What is a Horse Lease Agreement
A horse lease agreement is a legally binding contract between the owner of a horse (the lessor) and an individual (the lessee) who wishes to use or have access to the horse. Essentially, it serves to provide the lessee who may be unable to buy a horse with access to one. The lessor retains ownership of the horse, so the lease agreement protects their interest in the horse while also ensuring the lessee either has access to a horse or access to a specific horse.
The following agreements are used when leasing a horse or even several horses to another party:
For both parties, it is important to consider the liability that goes along with leases, whether you are the owner or anyone looking for a lease. Whether you are leasing your horse or looking for a lease , this is a legally binding contract that can be difficult to terminate when the parties involved have not had a clear discussion ahead of time about what will happen at the end of the lease. And it can be more difficult to sell a horse that has a lease against it, as it cannot pass full ownership along with the purchase until the lease is terminated and the appropriate paperwork filed with Horse ID and the Breed Association.
Clearly defining terms for both the owner and lessee in all aspects of the horse’s care is crucial. This will provide peace of mind that the horse is in capable hands, particularly for the owner, but it will also help the individual who leases the horse to have a set plan to follow.
Types of Horse Lease Agreements
There are three common types of horse lease agreements: (i) full, (ii) partial and (iii) share. There is no one-size-fits all and each type of lease is best depending upon the circumstances of the lessee and lessor. In general, a full lease agreement grants the lessee the right to use and control the horse 24 hours a day, 7 days a week. A partial lease grants the lessee the right to use and control the horse during specified times and availability as set forth in the lease agreement. A share lease typically divides the ownership of the horse with the lessee providing the time and training and the lessor providing the stable care and costs of the horse.
A full lease agreement is for the person who can devote all their attention to the horse and consistently rides several times a week, every week throughout the year. A full lease agreement provides the lessee with the greatest amount of control over the horse and lets the lessee devote his or her full attention to riding, training and taking care of the horse. A full lease agreement is also more beneficial for those seeking to show and compete with the horse because the lessee controls all aspects of the horse.
A partial lease agreement is for a person who can devote some of his or her attention to the horse and rides several times a week, but not on such a consistent basis. A partial lease agreement allows for the least control over the horse and often does not allow for showing and competing. Unlike a full lease agreement, the parties must agree upon specific times and days for riding the horse. Some partial lease agreements have the lessee taking full care of the horse, while others are like a co-ownership where the parties split the costs and care.
A share lease agreement is for a horse owner who does not have enough time, but does have the money to pay for someone else to ride, train and take care of the horse. A share lease agreement devotes the least amount of personal time with the horse. The lessor provides the horse and pays the costs of keeping the horse, while the lessee provides the riding, training and care. Share leases are for horses and riders who spend most of their time apart from each other, except for showing and competition.
Main Terms in a Horse Lease Agreement
These leases can range from simple handshakes to highly formal documents. However, it is strongly recommended that you have a written lease that includes certain standard terms and conditions. A horse lease agreement should set forth at least the following:
A. The term of the lease. You’ll want to specify clearly the date on which the lease begins and ends. If the lease is indefinite, you should include a provision for termination (see "Termination of Lease" below). In some jurisdictions, a lease for a term of less than one year need not be in writing to be enforceable but those without written leases may have difficulty proving the terms of the agreement. This is particularly true if there are disputes regarding the terms of the lease.
B. Identify the parties to the agreement. List the names and addresses of the landlord and tenant. It is preferable to use the legal names of the parties rather than nicknames or trade names.
C. Specify the premises. Describe the property that is the subject of the lease. Common terms used to describe the premises include "stable," "barn," "pasture," or "facility." It should include an address and the name of the general location. Some leases only cover certain aspects of a property. If the landlord does not intend to provide exclusive use of all facilities, be certain to make this clear.
D. Rent. The lease should specify which party will pay the rent and specify the amount of rent, payment method and frequency (i.e., monthly).
E. Taxes. The lease may include a provision regarding the responsibility for property taxes. It should distinguish between real estate taxes and personal property taxes on the horse itself, tack and equipment, etc.
