Top 5 Considerations for a Horse Sale Agreement with a Trial Period

If you are thinking about buying or selling a horse on a “trial basis”, or if you are entering into a horse sale agreement with a trial period, here are five of the most important things you should consider:

1)      The Timing of the Pre-Purchase Exam.  The most important consideration in horse sales is usually, “is the horse sound”?  If the horse is not sound enough to perform the intended tasks of the prospective buyer, the prospective buyer shouldn’t be taking it “on trial” anyway.  It doesn’t happen often, but a horse can sustain an injury or get sick during even a short trial period.  Therefore, the pre-purchase exam should be conducted before the horse is ever taken by a prospective buyer to “try out.”  If a question is ever raised as to whose possession the horse was in when the horse was injured or got sick, both parties will be informed of the horse’s condition when it left the seller’s property if the pre-purchase exam is conducted before the horse leaves.  See the following posts for more information on the types of tests that should be conducted in a pre-purchase exam.

Guest Post:  Top 10 Pre-Purchase Exam Considerations

Tips for Equine Pre-Purchase Exams

2)      Insurance.  If the horse is nice / expensive, the seller should insure it for mortality and major medical before the prospective buyer leaves with the horse.  Note:  Sellers should speak with their insurance agent to make sure the seller’s insurance will cover incidents that occur during the trial period.  If the seller’s insurance will not cover the trial period, good equine insurance agents can often sell the prospective buyer a short-term insurance “binder” that will cover incidents that occur during the trial period.  These short-term "binders" may be extended by a formal policy if the prospective purchaser decides to keep the horse.  If the prospective buyer purchases an insurance “binder”, the seller should be named as additional insured.

3)      Written Purchase & Sale Agreement.  All terms of a purchase agreement “on trial” should be reduced to writing.  Among other things, the specific term of the trial period should be set out, as well as who will bear the risk if the horse is injured or dies during the trial period.  A “security deposit” can also be provided for in the agreement, along with specifics on when the seller can keep the deposit and in which instances the deposit will be refunded to the prospective buyer.  The bill of sale (which transfers title to the horse) and the registration papers should not be signed over until after the trial period has expired. 

4)      Liability Release.  The seller should consider having the prospective buyer sign a release of liability should the prospective buyer or its property be damaged during the trial period.  This will not cover injury to third parties in most instances.  A seller can procure a liability insurance policy to cover accidents involving the horse and third parties.

5)      Location of Horse During Trial Period.  A seller should have a prospective buyer agree in writing as to a single location where the horse will be kept during the trial period.  The seller can deliver the horse to said location or make other arrangements to either approve or disapprove the living conditions of the horse before the horse is released to the prospective buyer.  If the prospective buyer intends to board the horse with a third-party, it is wise for sellers to make sure that the prospective buyer pre-pays board for the trial period in advance.  This is to guard against stableman’s or agister’s liens being placed on the horse if the prospective buyer does not pay board during the trial period.

Due to all of these concerns (and others), I do not typically recommend that prospective buyers or sellers enter into "trial period" sale agreements.  In the best case scenario, a seller would allow a prospective buyer to inspect the horse as much as needed prior to the sale, either 1) on the seller's premises;  or 2) at some other venue to which the seller would transport the horse for purposes of inspection.

This post was in response to a special request I received from a reader for a blog post on horse sales with trial periods.  I’m kind of like one of those music groups that takes requests as long as the song is in their repertoire, and I don’t even ask for tips in return!  So please contact me if you have any special requests for a blog topic.  I’m always looking for good content that will be helpful to my readers.

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Highlights from 2010 National Conference on Equine Law

I just returned from the 2010 National Conference on Equine Law , held last week in Lexington, Kentucky. This was my fifth year in a row to attend the conference, and it was a great year.  The conference had a record number of attendees--180 practitioners from all over the United States. This year's lineup of speakers and topics was the best I've seen so far in five years.

I was lucky enough to be invited to speak this year.  My topic was "A Multi-Jurisdictional Comparison of Equine Liens".  With only 30 minutes to speak, I only had time to cover Texas, Kentucky, and Florida.  However, I hope the materials are helpful by reference to every practitioner or horseman regardless of state.  My handout can be accessed in two parts: Part 1 and Part 2.  Click here for a copy of my PowerPoint presentation.

