The internet is filled with horse lease forms but just as no two horses are alike, no two agreements are the same either. Each state has different laws and each agreement requires careful scrutiny. If you have a lease form, the cost of having an experienced equestrian lawyer review the lease will save you the costs associated problems later and even litigation. These are some of the issues that should be addressed in a horse lease agreement:
- The Identity of the Parties and the Horse. As with horse sales contract, it is important to know if you are leasing the horse from the horse’s actual owner. Sometimes a lease will contain only the name of the leasing agent or the horse’s trainer and this does not necessarily provide a legal right to use the horse for the term specified in the lease. Similarly, company names should be investigated to make sure that (a) such an entity really legally exists, (b) it really owns the horse in question, and (c) the correct person is signing on behalf of that entity. There can also be problems when a horse is owned by a minor who, in California, has the right to rescind a contract. You should also verify the identity of the horse you are leasing.
- Use and Care. The manner in which the horse is to be used is critical in a lease. Leases will often contain provisions that require that the horse remain within the care of a particular trainer or stable and identify who will be allowed to ride the horse. Leases can also limit the geographical area in which the horse travels, the number of shows or races in which it will participate, and the type and frequency of the work it will perform. In fact, some leases will even restrict the type of feed a horse is to be provided. If a horse is both a breeding and performance horse, the horse’s work and breeding schedule will need to be reconciled and detailed. With broodmare leases it is particularly important to establish a level of fitness and care down to whether the mare will continue to wear shoes or not.
- The Lease Amount and Lease Term. An equine lease agreement needs to specify the term of the lease. Leases can be for a single show or for an entire year or longer. Will the lease payment be made in advance or in monthly? Can the horse be returned before the end of the lease term for a partial refund? In broodmare leases, what is considered the breeding season and what happens if the mare is not in foal? How will the horse be returned at the end of the lease?
- Risk of Loss. It is critical that a lease set forth who will be responsible in the event the horse is injured or becomes sick. Sometimes the lessee will pay for expenses only up to a certain amount. Sometimes injury extends the term of the lease until the horse is well. it is important to conduct a baseline examination of the horse to make sure that the lessee will not be held liable for a pre-existing condition that was not fully disclosed
- Injury to Others. California does not have equine activity liability laws like most other states. A lease should contain proper language that specifies who is responsible in the event the horse causes injury to anyone or anything. It is critical that a lawyer review this language to make sure it is enforceable and properly drafted.
- Insurance. The horse’s full value should be set forth in the lease so everyone understands what is at stake. The parties should also agree as to what types of insurance, if any, will be purchased and who will be named as an insured or “additional insured” on the policy. A system should be in place to verify insurance terms and amounts. Sometimes a lease will specify the amount of insurance, the identity of the insurer, and the type of insurance. There are several types of insurance that should be discussed. First, the parties need to determine if there is going to be major medical and mortality insurance regarding the horse. Second, the parties need to make sure there is a liability policy in place that will cover injury to others (see above).
- Sale of The Horse to a Third Person During the Lease Term. If the owner wishes to sell the horse during the lease term, there should be provisions that address how this is to be handled. A lessee will want to make sure that the horse is not shown in a manner that will interfere with the lessee’s use of the horse during the lease term. Additionally, if the lessee has pre-paid for certain items (such as entry fees, board, and farrier costs), the lessee may want to negotiate that such costs will be pro-rated on purchase.
- Lessee's Option to Buy. Some lease agreements provide an option for the lessee to buy the horse at some point in the future. The parties need to agree upon the purchase price and whether the lease payments are credited towards that purchase price.
- Access and Visitation. Sometimes the Lessor will want to be able to visit or check on the horse. There is a fine line between the occasional visit and being watched or micromanaged. It may be necessary to spell out exactly what is "reasonable" in the particular situation.
- Foals. In broodmare leases there are particular issues that arise regarding what happens to the foal. If there is a medical situation, should the veternarian be instructed to try to save the life of the mare or the foal? If the foal is not the proper color or has a defect of some sort, how will that be handled? If there are any circumstances under which the lessee would not keep the foal, the lease should specifiy what will happen at that point. The lease should also specify how long it will be before the foal is weaned and the mare returned.
- Boilerplate Terms. People often ignore the “fine print” or “boilerplate" terms of an agreement but those can be very important. You should consider whether you want to have a provision for mediation or arbitration in the event of a dispute. If the parties are in different states there should be a provision stating what state’s laws will govern the contract. If the parties are from different parts of the same state you may also want to have a provision in the contract that states where the lawsuit should be brought. If notifications are required, how will those be handled? Finally, it is important to remember that if there is a lawsuit or arbitration, neither side is entitled to have their attorney fees reimbursed unless there is an attorney fee clause in the contract.