Monday, April 20, 2009
Recession Ripples Throughout Horse Industry
From time to time, I'm asked how the downturn in the economy has affected the horse industry. Here's my perspective as an equine attorney.
Boarding
Although Equine Legal Solutions always receives a lot of calls from boarding stables about boarders who aren't paying their bills, the situation seems to have reached nearly epidemic proportions, particularly in California. Our practice spans California, New York and Washington, and most of the calls about past-due boarders come from California, with an increasing number from Washington. Over half of our free phone consultations are now about non-paying boarders, whereas those calls typically represent more like 20% of our call volume.
In more and more of the non-paying boarder cases, the boarding stable has no way of reaching the boarder. Sometimes, the information the boarder gave the stable was completely fictional - the boarder intended to dump the horses on the boarding stable from the very beginning. (Note that screening potential boarders would help eliminate this problem.) In other cases, the boarder's contact information was initially good, but the boarder's phone has now been disconnected, and the boarder hasn't visited the stable in quite a while. Often, the boarding stable has sent the boarder a certified or registered letter, which has been returned unclaimed. The boarding stable is often desperate for solutions and wants to know when the boarder's horses are considered abandoned and what the stable can do with them.
Now more than ever, the boarding stable is usually better off not executing on its agister's lien. The horse market has declined significantly due to the slaughter ban and the recession. Horses that would have brought at least $500 at auction a few years ago now have no value at all. Meanwhile, hay prices have increased dramatically, making it more expensive to feed horses while waiting for foreclosure proceedings to conclude. And, the chances of being able to collect past due board through traditional methods are slimmer. The boarder may be out of work, with no wages to garnish, and/or may be preparing to file for bankruptcy. Usually, the best thing a boarding stable can do is to get the boarder to come and take the horses, even if the boarder owes the stable money. Getting the horses off the property stops the meter from running on the hay bill and it also cuts off the stable's potential liability for the horses' care.
More boarding stables are having to enforce the payment, lien and eviction portions of their boarding contracts. Unfortunately, many of them are finding their contracts don't adequately address the issues they face. These old, outdated contracts have unwieldy and difficult notice procedures for eviction involving certified and/or registered mail (which most deadbeat boarders will not claim). Often, they require the stable to give the boarder 30 days' notice of termination, even if the boarder owes the stable thousands in back board, effectively making the stable feed the boarder's horse for free for yet another month. And they contain virtually no practical remedies for collecting past due board and getting rid of abandoned horses and tack. As a result, more boarding stables are weighing the high cost of dealing with boarding problems, and deciding that having a boarding contract they can rely upon to protect their interests is well worth the relatively small price.
Breeding
Most breeders booked fewer breedings in 2009, and many of the bookings were made later than usual, simply because mare owners needed to wait to make sure they had the money to breed this year. Mare owners are being more selective, opting to breed fewer mares. Large breeders are downsizing their broodmare bands, keeping the best and offloading the rest. Many smaller breeders are exiting the breeding business altogether, finding that it's less expensive to buy young stock than it is to breed their own. As a result, there's a glut of broodmares on the market and prices are at historic lows.
Given the significant costs associated with shipping cooled semen and artificially inseminating mares, some breeders are finding that offering live cover and on-site artifical insemination services is drawing more local breedings. Breeders are also keeping costs down by doing more of the work themselves and involving veterinarians and stallion stations less frequently.
As usual, discounts are available to mare owners who book early, book multiple mares and/or have mares with proven production or show records. However, these discounts are more widespread, the discounts are deeper, and even the top stallion owners are offering them. Hoping to draw budget-conscious mare owners, some stallion owners are waiving collection and shipping fees on initial shipments, and others are significantly reducing stud fees and eliminating booking fees. Other stallion owners are offering enhanced live foal guarantees, some with no stud fees due until a live foal is born.
Horse Sales
It won't be news to anyone that horse sales are down, and so are horse prices. Craig's List abounds with free horses, and not just junk. More and more of those free horses are sound, registered and/or well-trained. Breeders are having more dispersal sales, and sending more young stock and broodmares to auction.
