True enough, but the horse can be titled and the person currently in possession of the horse doesn’t have it. The title paper gets lost, just like registration papers on purebred horses. Horses live a long time, many of them change hands more than once, people move and lose stuff, homes burn down with all the paperwork in them, etc. If the horse has been previously titled, it can be sold by whoever is in legal possession of it (by the same criteria as anybody has legal possession of any other horse), to anybody who is legally able to purchase a horse (e.g. typically not a minor since minors cannot sign contracts). Including into the slaughter line. If the BLM finds out about the slaughter thing, the person selling is not going to be able to adopt or buy a Sale Authority mustang directly from the BLM, but as far as I know there are no other consequences.
Once you verify a horse is titled (using the methodology outlined by Clanter), you can buy and sell a mustang as you would any other horse, with whichever verbal agreement/handshake, bill of sale, lease-to-own contract, auction, what have you that you would use for any other critter on four hooves.
If the horse is NOT titled, and still owned by the government, changing possession of the horse can still take place via “reassignment”. As far as I know this process works the same regardless of whether the original adopter never followed through to get title (and dropped off the earth so BLM couldn’t follow up, ) it’s a Trainer Incentive Program horse, a Youth EMM competitor that is not planning on keeping their assignment, someone adopted and then fell on hard times or was overwhelmed by the horse, whatever. Person A has an untitled mustang that Person B wants. Person B has to apply to the BLM the same way they would if they were adopting direct, and be approved. Person B pays the BLM a “reassignment fee” (which I think is the same as the adoption fee), and pays Person A any training fees that have been mutually agreed upon. The BLM gives Person B all the same paperwork and such they would have if they had adopted direct. I’m not sure if Person B has to have possession of the horse for the full year before they can apply for title, like they would if they had adopted, or if they just need to “finish out” the year since the first adopter took on the horse. I suspect the former. The person who wants to reassign also is not obligated to hand the horse over to the first yutz that turns up on their doorstep with approved adoption paperwork. They get to decide, just as they would if they were selling a horse of any kind they owned outright.
On my Mustang groups there are situations from time to time where untitled horses kinda “show up” on the market (through rescue, say). The BLM has seemed more than happy to facilitate getting these horses into good hands without throwing up a bunch of unnecessary barriers or making somebody return the horse to a BLM holding facility or what have you. I don’t know all the details but presumably it’s some manifestation of the reassignment process. Even in situations where untitled BLM horses have had to be removed, they seem to do their best to NOT take the horses back into the holding facilities, but get them into the hands of known members of the mustang community that are willing to take them on as rescues. The trainer who brought my my boy for the EMM, for example, has taken in three such rescue-type cases in the last couple years, re-habbed and re-homed them.