On Farm Share Lease - Things I should/need to know

[FatCatFarm]

A friend who has come out and ridden one of my horses with me several times now is not in a position to buy and board a horse but is interested in a partial lease of one of mine, the one she has been riding. She would be coming out a few days a week and riding at her leisure. The horse will remain on my farm and I will still be paying for his upkeep as I want to control that. She will also be using my tack and equipment, so basically everything is provided, I’m just allowing her access to one of my horses. She has no truck or trailer so would not be taking him off the farm unless she were with me to provide transpo.

So I was thinking a $200 a month partial lease fee? Sound reasonable? Having her sign a waiver of liability of course. But would need to hammer out some sort of lease agreement which I would prefer to keep on a month-to-month basis so either of us can bow out if we decide it’s not working.

[Bluey]

Be sure your insurance will cover you from any liability, if she gets hurt or causes someone to get hurt.

If you have to increase your insurance premiums to let her ride in your place, your horse, or wherever you haul her to, you may want to add that cost to the lease?

[trubandloki]

It is hard to guess if $200/month is a good fee with out knowing what things cost in your part of the world.

$200 for a half lease, with everything included is pretty cheap in my part of the world.

But, if this lease is mutually beneficial then charging less does make sense.

Bluey makes a good point. Does your insurance cover you for this situation?

[FatCatFarm]

I did just put a call into my insurance agent and she’s thinking that it might require me to establish a LLC and have a policy for that LLC which would also require that I have a separate checking account to process any received funds, blah, blah, blah, in order to give me the recommended layer from liability for such a transaction. Ugh! I’m thinking this makes it all overly complicated and not worth the bother. I totally get that despite waivers, if something were to happen, it could expose me to losing a boat load of money without additional protections.

[mmeqcenter]

Hmm I’ve known many people do partial leases, and never knew of any that had to register as an LLC to do it. You don’t have to be a business to lease property and claim the income on your personal taxes. It is a good idea to, to protect yourself and your assets. But I guess insurance companies can require whatever they want to give you a policy.
I would expect that if you obtain a personal liability insurance policy, and the lessee obtains their own personal liability insurance policy, that should be sufficient?

[FatCatFarm]

Well you don’t “have” to do anything. But it is grounds for my insurer to cancel my homeowner’s insurance coverage or not honor a claim if I am “conducting business” without appropriate coverage and this person got hurt riding one of my horses for which she was paying a fee in order to do. So if I am taking money for services, i.e. providing a horse to someone to ride for a fee, it’s arguable that I am. I actually had a previous insurance company cancel my homeowners policy when we were claiming the farm as a business (breeding/raising a foal or two a year) and claiming a tax write off, evidently viewing it as we were running the farm as a business without what they deemed sufficient coverages. It is a premises liability issue is the way they are approaching it, I think.

But sure, I could do it and essentially whistle past the graveyard, so to speak. Still exploring it but I’m thinking it’s not worth it. For an interesting read, check out this article put out by the Horse in 2014 which is on point, particularly regarding tack, which I would be providing. So, say she doesn’t properly fit the girth (both which are mine) and the saddle slides, she comes off and is injured. She could claim faulty tack, particularly if the tack is damaged in the process of her coming off by a struggling horse, muddying the waters for me to claim the tack was fine prior to her usage.

Horse Farm Liability – The Horse

[mmeqcenter]

Seems pretty overkill, to me, for them to say that a private person leasing out a private horse for a teeny amount of “income” is considered operating a business. Shouldn’t/couldn’t it be considered a hobby? I believe the IRS definition of a hobby is “an activity that an individual pursues without intent to generate a profit.” $200 per month for riding your horse certainly couldn’t be considered generating a profit. Maybe you could structure it instead that she pays directly for its feed or something, doesn’t actually hand you money?

But yes, if even that could get you in trouble with your insurance company, I agreed it’s definitely not worth it.