Takeaways from my presentation:  1) no matter what state you're in, and regardless of whether your state requires it, always send written notice directly to the debtor (if you can find them) before foreclosing on an equine lien; 2) if you want to do a private lien sale under the UCC foreclosure provisions, make sure you can prove to a judge or jury that your debtor was engaged in a "farming operation" (i.e. they are in the horse business--not just a hobbyist); and 3) there may be multiple liens on the horse at issue.  Be aware of which lien has priority.  The person in possession of the horse almost always has the most bargaining power, regardless of priority.

Ned Bonnie, a long-time Kentucky horseman, equine lawyer, and graduate of Yale undergrad and law school, told me he also attaches (seizes via court order) the original registration papers to a horse when a lien dispute arises.  I like this idea, though it requires filing a lawsuit in Texas.

Other highlights from this year's conference:

1) Frank T. Becker's annual Equine Case Law Update--The "case of the year" (the year's most wacky or novel case) was State v. Coates, 2009 WL 2414334.  Frank calls it a "silly case of no legal significance", but interesting nonetheless!  It involved a case of "road rage" between a jogger and a horseman fighting over who should yield a pathway.  The jogger intentionally startled the horse and ended up getting arrested.  Horsemen 1, joggers 0.

2) Ted Martin and April Neihsl talked about the recoverability of damages in equine cases.  Ted stressed the importance of determining the fair market value of the horse at issue and said it is usually determined by 1) expert testimony; 2) previous sales prices and offers to buy; and 3) the owner's testimony (in some cases).

April addressed the recoverability of lost profits, sentimental, and punitive damages.  April stressed that when proving up lost profits, it is essential that the plaintiff had income in the past and that the focus is on net profits rather than gross profits.  Also, while sentimental damages are rarely awarded in equine cases, some states (Colorado, Illinois, Oregon, Tennessee, and Utah) allow them by statute.  

3) Bob Webb and Chris Coffman discussed the IRS's "National Research Program" that is targeting many horse businesses.  The key issue to survive these audits is to prove that the horse operation is a for-profit business, or a trade at the very least.

4) Doyice and Mary Cotten discussed changes in the law affecting the enforceability of liability waivers.  The most frequent causes of liability waiver failure are, according to the Cottens: 1) statutory prohibition of waivers in some states (such as Montana and Louisiana); 2) lack of clarity in the waiver (use of phrase "all liability"); 3) inclusion of waiver in entry form or membership contract; 4) waiver is overbroad or too narrow; and 5) surprisingly--the party to be released is not named in the waiver!

5) Paul Husband presented on the law determining whether someone is an independent contractor or an employee.  Paul stressed the importance of this issue as 6,000 employment tax audits are planned as part of the IRS National Research Program.  The Obama administration has budgeted $25 million to target misclassification of workers as independent contractors.  If an employer misclassifies an employee as an independent contractor, they can receive the "100% penalty" (the person with signature authority on checks for the employer personally pays the employee's tax and serves time in jail).

6) Jay Hickey of the American Horse Council addressed current federal legislation affecting the horse industry.  The Economic Stimulus Bill contains at least one thing that might benefit horse owners--$1.7 billion that can be used for the maintenance and construction of equine trials.  The AHC encourages local organizations to contact district offices to make sure funds are appropriated to horse-related projects.

7) Julie Fershtman discussed liability issues surrounding equine shows and events.  Because most shows or rodeos do not get each spectator to sign a liability waiver, it is important that event sponsors ask their insurance company about insuring against spectator liability.  Furthermore, it was noted that many accidents at equine activities do not involve horses at all, thus bringing them outside the Equine Activity Acts.  Sponsor insurance should, if possible, cover all premises liability issues...not just accidents involving horses.

8) Krysia Carmel Nelson and Tamara Tucker addressed liability issues in boarding and training arrangements.  They suggested including the following clauses in some boarding/training agreements: 1) "training disclaimer" to protect against claim that bad training diminished value of horse; 2) "risk of loss/indemnity" provision to curtail claims that the trainer or boarding facility injured the horse; 3) "veterinary power of attorney" to protect boarding facility from claim that veterinary services were not authorized and ruined horse; 4) "abandonment clause" holding that after a certain period of time, a horse becomes property of the boarding facility/trainer if the owner doesn't pay, make contact, or move the horse.

