Equine lease transactions have become increasingly popular. Surprisingly, some people continue to lease horses merely on a handshake or use very short lease agreements, only to encounter costly problems later. Over the years, several people who have contacted us with equine lease disputes wished their contract had been more detailed. Detailed contracts can help avoid disputes, which can save very substantial amounts of money.
Recognizing that equine lease transactions differ, here are a few items to consider:
Payment Obligations (and When They Stop)
Does the document make clear what the lessee is expected to pay during the lease term – and possibly afterwards? Aside from mentioning who pays for the horse’s routine veterinary care, does the lease address non-routine veterinary expenses the lessee must pay, and for how long, if the leased horse becomes injured, lame, or ill during the lease term?
Restrictions on Use and Location
Equine leases can address restrictions on use of the horse, such as:
- Training and showing. Can the horse, for example, be jumped over 3’6” in training or showing?
- Recreational uses. Can the lessee take the horse on trail rides?
- Permitted riders. Can the lessee allow others to ride the horse? Some lessors, usually due to liability concerns, forbid this.
- Permitted horse show events. Does the lessor want to restrict the type or number of events in which the horse can be shown
- Breeding. Is the lessee allowed to breed the horse? Can the lessee flush an embryo from a leased mare and keep the resulting foal? Can the lessee collect the stallion and freeze semen for the lessee’s use, or sale, later on? Although some leases specifically apply to breeding stock, the parties can consider restrictions, if any, in the document.
- Restricted trainers. Is the lessor opposed to allowing certain trainers to ride, handle, or work with the leased horse?
- Location. Do the parties intend to keep the horse only at a specified location, except in emergencies?
Equine insurance can pose troublesome issues for lease transactions. As a matter of law, lessees do not own the horse they lease, and they cannot buy equine insurance for themselves. Insurers have issued mortality policies naming both the lessor and lessee as insured parties. The parties might want their lease agreement to address who pays the insurance premium and how insurance proceeds (if any) from claims are to be distributed.
Standard and Quality of Care
Lessors fear that the lessee will skimp on important veterinary or farrier attention or, worse, neglect the horse. (This blog has written on this issue.) In an effort to avoid these problems, equine leases can specify a standard of care that the lessee is expected to follow in the horse’s care and keeping. As one example, for valuable, well-trained show horses, the lease can specify that the lessee agrees to provide the horse with “a high quality of care and humane treatment that is customarily given to top quality show horses in (a particular breed or discipline).” In addition, lessors may want to detail the type of care expected of the leased horse, such as the type and quantity of feed, required supplements, type of hay, turnout (individual or group), blankets, use of splint boots/protective wraps, and more.
One Lawyer Representing Both Lessor and Lessee?
Lessors and lessees have different interests in equine lease transactions. Certainly, the jurisdiction’s ethical regulations might permit a lawyer to represent both sides, with proper advance disclosures, waivers, and written consent, but the risk exists that protections could be compromised if both parties use the same lawyer. For their protection, lessors and lessees should secure separate counsel.
When people enter into equine leases, they don’t expect to become embroiled in a dispute. Yet, disputes occur. Lawsuits are expensive and, with very few exceptions, each party must pay its own legal fees. Because of this, the parties can consider including an attorney fee clause in their lease. This blog has discussed attorney fee clauses, and how they differ. Learn more here.
Equine lease arrangements can be complex, generating a host of risks, disputes, and liabilities. Plan ahead, protect yourself, and consider securing knowledgeable legal counsel.