At the same time, there are fewer buyers at those auctions, and the buyers who do attend buy fewer horses. Sellers are less likely to "no sale" low-selling horses, opting not to haul them home.
Some horse buyers are being more careful. They're making fewer impulse purchases, not buying as many horses sight unseen over the Internet. They're using horse purchase contracts, insisting upon some accountability from the seller. Some horse buyers are taking horses on trial and/or making payments in installments. More sellers are agreeing to these relatively risky terms because they have no other buyers, but conscious of these risks, they are seeking out higher quality horse sale contracts in an effort to protect themselves.
Other horse buyers are cutting costs unwisely, opting not to get a pre-purchase vet exam or not have radiographs or blood draws done during the exam. And some horse sellers are also accepting risky deals that they wouldn't have even considered in a better economy, simply because they need to move some horses, and they need to do it now.
Riding Lessons
It should come as no surprise that many families consider riding lessons a luxury, so children's lessons are eliminated or reduced when a family experiences financial difficulty. Adult amateurs are also doing without lessons, opting to ride on their own instead.
Training
A lot of horse owners who would have sent young horses to a trainer are now either letting those horses sit, selling those horses as unbroke or greenbroke, or doing some of the training themselves. As a result, I think we can expect to see even more untrained young stock for sale in the coming months. Other horse owners who normally keep their horses in full-time training are bringing their horses home, or cutting back to part-time training, filling in the gaps themselves. Fewer training clients are going to shows, and many of those still showing are opting to attend fewer shows and show in fewer classes this year. More and more trainers are opting to use training contracts, fearful that they won't get paid, or will get stuck with a client's horse.
Boarding
Although Equine Legal Solutions always receives a lot of calls from boarding stables about boarders who aren't paying their bills, the situation seems to have reached nearly epidemic proportions, particularly in California. Our practice spans California, New York and Washington, and most of the calls about past-due boarders come from California, with an increasing number from Washington. Over half of our free phone consultations are now about non-paying boarders, whereas those calls typically represent more like 20% of our call volume.
In more and more of the non-paying boarder cases, the boarding stable has no way of reaching the boarder. Sometimes, the information the boarder gave the stable was completely fictional - the boarder intended to dump the horses on the boarding stable from the very beginning. (Note that screening potential boarders would help eliminate this problem.) In other cases, the boarder's contact information was initially good, but the boarder's phone has now been disconnected, and the boarder hasn't visited the stable in quite a while. Often, the boarding stable has sent the boarder a certified or registered letter, which has been returned unclaimed. The boarding stable is often desperate for solutions and wants to know when the boarder's horses are considered abandoned and what the stable can do with them.
Now more than ever, the boarding stable is usually better off not executing on its agister's lien. The horse market has declined significantly due to the slaughter ban and the recession. Horses that would have brought at least $500 at auction a few years ago now have no value at all. Meanwhile, hay prices have increased dramatically, making it more expensive to feed horses while waiting for foreclosure proceedings to conclude. And, the chances of being able to collect past due board through traditional methods are slimmer. The boarder may be out of work, with no wages to garnish, and/or may be preparing to file for bankruptcy. Usually, the best thing a boarding stable can do is to get the boarder to come and take the horses, even if the boarder owes the stable money. Getting the horses off the property stops the meter from running on the hay bill and it also cuts off the stable's potential liability for the horses' care.
More boarding stables are having to enforce the payment, lien and eviction portions of their boarding contracts. Unfortunately, many of them are finding their contracts don't adequately address the issues they face. These old, outdated contracts have unwieldy and difficult notice procedures for eviction involving certified and/or registered mail (which most deadbeat boarders will not claim). Often, they require the stable to give the boarder 30 days' notice of termination, even if the boarder owes the stable thousands in back board, effectively making the stable feed the boarder's horse for free for yet another month. And they contain virtually no practical remedies for collecting past due board and getting rid of abandoned horses and tack. As a result, more boarding stables are weighing the high cost of dealing with boarding problems, and deciding that having a boarding contract they can rely upon to protect their interests is well worth the relatively small price.