F. Occupancy limits. The lease should specify the maximum number of people permitted to occupy the premises, i.e., only one person or members of family of tenant. If the landlord does not want the tenant’s friends bouncing on and off the property, make that clear.
G. Rights and duties of the parties. This portion of the lease can vary widely. Some landlords want the horse to be boarded at the facility but require the tenant to care for the animal. Others want to have vetting and care calls made through them. While certainly not a complete list, the following items should be considered for inclusion in any lease:
Termination of Lease. Either party has the right to terminate the lease for any reason at the end of the lease term or with 30, 60, or 90 days’ notice prior to the lease term.
Sample Horse Lease Agreement
This example horse lease agreement template is provided to show language that a lease may be a very detailed and comprehensive document, rather than a short form agreement. In the example below, the lease is broken into initial articles, like a typical contract, and then thirty additional numbered "provisions", which is not as common. It makes the lease comprehensive; however, it may be cumbersome to read. It expressly adds liability release and indemnity obligations as well as the waiver of subrogation. While this is not the only kind of language an equine liability release can include, it is similar to the language we have used for our clients.
AGREEMENT FOR LEASE OF HORSE
THIS AGREEMENT FOR LEASE OF HORSE (hereinafter the "Lease") made and entered into as of the ______ "Date" (as defined in Article 1 below), by and between _____________, ("Lessor") whose address is ___________________________ and ____________________ ("Lessee") whose address is ______________________________________________________________.
WITNESSETH
1. DESCRIPTION OF LEASED PROPERTY
Lessor agrees to lease to Lessee upon the provisions contained herein Lessor’s horse, ______________ ("Horse"), identified as follows:
2. PURPOSE
The premises, and the property therein, shall be used and occupied by Lessee for the purpose of ___________________ ("Permitted Use") and for no other purpose without the prior written consent of the Lessor.
3. TERM
This Lease shall commence on the _______ day of _________, 200_, and will end as of the expiration date set forth below. The term of this Lease shall be Month(s), until ______, 200__. The end date of that term shall hereinafter be known as the "Lease Expiration Date." This Lease may be renewed by mutual written agreement of the parties hereto upon such terms as the parties may agree.
4. RENT
Lessee shall pay Lessor rent of $______ per month on or before the last day of each month. All rent shall be paid at the office of Lessor, or any other location as Lessor may designate from time to time, no later than 5 PM CST.
5. IMPROVEMENTS
Lessee is permitted to improve the Leased Premises. Any improvements constructed by Lessee will not be removed unless Lessor so requests and Lessee agrees to do so.
6. CONDITION OF PREMISES
Lessee accepts the premises "as is," and Lessor makes no representations or warranties, express or implied, with respect to the horse’s condition.
7. EXPENSES
Any expenses incurred in connection with the operation of the horse shall be borne by Lessee.
8. ALTERATIONS
9. MAINTENANCE
Lessee agrees to keep the Leased Premises in good condition and repair. At the termination of this Lease, Lessee will surrender the Leased Premises to Lessor in good condition, ordinary and reasonable wear and tear thereof excepted.
10. UTILITIES
Lessee agrees to pay all utility expenses and charges in connection with using the Leased Premises. Lessee may terminate any utilities at its discretion except for water. Lessee agrees to grant access for all purposes related to utilities at any time Lessor or its designee deems necessary.
Lease Agreement Negotiation
When negotiating a horse lease agreement, it is critical to ensure that the lease terms and conditions are mutually acceptable to both the lessee and the lessor. As mentioned previously, the lease itself should set forth specific and/or unique prohibitions, rights, duties, and responsibilities of the lessee and lessor. Further, all terms and conditions should be specifically negotiated and included in the lease agreement, as leaving too many provisions to assumption and inference could have unfortunate results.