9) Bruce Smith and Mike Meuser covered fraud in horse sales transactions.  They addressed the crucial issue of a seller's duty to disclose a known defect in a horse.  A duty to disclose can arise when 1) a sales contract requires it; 2) a seller voluntarily makes a partial disclosure that is misleading; 3) the seller knows the buyer has the wrong impression about something related to the horse; 4) a confidential or fiduciary relationship exists; and 5) the seller knows the horse has dangerous propensities.

10) Gregory Dennis, a practitioner who specializes in veterinary malpractice and disciplinary proceedings, discussed various issues surrounding veterinary malpractice cases involving horses.  His presentation highlighted the difference between general negligence in veterinary actions versus veterinary malpractice.

If you would like further information about this year's conference, please click on the individual presenters' names discussed above to find their contact information, or contact me for details.

Is a Horse Legally Abandoned If its Owner Doesn't Ask About it for Four Years?

A horse owner in Texas recently called our office and said she allowed her neighbor to graze his horse on her property for free because she was concerned that he wasn’t taking care of it. After little or no contact with the neighbor for four years, the neighbor has demanded the horse back so that he can sell her. Can the caller now keep the horse because her neighbor “abandoned” it?

The law does not operate to give the caretaker title to the horse just because the owner did not ask about the horse for four years. The owner will need to go through the court system to get title.

The caller’s case is not a clear case of abandonment because the owner is now claiming title and demanding possession.  Courts typically will not consider a horse to be abandoned unless the owner expressly disregards his ownership of the horse and fails to claim the horse even after he is put on notice that someone else wishes to claim title to it.

In order for the caretaker to get title to the horse, she can file a lawsuit against the horse’s owner claiming a lien on the horse for unpaid costs of care and damages under the theory of unjust enrichment (quantum meruit), and ask the court for a temporary restraining order/injunction to prevent the sale until final disposition at trial. If the court grants the caretaker the right to sell the horse in a lien sale to recoup her costs, the caretaker could run the horse through a public horse sale and bid on it. If she is the highest bidder, she will obtain title to the horse. If someone else buys the horse in the lien sale, the caretaker can use the sales proceeds to recoup the costs she incurred caring for the horse.

Filing a lawsuit in these types of cases is usually a waste of money, unless the horse is very valuable or the owner is wealthy.  In most cases, it is best to assume you will never get reimbursed for taking care of an “abandoned” horse. If you ever come across a loose, stray, or otherwise apparently abandoned horse, the best thing to do is call the sheriff immediately and follow their instructions.
 

Lien for Texas Large Animal Vets to Take Effect September 1, 2009

Beginning September 1, 2009, all large animal veterinarians in the state of Texas will have a lien on treated animals to secure payment of vet bills. This lien will be effective both before and after the animal is released to the owner.
 
Prior to the effective date of this legislation, veterinarians have no statutory lien on treated animals to secure veterinary services other than board. See "Liens for Veterinarians and Farriers in Texas" (February 18, 2008)

 

As of January 2009, twenty-eight other states provide veterinarians with a statutory lien. Texas's lien is unique in that it only applies to large animals (livestock) and is not purely possessory in nature (i.e. allows repossession after the animal is taken by its owner).

*The passage of this lien doesn't mean the vet "has" to take the treated animal as payment...it's just there as an alternative collections measure.*

The final bill (S.B. 1806, proposed by this firm and carried by Senator Judith Zaffirini) will be codified in Section 70.010 in the Texas Property Code.
 
This lien may give veterinarians some leverage in getting paid for their services, even if the lien is not ultimately enforced.
 

FACTS ABOUT THE NEW STATUTE:

1) The lien will only apply to amounts that become due to vets after September 1, 2009.

2) When the vet maintains possession of the animal, the vet's lien will have priority over all other liens.

3) Once the vet relinquishes possession of the animal, the vet's lien should be filed of record in the county where the services were rendered and with the Secretary of State.  The vet's lien, post possession, takes priority in the order of filing the notice, per Article 9 of the Uniform Commercial Code.

Protecting Your Horse During a Dispute

Texas law provides liens for two specific types of services provided to horse owners: 1) the stable keeper’s lien, (Tex. Prop. Code §70.003) which secures payment for charges related to the care of horses; and 2) the stock breeder’s lien, which secures payment for breeding services. The stable keeper’s lien also applies to an animal fed in confinement for slaughter, and thus can also be asserted by feedlot operators. See Tex. Prop. Code §70.005(c).

Unlike many other states, Texas does not provide veterinarians or farriers with a lien on a horse to secure payment for professional services rendered. However, the stableman’s lien in Texas does provide a farrier or vet who had a horse in his or her care a lien on the animal for costs of boarding the animal.

