contract which creates a purchase lien in favor of the seller in the event of a…