Breeding
Most breeders booked fewer breedings in 2009, and many of the bookings were made later than usual, simply because mare owners needed to wait to make sure they had the money to breed this year. Mare owners are being more selective, opting to breed fewer mares. Large breeders are downsizing their broodmare bands, keeping the best and offloading the rest. Many smaller breeders are exiting the breeding business altogether, finding that it's less expensive to buy young stock than it is to breed their own. As a result, there's a glut of broodmares on the market and prices are at historic lows.
Given the significant costs associated with shipping cooled semen and artificially inseminating mares, some breeders are finding that offering live cover and on-site artifical insemination services is drawing more local breedings. Breeders are also keeping costs down by doing more of the work themselves and involving veterinarians and stallion stations less frequently.
As usual, discounts are available to mare owners who book early, book multiple mares and/or have mares with proven production or show records. However, these discounts are more widespread, the discounts are deeper, and even the top stallion owners are offering them. Hoping to draw budget-conscious mare owners, some stallion owners are waiving collection and shipping fees on initial shipments, and others are significantly reducing stud fees and eliminating booking fees. Other stallion owners are offering enhanced live foal guarantees, some with no stud fees due until a live foal is born.
Horse Sales
It won't be news to anyone that horse sales are down, and so are horse prices. Craig's List abounds with free horses, and not just junk. More and more of those free horses are sound, registered and/or well-trained. Breeders are having more dispersal sales, and sending more young stock and broodmares to auction.
At the same time, there are fewer buyers at those auctions, and the buyers who do attend buy fewer horses. Sellers are less likely to "no sale" low-selling horses, opting not to haul them home.
Some horse buyers are being more careful. They're making fewer impulse purchases, not buying as many horses sight unseen over the Internet. They're using horse purchase contracts, insisting upon some accountability from the seller. Some horse buyers are taking horses on trial and/or making payments in installments. More sellers are agreeing to these relatively risky terms because they have no other buyers, but conscious of these risks, they are seeking out higher quality horse sale contracts in an effort to protect themselves.
Other horse buyers are cutting costs unwisely, opting not to get a pre-purchase vet exam or not have radiographs or blood draws done during the exam. And some horse sellers are also accepting risky deals that they wouldn't have even considered in a better economy, simply because they need to move some horses, and they need to do it now.
Riding Lessons
It should come as no surprise that many families consider riding lessons a luxury, so children's lessons are eliminated or reduced when a family experiences financial difficulty. Adult amateurs are also doing without lessons, opting to ride on their own instead.
Training
A lot of horse owners who would have sent young horses to a trainer are now either letting those horses sit, selling those horses as unbroke or greenbroke, or doing some of the training themselves. As a result, I think we can expect to see even more untrained young stock for sale in the coming months. Other horse owners who normally keep their horses in full-time training are bringing their horses home, or cutting back to part-time training, filling in the gaps themselves. Fewer training clients are going to shows, and many of those still showing are opting to attend fewer shows and show in fewer classes this year. More and more trainers are opting to use training contracts, fearful that they won't get paid, or will get stuck with a client's horse.
Labels: agister's lien, horse boarding, horse breeding, horse sales, horse training
Monday, February 2, 2009
Entering Into Contracts with Minors
Happily, there are a lot of minors (persons under 18 years of age) involved in the horse industry. At Equine Legal Solutions, we're often asked whether a minor can sign a boarding contract, horse lease agreement or horse purchase agreement. The short answer is yes. But, there are reasons why you may not want to enter into a contract with a minor.