Two things to be considered are that 1) a service provider may attempt to hold your horses for nonpayment, even though no statutory lien exists. This may result in the necessity to get a writ of sequestration to regain possession; and 2) horse owners need to be aware of the lien laws in other states when shipping their horses across state lines in the possession of a service provider.
When a service provider refuses to turn over the horses until the full amount of the bill is paid, the local sheriff’s department and the Texas & Southwestern Cattle Raisers will rarely assist the horse owner in regaining possession of his horses due to the civil nature of the dispute. Without the aid of law enforcement, a horse owner may decide to pursue a lawsuit for conversion asking for the return of the animals that includes an application for a writ of sequestration to regain possession of the horses and to seek damages.

A writ of sequestration will enable the owner to regain possession of the horses within a short time, without a trial on the merits, and maintain possession until the lawsuit is disposed.

In the context of horses, a writ of sequestration is available to a plaintiff in a suit if the suit is for possession of horses or for foreclosure or enforcement of a lien or security interest in horses, and a reasonable conclusion may be drawn that there is immediate danger that the party in possession of the livestock will conceal, dispose of, ill-treat, waste, or destroy the livestock or remove it from the county during suit. Tex. Civ. Prac. & Rem. Code §62.001 (Vernon 1997). The defendant’s use of the livestock while the suit is pending is not enough for a writ to be granted. The plaintiff must fear that the livestock will be sold, mistreated, killed, or concealed. Mere depreciation in the value of the livestock during the pendency of the suit probably will not constitute injury that would warrant the issuance of a writ of sequestration. Commercial Acceptance Trust v. Parmer, 241 S.W.586 (Tex.Civ.App.—Fort Worth 1922, writ ref.)(involving depreciation of motor vehicle).

“Sequestration” is not a cause of action, but rather, a remedy available after suit has been filed, but before a judgment has been obtained. Its purpose is to prevent the destruction or disposal of property until the court can reach a final judgment.

To avoid these situations, horse owners and service providers should put all terms of the service agreement in writing. The contract needs to specify what the service provider has been hired to do with the horses, where they will keep the horses, and the expected payment for the care and services provided. Horse owners should ask all service providers to send a detailed bill at least once per month and be sure to pay bills timely.

Owners should not entrust their horses to anyone in whom they do not have full faith and confidence, and should keep in close contact with the person or company in possession of the horses. Similarly, a service provider needs to check references to make sure they are not accepting a client who will not end up paying for the services.
 

 

Does a Bank's Prior-Filed Security Interest Have Priority Over a Stableman's Lien?

No.  In states that have adopted the Uniform Commercial Code (UCC), courts will probably hold that the possessory stableman's lien is superior, even if the bank's UCC Financing Statement was filed before the stableman took possession.

When Does the Conflicting Lien Situation Arise?  If someone borrows money to buy a horse or horses, the bank will often require the borrower to sign a security agreement pledging the horse(s) as collateral on the note.  When the borrower stops making payments on the loan, the bank normally will repossess the horses and sell them to foreclose on the note.  In some instances, when a borrower stops paying the bank, they also stop paying the boarding facility that is taking care of their horses.  The nonpayment of board gives the boarding facility a statutory stableman's lien on the horse(s) as long as the boarding facility maintains possession.  Let's assume the bank's lien was first in time--i.e. the bank lent the purchase money to the owner and filed a UCC Financing Statement before the boarding facility took possession of the horses. The question becomes, who is entitled to the first lien on the horses...the bank or the stableman?  Also, is the bank entitled to come onto the boarding facility's property and repossess the horses?

Under Section 9.333 of the UCC, the Possessory Lien Has Priority.  Section 9.333 and its Official Comment under the Texas version of the UCC states that "the possessory lien has priority over a security interest unless the possessory lien is created by a statute that expressly provides otherwise...the possessory lien takes priority, even if the statute has been construed judicially to make the possessory lien subordinate."  This means the bank's lien, even if prior filed, is subordinate to the stableman's lien.

