Can a horse seller repossess a horse if the buyer has failed to pay in full? We receive this question frequently, but the answer is more complicated than you might think.

What Makes Repossession Complex

Repossession is the act of taking back an item, such as a horse, that has been sold on credit when the buyer has violated a payment arrangement. The process may seem as simple as entering the non-paying buyer’s barn, removing the horse, and hauling it away. In the eyes of the law, however, repossession is far more complex.

The right to repossess generally can exist in three settings:

  • The parties have a legally valid contract (that includes appropriate language) through which the buyer has allowed the seller the right to repossess the item that is being sold;
  • The applicable state’s law gives the unpaid seller the right to peacefully (without trespassing and without receiving resistance from the buyer) repossess the item; or
  • Before the repossession takes place, the seller goes to court and receives a legally valid court order that allows the seller, or someone acting for the seller, to repossess the item. Sellers may need to pursue this option if (1) buyers refuse to part with the item; (2) no contract exists; (3) the parties did have a contract, but it is silent about the seller’s repossession rights; and/or (4) the applicable state law requires a court order before any repossession can take place.

The risks of making a mistake in the repossession process can be significant. By entering another’s private barn or pasture to repossess a horse, sellers face costly legal battles and sometimes even criminal charges of trespass and theft. Hauling repossessed horses across state lines, if done unlawfully, might even trigger federal criminal offenses.

Avoiding Repossession Problems

Efforts can be made to avoid repossession disputes. Some sellers abandon installment sales completely and insist on payment up front and in full. Some sellers invest in a well-written sale contract that complies with the law, and require the buyer to sign it, before the transaction occurs. Some sellers will allow the buyer to make installment payments, but the sellers keep possession of the horse until the buyer’s final payment has cleared the bank. Unpaid sellers can also file lawsuits against non-paying buyers to recover the money owed, while allowing the non-paying buyer to keep the horse.