For example, the terms for the equine leased property should include specific details, such as where the animal(s) will be housed, at whose expense (lessee or lessor), who is responsible for care and feeding of the animal(s), and other precise provisions. It is also important to address any other features and public or private property to be utilized by the lessee and/or lessor in connection with the lease agreement, along with applicable terms and conditions. For instance, a racetrack may be leased by a racetrack manager to a daily management association, enabling the daily management association to conduct daily meets and other races at the racetrack .
Common points of negotiation include, but are not limited to: the scope and duration of the lease, the rights of the parties to cancel the lease, compensation (whether or not it is required), the rights of the parties to assign and/or sub-lease specified portions of the property, the rights of the parties with respect to requiring the payment of property taxes, allowable uses of the subject property, responsibilities of the parties for payment of operational expenses related to the property, and any other terms and conditions that adequately address the rights, duties, and obligations of the lessee and lessor.
Remember, leases should be in written form and should specifically set forth all requisite and typically material terms and conditions. Generally speaking, a good lease agreement may be for a fixed term of months or years, and include provisions at the end of the lease providing for automatic renewal unless a party terminates the lease. If the lease is for a specific animal, the lease term may be for the life of the horse, but should include a noted expiration date, such as "until the horse reaches 15 years of age." Other restrictions may be imposed, however, certain of which may be the subject matter of negotiations.
First and foremost, the parties should always read the lease carefully, and not rely on oral statements or representations made by the lessor or lessee in connection with the lease agreement.
Legal Issues & Legal Risks
One common pitfall is the misunderstanding of whether a lease is a lease or a sale. Courts will look to the intent of the parties involved to determine whether the document is a lease or sale. If a court finds that the document is a sale, then all of the legal concepts involved in a sale will apply, including the doctrine of caveat emptor, or "let the buyer beware". So if you are selling a horse, be clear in your intent and with your buyer that he is buying the horse and not leasing it; otherwise he may think he is leasing the horse and fail to take care of it. Additionally, the buyer will not have any recourse for any defects. Even though there is a health certificate, you could be liable if you knowingly misrepresented the horse, but otherwise you will not be.
Since leases are often longer than the usual riding lesson here or there, some might think they are giving up their ownership rights forever. Landlord-tenant laws apply to horse leases, and so do certain other traditional concepts of leases. A tenant normally has security of tenure and cannot be removed from the premises except for legitimately defined reasons. In the same way, a horse owner who has leased his horse to someone else does not expect to lose his horse unless he is notified and has a chance to redeem his horse, typically by paying off the balance owed.
A legal advisor should be consulted to draft or at least review lease agreements before they are finalized. An attorney experienced in equine law should be consulted to consider the issues that are most important to the horse owner and make sure that the lease agreement satisfies these issues. For example, if the horse is being leased at a facility that has troublemakers, the agreement may provide that the facilities are responsible for any losses or damages. Some may lease their horse to a trainer but want to avoid any trainer’s lien problems. Others may be concerned about the risk of students being harmed through an accident and may want an assumption of the risk from students, with insurance to cover such risks. Of course, indemnity and hold harmless provisions can protect both the owner and the lessee from harm resulting from the use of the horse.
Common Questions about Horse Lease Agreements
How long do horse leases typically last?
Horse leases can vary in length according to the preference of the owner and the lessee. A lease can be for several months or a few years, depending on the circumstances. Some leases can be structured with renewal options based on the satisfaction of the renewal criteria. A typical lease period might be 12 months.
Can you lease a horse for just a few days?
Yes, in fact, if you are interested in leasing a horse simply to determine ownership or bonding concerns, a very short-term lease would be quite practical.
Do you need a written agreement?
While not entirely necessary, it is highly advisable that you have a written agreement clearly outlining the expectations of both parties . If something is not in writing it can always be a point of contention.
What about liability and insurance?
Most leases of any kind require some form of liability insurance; however, the specifics and levels of insurance vary depending on the scope and substantive terms of the lease. In a comprehensive agreement, insurance requirements should be listed in great detail.
What is the best way to prepare a horse lease agreement?
Most people enlist the assistance of an experienced equine attorney when drafting a horse lease. An attorney can help you structure the agreement to address all contingencies and anticipate any problems or shortcomings in the agreement.