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Selling a Horse on Installment Payments: Part III – Avoiding Common Disputes

Over the years, horse sellers have entered another’s property, such as a private barn or pasture, in an attempt to repossess a horse, only to face costly legal battles and sometimes even criminal charges of trespass and theft, as a result.

Here are suggestions for avoiding equine installment sales disputes.

1) The Buyer Stops Making Payment

When the buyer stops making payments, the seller’s options include:

  • Hold the Registration Papers until the Final Payment Clears the Bank
    Especially if the horse’s value for racing, showing, or breeding purposes depends on its registration papers, sellers would be wise to retain the papers in their own name and to hold them until the buyer’s final payment has cleared the bank.  This alone is strong motivation for some buyers to pay on time, and sometimes to even make early payments.
  • Properly Document the Seller’s Right to Repossess
    A carefully written installment sales contract can give sellers a security interest in the horse.  Consider a legally proper UCC (Uniform Commercial Code) financing statement in a form required under the applicable state’s law, and specify from the beginning how and when you may repossess the horse. Without proper documentation, repossession is not easy.

2) The Horse Becomes Injured, Ill, or Dies Before the Buyer Makes the Final Payment

Of the many ways to avoid this problem, here are two:

  • Address "Risk of Loss" in the Sales Contract
    For the seller’s protection, an installment sale contract can specify that the buyer exclusively bears all risk of the horse’s loss after the horse has been delivered to the buyer or after the buyer has signed the contract.  This means that the buyer will accept the risk of injury to or loss of the horse, and that the buyer is still responsible for paying the full sale price, as agreed.
  • Insure the Horse
    Insurance cannot prevent a horse’s illness or death, but it can protect both parties if something should happen to the horse before it is fully paid for.  The sales contract can require the buyer to purchase a policy of full mortality insurance on the horse, which designates the seller to receive certain proceeds in the event that a claim is made (this is often called naming you the seller as a “loss payee” on the insurance policy).  Remember that the buyer and the seller cannot insure the horse at the same time. For the buyer’s protection, and to prevent the seller from reaping a windfall from collecting installments and also an insurance payout, the contract can specify that  the seller, if mortality insurance proceeds are paid out, can only accept insurance proceeds equal to the amount of the remaining installments, and the rest will go to the buyer.

3) The Seller is Either Paid in Full or Has Repossessed the Horse – But It Took a Fortune in Legal Fees To Get This Result

Installment sales arrangements can generate costly legal battles.  Here are two options for addressing the problem:

  • Address attorney’s fees in the sales contract
    An equine sales contract can protect the seller by specifying that the buyer agrees to pay the seller’s legal fees if a legal dispute arises involving the contract.  Or, the contract can state that the losing party must pay the winning party’s legal fees. Unfortunately, there is never a guarantee that a court will enforce an attorney fee clause; without them, however, the seller has very little chance of recouping the cost of legal bills.
  • Include an interest rate clause in the contract
    Banks and credit card companies charge interest on unpaid balances through carefully written contracts that specify the rate of interest.  Maximum interest rates vary by state law. Financial institutions and credit card companies are usually legally permitted to charge higher rates of interest, mainly because of the heavy degree of regulation these institutions receive from the government.

By proceeding cautiously before entering into an installment sale, you can avoid legal disputes altogether or narrow them considerably.  Legal advice is strongly recommended.

Categories: Sales/Disputes

Photo of Julie I. Fershtman

is considered to be one of the nation's leading attorneys in the field of equine law. A frequent author and speaker on legal issues, she has written over 400 published articles, three books, and has lectured at seminars, conventions, and conferences in 29 states on issues involving law, liability, risk management, and insurance. For more information, please also visit www.fershtmanlaw.com and www.equinelaw.net, and www.equinelaw.info.

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Julie Fershtman, author of our popular and prolific Equine Law Blog, was interviewed by the State Bar of Michigan. The interview, which called Fershtman "Lawyer-Blogger," discussed our Equine Law Blog. We truly believe that this blog is the nation's most active blog serving the equine industry on equine law topics, and we thank you for visiting it. Read more here.

Julie Fershtman’s Recent and Upcoming Equine Law Speaking Engagements Include:

National Conference on Equine Law in Louisville, Kentucky on April 29, 2020. Topic will be on Waivers/Releases of Liability Involving Minor Participants. 

U.S. Hunter Jumper Association (USHJA) Annual Convention in Denver, Colorado on December 10, 2019. Topic will be on Equine Liability. 

IRMI Emmett J. Vaughan Agribusiness Conference (“AgriCon”) in Sacramento, CA (April 2019), and Richmond, VA (June 2019) and in Des Moines, IA (September 2019), on topics of “Equine Activity Liability Acts” and “Equine Mortality Insurance Disputes.”

National Conference on Equine Law in May 2019 in Lexington, KY, on the topic of “Equine Activity Liability Act Updates” and liabilities involving hosting of equine clinics. 

Agricultural Claims Conference in Kansas City, MO, in March 2019 on topics of “Loose Livestock Liabilities.”

2018 American Bar Association Annual Meeting in Chicago, IL, on “Equine Mortality Coverage and Disputes.”

November 2018, American Horse Council webinar on “Equine Liability.”

Honors & Recognitions

Equine lawyer, Julie Fershtman, has received these prestigious equine industry awards from respected equine organizations:

"Excellence in the Advancement of Animal Law Award" - American Bar Association Tort Trial & Insurance Law Section Animal Law Committee

"Distinguished Service Award" - American Youth Horse Council

"Industry Service Award" - Michigan Equine Partnership

"Catalyst Award"- Michigan Horse Council

"Outstanding Achievement Award" - American Riding Instructors Association 

"Partner in Safety Award" - American Riding Instructors Association 

"Associate Service Award" - United Professional Horseman's Association

"National Partnership in Safety" Award" - Certified Horsemanship Association 

What our Equine Law Services can Provide

Handling breach of contract, fraud/ misrepresentation, commercial code, and other claims involving equine-related transactions including purchases/sales, leases, mare leases/foal transfers, and partnerships.

Litigating disputes in court or through alternative dispute resolution (arbitration, mediation, facilitation).

Defending equine/farm/equestrian industry professionals,  businesses, and associations in personal injury claims and lawsuits.

Drafting and negotiating contracts for boarding, training, sales, waivers/releases, leases, and numerous other equine-related transactions.

Representing and advising insurers on  coverage and policy language as well as litigation;

Advising equine industry clubs and associations regarding management, rules, bylaws, disputes, and regulations.

Representing some of the equine industry's top trainers, competitors, stables, and associations.

Counseling industry professionals, stable managers, and individual horse owners. 


Did you know Julie Fershtman has spoken at the American Horse Council Annual Meeting, Equine Affaire, Midwest Horse Fair, Equitana USA, US Dressage Federation Annual Meeting, North American Riding for the Handicapped (now PATH International) Annual Meeting, American Morgan Horse Association Annual Meeting, American Paint Horse Association Annual Meeting, US Pony Clubs, Inc.'s Annual Meeting, All-American Quarter Horse Congress, American Youth Horse Council Annual Meeting, American Riding Instructors Association Annual Meeting, CHA Annual Meeting, and numerous others? Consider signing her up for your convention. Contact Julie.

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