WARNING--Courts May Follow Old Cases.  Even though the UCC is clear on this, a trial court in one of my cases found that the stableman's lien was subordinate to a bank's security interest.  The court cited Blackford v. Ryan, 61 S.W. 161 (Tex. Civ. App. 1901)(holding that a bank's pre-existing security interest is superior to an agister's lien when a horse was placed in a stable without the bank's knowledge).  This case, as well as several other pre-1930 Texas cases with similar holdings, interpreted the common law agister's lien and not the statutory lien under Section 70.003 of the then non-existent Property Code.  These cases were also decided before Texas adopted the UCC.  But the cases are still presented in Texas Jurisprudence and other legal treatises as being current law.  There are many cases that have found the possessory lien to be superior when it comes to garagemen keeping automobiles under Section 70.003, but no Texas cases involving stablemen.  Despite the current lack of appellate review on the issue, I think most courts will defer to the UCC and the car cases and hold that the stableman's lien is superior.

Do Horse Trainers Have a Lien on Horses they Train for Unpaid Training Fees?

In most states, trainers do not have an express statutory lien for unpaid training fees and training-related expenses unrelated to the care of horses such as show entry fees and hauling.  This means, unless a trainer has a written security agreement signed by the owner providing a lien on the horses in the event of nonpayment of training fees, the law is unclear as to whether a trainer can hold or sell the owner's horse when training fees remain unpaid.  You need to check your state's statutes, however, as some states' stableman's liens do expressly provide a lien for training services. Oklahoma's stableman's lien statute, for example, expressly includes a lien for training services.  You can find your state's lien statutes on Equine Law and Horsemanship Safety.

What if My State Has a Stableman's or Agister's Lien Statute but No Trainer's Lien?  Currently, every state except Rhode Island has a stableman's or agister's lien statute.  These statutes provide those who care for, board, pasture, or stable the horses of another with a lien on the horse if charges related to the care of the horse are not paid.  Charges related to the "care" typically include the monhtly board rate, supplements, wormer, vaccinations, farrier, and veterinary services paid or advanced by the caregiver on behalf of the owner, and other services related to the care, health, and maintenance of the horses.  See Carney v. Wallen, 665 N.W.2d 439 (Iowa Ct. App. 2003)(holding that a trainer who provided only training and did not also provide board or other services related to the "care" of the horses could not obtain a stableman’s lien because training services do not pertain to actions or services performed in the course of acting as a stable keeper).

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What Happens if Lien Foreclosure Sale Proceeds Not Enough?

In many cases, the proceeds from a stock breeder's or stable keeper's lien foreclosure sale will not be enough to satisfy your debt.  In those cases, you may sue the owner for the deficiency, if any.

The law suit may not be worth it, however, as you could end up spending more on legal fees than you are owed. For these reasons, I recommend that everyone who takes a horse to be boarded or bred obtain a written contract providing an agreement for the customer to pay for your services as well as the services of third parties for their horse's care while in your possession. 

Ideally, the agreement would include either 1) credit card information from the customer and an agreement that it will be charged for your services; or 2) the customer’s agreement that you may sell their horse at a public or private sale without notice to them if their account is in arrears more than 30 days.

This is especially important for farriers and veterinarians, as Texas law does not provide them any statutory lien to secure payment for their services.

What is a "Public Sale" as Referenced in Texas Lien Statutes?

The law is vague as to what, specifically, constitutes a “public sale” as referenced in the stock breeder’s and stable keeper’s lien statutes. This clearly would not include a sale by private treaty to a third party without the possibility of others bidding on the horse. If you are foreclosing on either the stock breeder’s or stable keeper’s lien, the safest thing to do is to put the horse, upon proper notice to the debtor, in a horse or livestock auction that is being held in your area. You could also hold your own auction, provided that you provide sufficient public notice (i.e. put information about your sale in the “notices” section of the local newspaper or on the designated area of the courthouse steps in your county) so that the public may show up to bid on the horse.

Transfer of Jockey Club Papers after Lien Foreclosure Sale

When you sell a registered Thoroughbred in a valid foreclosure sale, you may or may not be able to obtain the Certificate of Foal Registration (i.e. the “Jockey Club papers”) from the original owner. In either case, pursuant to Rule 9 of the Jockey Club’s American Stud Book, you or the buyer must provide the Jockey Club with the following items in order to have the horses’ papers transferred to your name or the buyer’s name:

1) A check or money order payable to The Jockey Club covering the fee for Duplicate Certificate of Foal Registration;

2) A set of four color photographs of the horse (front, both sides, and rear views) clearly showing the color, and the markings (or lack of markings) on the head, legs and body;

3) A completed and signed Duplicate Certificate Form containing the written description of the markings on the horse, including the exact location of the head and neck cowlicks;

4) Proof of ownership of that specific horse (for example, a bill of sale or canceled check including the name or pedigree of the horse, date of sale and the name of the new owner);

5) An opinion from an attorney, indicating that the sale was conducted in accordance with the laws of the state; and

6) Any further evidence and assurances as The Jockey Club may require, such as genetic typing, parentage verification, or information regarding the circumstances and validity of the sale.

