Always interesting seeing what kind of threads attract the most attention. This one was started yesterday and in less than 24 hours, 66 replies, over 5,600 reads.
I guess a lot of people have been or are in the same boat? Misery likes company?
This is another tread about a “horse deal” gone astray asking advice. Another horse deal that involves 5 figures and no contract per-say to work from. So we are only hearing the buyer’s side of things. At least the buyer in this tread admits her mistakes.
I don’t think the court will look at this any differently than if the horse was a car. It would all depend on the wording of the contract.
What the buyer should have done when realizing that she would not be able to make the payments was to sell the horse. Hopefully for at least what is owed. The buyer/owner does not have “clear title” at this time. So if the horse is/was sold the “lean holder” the sellers would have to “sign off” on the sale and give “clear title” to the buyer. How that is done would need to be worked out between the two parties.
If the horse is sold for less than what is owed the 2 parties would have to work out a payment arrangement. In real-estate this is called a short sale. Sometimes the lean holder will just take what the property sold for and “write off” the loss.
When buying a car on payments it states very clearly when the buyer is in default and the seller has the right to repossess the car. In most states the seller does NOT have to go to court and get a judgement. The buyer gives up this “right”, agrees to this in the purchase contract.
The seller will notify the buyer they are in default and is prepossessing the car. But the buyer does not have to “hand over” the keys. They can play “cat and mouse” with the seller. Which is why there are people/companies that specialize in finding and reprocessing. There are TV reality shows on this.
If the car is worth more than owed the last thing the owner wants is for the car to be repossessed. The seller/lien holder is under no obligation to sell the car for its “market value”. All they are interested in is getting what’s owed and getting it off the “books”. If it is a “short” sale they lien holder can/will come after the buyer for the difference. They may or may not have to go to court and get a judgment for what is owed. It may depend on state laws.
So if the horse is worth at least what the buyer paid for it and or at least what is owed she should have moved the horse before the seller took possession and sold the horse. But any “smart” seller and or one that has consulted with an attorney would never allow a horse sold on an installment plan leave their barn until paid in full.
Considering the “contracts” I have read in the forums, if they could be called contracts. I doubt it was written in detail covering a “default” situation. So, assuming it wasn’t this again comes up as a “he said, she said” situation.
IMO if the seller keeps the horse for their own use they have no “cause for action” against the buyer. The buyer loses their “down payment” and or any payments that have been made. IMO and understanding of these things the only legal recourse the seller has against the buyer for money owed is if they sell the horse for less then what is owed.
If the sellers sold the horse for less than what is owed they will have to go to court to get a judgement on the balance. But it better not be a “shame” sale. In other words the seller “sells” the horse to a friend for a fraction of its “fair market value” then goes after the default buyer for the balance. Gets a judgment and “buys” the horse back after the fact. If these were the case it opens up a whole new can of legal worms. Brings the “he said, she said” scenario to new heights. And can become expensive litigation.
Going to court over “horse deal” is a total PITA. Judges and juries know little to nothing about the “business” of horses. How they can go up in value quickly and how they can go down in value quickly. Details of which have to be explained by hiring an expert witness, maybe several. I have been involved in this.
Arbitration can be a much cheaper and more efficient way of settling disputes over horses. That’s way most if not all TB sales companies require a buyer to agree to arbitration in the case of disputes between the sales company and the buyer. But not between the seller and the buyer. If a TB buyer has a dispute and wants to go to court over it they have to sue the seller not the sales company in most cases.
So there’s a brief “primmer”.
OP, if the seller has possession of the horse. The horse was “returned” in the same condition, if not better than they would be smart just to “sign off” on the deal and be satisfied with the horse and the “free” money they have already been paid.
If they take you to court for the balance and you don’t have the money to pay. I am pretty sure the court will order you and the seller to have the horse appraised and sold for “fair market value”. If it sells for more than what is owed I am pretty sure you will get the difference less any expenses the seller has incurred. These expenses would include, board, vet, training and anything else the seller may want to include that is reasonable. Whether they “incurred” them or not, “he said, she said”.
If the sellers chose to keep the horse IMO and experience they have no legal recourse when it comes to money owned on the purchase price. At this time you may still technically “own” the horse. Depends on state law. The seller technically does not have “clear title”. They still own the majority of the horse and are in the “first” position as lien holder and would be paid first when sold. But you would have to “sign off” on the sale also. Which “clears” the title.
If the seller plans on keeping the horse for the time being than they and you need to “clean” this “deal” up both for your sake and the sellers sake. A simple document should be draw up saying something like for monies received the buyer gives, relinquishes its interest in the horse and returns the horse to the seller. It should be a bit more detailed than that but you get the idea. You should do this ASAP.
If not and the horse dies and or hurts itself in the mean time you can and most likely will be held responsible for the balance and or the vet bills. Along with “care and feeding”.
Conversely the seller would be smart to do this also. Let’s say you both just “walk away” from the contract with no “closure”. The seller is happy taking the horse back and keeping the deposit.
A year or two down the road the horse “blossoms” into a top Grand Prix horse and is sold for big money. You are technically still “part” owner and could go after them for some of the sales proceeds. You may or may not prevail but you can hold up the seller from passing, conveying “clear title” if a suit was filed. The horse maybe held in “limbo”. No buyer is going to sit around and wait for it to be settled. It would kill the sale.
The above is not meant as advice. I am not an attorney. I have been a Bloodstock agent for many years and have paid for legal “horse” advice and contracts. All kinds of “horse” contracts. I am well versed in writing them after all these years.
All of the above is written without the benefit of reviewing a Purchase and Sales agreement, security lien document, and Bill of Sale.
I have said it many times in the past and will say it again. Get EVERYTHING in writing. Especially when dealing with “friends”. Horse “deals” gone astray are kind of like divorces. They can get really nasty and expensive.
