If the property was leased, your friend did not own it and can't sell to you what he doesn't own. Your not knowing he didn't own it when you bought it doesn't mean you can simply keep it now that you know it wasn't his to sell doesn't make the transaction legitimate.

The property wasn't "lost, stolen or destroyed" from your friend. He sold it to you and obviously told them where it was in an effort to get his judgement satisfied or reduced.

You most likely need to recover from your friend any loss if the company prevails, not the company who owns the building. How much money are we talking here, a little movable storage pod or a barn-sized Morton building? Not necessarily what you paid, but what the building is worth.

NC has a felony limit of being in possession of stolen goods of just $1000. Don't be coy and have this potentially escalate on you. Sounds like they simply want their property back and are choosing civil over criminal charges at this time. Do you really want to play a game here?

Before you get yourself in too deep, you should consult a lawyer to go over the paperwork you have been given concerning this civil suit to see where you stand and what consequences, if any, you could face in your state by attempting to keep the building.

Good luck.

Hmmm...the first thing that leaps out at me is that - since you bought the property being completely unaware that it was encumbered in any way - you might be considered a holder in due course or a holder in good faith. Under those circumstances, you may have certain rights in the property.

In short, I don't think you're likely to get in any type of legal trouble here. However, the truth of the matter is that your friend owes somebody in this situation, so it's a matter of figuring out whether it's you or the people he leased from that will be going after him in court.