More information, including the American Stud Book rules discussed above, can be found on the Jockey Club’s website.

For instructions on transferring ownership of a registered Appaloosa, go to the APHA's website. 

How to Enforce Texas Stock Breeder's Lien

Fortunately, unlike many states, Texas does not require holders of stock breeder's liens to file suit or involve the courts in order to enforce their liens—provided the enforcement provisions in the statute are precisely followed.

If you own or stand a stallion and a mare owner does not pay for the breeding services, you have a stock breeder’s lien on the resulting foal (but not the mare) under Section 70.201 of the Texas Property Code. You may sell the foal in a public sale and apply the proceeds to the unpaid stallion fee and related service charges. Your lien remains in force for 10 months after the date the foal is born, but importantly, it cannot be enforced until 5 months after the date the foal is born.

Note: If you are in possession of the mare that was bred and the owner has not paid for board on the mare, you may also have a stable keeper’s lien on the mare and may enforce it as set forth in my previous blog entry, How to Enforce Texas Stable Keeper's Lien.

STEP 1

As soon as it becomes apparent that the mare owner is not going to pay for the breeding services, it is advisable (but not required) that you file a UCC Financing Statement putting the world on notice that you have a lien on the resulting foal (whether born or unborn at the time the debt accrues) for unpaid stallion service. The Financing Statement is best filed in both the county where you stand the stallion as well as with the Texas Secretary of State. Be sure to provide sufficient information in the Financing Statement to identify the foal (registered names and registration numbers of your stallion and the mare; date and place of stallion service, etc.) Instructions on filing the Financing Statement can be found at the Texas Secretary of State's website.

STEP 2

When the foal turns 5 months of age, send a notice of sale to the debtor.  For a form of the notice of sale, click here.

STEP 3

Sell the foal at a public sale 30 days or more after you send the notice of sale referenced in Step 2.

Note: If you are not in possession of the foal when it becomes 5 months of age, you may need to take your notice of sale and UCC Financing Statement to the sheriff’s office of the county where the foal is located and have them help you seize the foal so it can be sold.

How to Enforce Texas Stable Keeper's Lien

Fortunately, unlike many states, Texas does not require lien holders to file suit or involve the courts in order to enforce the stable keeper's lien—provided the enforcement provisions in the statute are precisely followed.

If you are boarding someone else’s horse, the board bill is 60 days or more past due, and you still have possession of the horse, you have an enforceable stable keeper’s lien under Section 70.003 of the Texas Property Code and may sell the horse in a public sale to satisfy the debt.   In order to enforce a stable keeper’s lien, you must follow the following steps:

STEP 1

If the owner’s residence is not in Texas or not known, you do not need to send the notices set forth in Step 1 and Step 2 below. You may sell the horse at a public sale without notice to the owner—provided the board bill is at least 60 days’ past due and you have possession of the horse. Still, it is advisable that you keep some proof that you billed the customer and they did not remit payment before proceeding with the sale.

If the owner’s residence is in Texas and known, you start the lien enforcement process by sending a demand for payment by certified mail and regular mail to the owner’s last known address.  Form Demand Letter.

STEP 2

If the owner does not pay the amount owed before the 11th day after the date you sent the demand letter referenced above, send out a notice of sale by certified mail and regular mail to the owner’s last known address.  Form Notice of Sale.

STEP 3

Sell the horse at a public sale 20 or more days after you send the notice referenced in Step 2.   

Note: If you are fortunate enough to get more for the horse at auction than you are owed, you must pay the overage to the owner. If the owner has moved out of Texas or its residence is unknown, you must pay the overage to the county treasurer of the county in which you boarded the horse.

Remember—the stable keeper’s lien is a possessory lien. This means that if you give the horse back to the owner before the bill is paid, the stable keeper’s lien is, practically speaking, no longer enforceable. In that case, you will need to file suit against the debtor to collect the unpaid board. This is why it is essential to obtain a written board agreement from every customer that contains the date you started boarding the horse, sets forth your fee for board, and includes an agreement that your customer will pay out-of-pocket expenses for care such as worming, farrier, supplements, and vet work.

