The successful lease

Leases are a common part of the equine industry. People lease horses for all different uses, including breeding, showing and pleasure, just to name a few. Like many horse transactions, leases often go undocumented, without addressing many of the critical ...Leases are a common part of the equine industry. People lease horses for all different uses, including breeding, showing and pleasure, just to name a few. Like many horse transactions, leases often go undocumented, without addressing many of the critical ...

Story originally posted by: Michael Beethe, Esq.

The Successful Lease

by Michael Beethe

Leases are a common part of the equine industry. People lease horses for all different uses, including breeding, showing and pleasure, just to name a few. Like many horse transactions, leases often go undocumented, without addressing many of the critical issues. Often times, failure to address certain critical issues result in disputes during and after the lease. If, however, the parties discuss and document the critical issues related to the lease, fewer disputes will arise.

Critical Issues

The critical issues surrounding a lease will vary depending upon the intended use of the horse during the lease. For example, the lease of a broodmare will present different issues and concerns than the lease of a show horse. When considering the lease of a horse, you should think of all of the possible issues and pitfalls surrounding the lease, and address them with the other lease party prior to entering into the lease. Below you will find several of the common issues which require attention.

Fee and Term

While this may seem elementary, the fee and term of the lease require clear identification. The parties should agree on the fee and term for the lease, which could be on a month-to-month or yearly basis. The fee and term could also be based upon a certain result. For example, for the lease of a broodmare, the lease fee and term could be based on the amount of time it takes the lessee (the party obtaining the right to use of the horse) to obtain one foal from the mare. As you can see, the term here is not set period of time, but based upon the final result.

Use of the Horse

The lease should clearly identify the lessor (the party granting the lessee use of the horse) and lessee’s rights to the horse during the lease period. Often times, the lessor gives up all use of the horse. On the other hand, some people desire to do "partial leases," where both the lessor and lessee have the right to use the horse. For example, the owner of a show horse, may agree to allow a junior rider to ride their horse in certain classes, while the owner continues to show their horse in other classes. In this case, both parties will have certain rights to use the horse, and such rights should be clearly identified.

Care for the Horse

The care of the horse proves one of the most critical issues surrounding the horse lease. Several different issues arise and require clarification:

1. Board and Training. Some lessors require specific board or training of the horse. For example, the lessor may require that the horse remain in training with a certain trainer during the term of the lease. On the other hand, the lessor may simply require that the horse be boarded or trained at a reputable facility. Such requirements should be clearly defined, as well as the party responsible for paying such board and training expenses.

2. Standard Veterinary and Farrier Care. Like the board and training of the horse, the lessor may have specific veterinary and farrier requirements. Again, the party responsible for such expenses should be clearly defined prior to the lease.

3. Emergency and Major Veterinary Care. While no one wants to think about the worst case scenario, this may be the most critical issue to discuss. What happens if the horse requires major medical care, such as colic surgery. While this may be somewhat diminished by proper insurance (discussed below), this issue mandates attention. The extent of care required, the party responsible for making such decisions and the party responsible for paying the emergency cost should be addressed prior to entering into the lease. Failure to do so could result in disaster.

Insurance

In any lease agreement, I strongly recommend insuring the horse. Implementation of insurance does not always prove to be that simple. Many details must be worked out in order to provide the desired protection. The type of insurance, such as mortality, loss of use, and major medical, should be clearly defined. Equally important, the party responsible for payment of the insurance premiums, as well as the loss payee should be agreed upon in advance. Finally, the parties should agree on the insured amount.

Injuries

The lessor will not want to take on the risk of someone getting injured on or around the horse while the horse is in the care of the lessee. Since the lessor owns the horse, however, they could be subject to such liability. For proper protection, the lessor should require the lease agreement contain provisions for the release of their liability, as well as an indemnification agreement between the lessor and lessee. Each state varies on the extent and language of such provisions. Thus, you should contact a lawyer to discuss the language required in your state.

Termination of the Lease

In the event of a disagreement, violation of the terms of the lease or other events, the parties should agree on what events will trigger termination of the lease, as well as effectuating such termination. If the lessee pays a fee for leasing the horse, the refund of such fee should also be addressed.

The Lease Agreement

As you can see from the critical issues addressed above, along with any other issues which may be particular to your lease, you need to document your lease with a lease agreement. The lease agreement provides several benefits. First, it brings up issues prior to the lease which require attention, and thereby requiring the parties to address the issues in advance. Second, it provides written documentation for the parties to refer to during the lease. Finally, the written documentation will provide a remedy and the ability to enforce the lease if there is a dispute regarding the lease.

The following are several of the provisions which should be included in the lease agreement, many of which are discussed above:

1. Identification of the parties;
2. Identification of the horse;
3. Duration of the lease;
4. Fee for the lease;
5. Use of the horse by each party;
6. Care for the horse;
7. Insurance of the horse;
8. Liability releases/Indemnification;
9. Equine Activity Liability Insurance provision (if applicable);
10. Termination of the lease;
11. What state’s law applies; and
12. Payment of attorneys fees.

Conclusion

Leasing a horse can prove beneficial for all parties involved. It can make it possible for the lessee to obtain the use of a valuable horse for a period of time, which they could not otherwise afford. It can also allow the lessor to retain ownership of a horse, but decrease or eliminate the daily expenses of such ownership. In order to ensure that the lease works out they way the parties intended, the critical issues surrounding the lease should be addressed prior to the lease, and the lease should be documented by a lease agreement. With those steps in place, the parties stand a much better chance in having a successful relationship.

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