Transfer of Horse's Papers After Lien Sale

When you sell a horse at a lien foreclosure sale, you will want to transfer its registration papers into the name of the buyer at auction, whether that be you or a third party.  Most breed registries have policies and procedures relating to horses purchased in a lien foreclosure. Depending on the breed registry, you will be asked to provide certain items such as a notarized affidavit stating that the stableman has complied with the law relating to the foreclosure; a copy of the written notice of the foreclosure sale; a copy of the statute by which the foreclosure was conducted; and a notarized bill of sale from the stableman. If you can provide all of the items requested by the breed registry, you will most likely be able to get the horse’s papers transferred into your name.

Liens for Veterinarians and Farriers in Texas

Unlike many other states, Texas does not provide veterinarians or farriers with a lien on a horse to secure payment for professional services rendered. The stableman’s lien in Texas does provide a farrier or vet who had a horse in his or her care a lien on the animal for costs of boarding the animal. Also, both vets and farriers can obtain contracts with their customers providing for a contractual lien on the animal to secure payment for work done.

Overview of Texas Stock Breeder's Lien

Who has a stock breeder’s lien, and to which animal(s) does the lien apply? An owner or keeper of a stallion, jack, bull, or boar confined to be bred for profit has a preference lien on the offspring of the animal for the amount of the charges for the breeding services, unless the owner or keeper misrepresents the animal by false pedigree. In the case of a stallion, the lien would be on the foal resulting from the breeding, but would not extend to the mare that was serviced by the stallion.

How long does the stock breeder’s lien last? The stock breeder’s lien remains in force for 10 months from the day that the foal is born, but the lien may not be enforced until five months after the date of birth of the foal. The lien exists during these time parameters, regardless of whether the mare or foal is still in the possession of the stallion owner.

How is the stock breeder’s lien enforced? Your foreclosure has to comply with Sections 54.044 and 54.045 of the Texas Property Code. The stallion owner would seize the foal produced by the stallion, usually with the assistance of the sheriff’s department. Before selling the foal at public auction, the stallion owner must first send the mare owner a written notice complying with Section 54.045 of the Texas Property Code.

This entry addresses only the law in Texas.  The University of Vermont's website, Equine Law and Horsemanship Safety, provides a list of breeder's liens in other states (scroll to bottom to find your state).

Overview of Texas Stable Keeper's Lien

Texas law provides liens for two specific types of services provided to horse owners: boarding services (the stable keeper's lien) and breeding services (the stock breeder’s lien).   This blog provides an overview of the stable keeper's lien.

How does a stable keeper's lien work? The Texas stable keeper's lien, also known as an “agister’s lien,” is a possessory lien that applies when one person takes care of horses or other livestock of another by providing board or pasture for the horse or other livestock. If you run a stable or keep other people’s horses on your land or land you are leasing, you may keep possession of the horse until your board bill is paid by the horse owner. If the nonpayment persists, you can have the horse sold to collect the amount owed.

How do I foreclose on a stable keeper's lien? Your foreclosure has to comply with Section 70.005 of the Texas Property Code. Under that section, you must: 1) have possession of the horse for 60 days after the date the charges accrue; 2) make a written request to the owner to pay the unpaid bill; and 3) if the charges are not paid on or before the 11th day after you made demand for payment, you may sell the horse at public auction after giving the horse owner 20 days’ written notice.

What if someone is interested in buying the horse? Can I sell it to them or does it have to be sold at an auction? Texas law provides that you must sell the horse at a public sale. This is to prevent boarding facilities from selling a horse worth a lot of money to a friend for much less than the horse is worth, just to satisfy the debt. To get around the public auction requirement, boarding facilities can draft clauses into their boarding agreements allowing them to sell to horse by private treaty. The boarding contract may also provide for interest and late fees for past-due board.

My boarder left a lot of tack at my barn and did not pay their board. Can I keep or sell the tack to satisfy the bill? No. The stable keeper's lien only covers the horse itself. Boarding facilities may not hold tack or other equipment as security for payment of past-due board. Again, a boarding facility may draft a clause into their boarding agreement allowing them to keep or sell tack or other equipment belonging to a boarder who does not pay their bill.

This entry only addresses the current law in Texas.  The University of Vermont's website, Equine Law and Horsemanship Safety, provides a list of agister's lien statutes in other states
(scroll to bottom to find your state).