Minors Can Back Out of Contracts
In the horse context and in most U.S. jurisdictions, almost all contracts will be voidable by the minor. At any time, the minor can choose to back out of the contract, with no penalty. For example, if a minor signs a boarding contract with a boarding stable, the boarding stable can't hold the minor to the contract. Even if the stable honors its obligations and provides wonderful care for the minor's horse, it won't be able to require the minor to pay board or honor a 30-day termination notice provision. This seems like a very unfair result, especially when the minor has received the benefits of the contract. However, the prevailing legal theory is that minors are particularly susceptible to being taken advantage of, and therefore the law must protect minors who enter into contracts with adults. By making it rather disadvantageous to enter into a contract with a minor, the law effectively protects minors by preventing adults from contracting with them.
Minors Can Enforce Contracts
In contrast, a minor can enforce the provisions of a contract against an adult. So, if an adult enters into a contract with a minor to sell the minor a horse, the adult can't change their mind if they get a better offer. If they do, the minor could sue the adult for damages or for "specific performance" - i.e., legally force the adult to sell the horse to the minor. Again, the legal theory is to discourage adults from entering into contracts with minors, thereby protecting minors from contractual exploitation by adults.
If the Minor Owns the Horse
Often, a minor is the registered owner of their horse. How, then, should trainers, boarding stable owners and other equine service providers handle that situation? The answer is fairly simple: Have the minor's parent or guardian sign the boarding or training contract. Like service provider situations involving leased horses, if the parent or guardian isn't listed on the horse's papers as a registered owner, this fact won't affect the trainer's or boarding stable's ability to enforce the contract.
Minors and Liability Releases
A liability release is essentially a contract. Therefore, if a minor signs a liability release, that signature is pretty much worthless because the minor can void the contract at any time. How, then, can boarding stables, riding instructors and other parties protect themselves against legal claims brought by minors. The short answer is to have the minor's parent or guardian enter into a liability release on behalf of the minor. For added protection, the liability release should include an indemnification clause stating that if any claims are later brought by the minor or on the minor's behalf, the person signing the liability release agrees to pay to defend the person being sued, and to pay the cost of any legal judgment. Equine Legal Solutions offers a wide range of liability releases meeting these requirements, including liability releases specifically designed for situations involving minors.
Minors Can Back Out of Contracts
In the horse context and in most U.S. jurisdictions, almost all contracts will be voidable by the minor. At any time, the minor can choose to back out of the contract, with no penalty. For example, if a minor signs a boarding contract with a boarding stable, the boarding stable can't hold the minor to the contract. Even if the stable honors its obligations and provides wonderful care for the minor's horse, it won't be able to require the minor to pay board or honor a 30-day termination notice provision. This seems like a very unfair result, especially when the minor has received the benefits of the contract. However, the prevailing legal theory is that minors are particularly susceptible to being taken advantage of, and therefore the law must protect minors who enter into contracts with adults. By making it rather disadvantageous to enter into a contract with a minor, the law effectively protects minors by preventing adults from contracting with them.
Minors Can Enforce Contracts
In contrast, a minor can enforce the provisions of a contract against an adult. So, if an adult enters into a contract with a minor to sell the minor a horse, the adult can't change their mind if they get a better offer. If they do, the minor could sue the adult for damages or for "specific performance" - i.e., legally force the adult to sell the horse to the minor. Again, the legal theory is to discourage adults from entering into contracts with minors, thereby protecting minors from contractual exploitation by adults.
If the Minor Owns the Horse
Often, a minor is the registered owner of their horse. How, then, should trainers, boarding stable owners and other equine service providers handle that situation? The answer is fairly simple: Have the minor's parent or guardian sign the boarding or training contract. Like service provider situations involving leased horses, if the parent or guardian isn't listed on the horse's papers as a registered owner, this fact won't affect the trainer's or boarding stable's ability to enforce the contract.
Minors and Liability Releases
A liability release is essentially a contract. Therefore, if a minor signs a liability release, that signature is pretty much worthless because the minor can void the contract at any time. How, then, can boarding stables, riding instructors and other parties protect themselves against legal claims brought by minors. The short answer is to have the minor's parent or guardian enter into a liability release on behalf of the minor. For added protection, the liability release should include an indemnification clause stating that if any claims are later brought by the minor or on the minor's behalf, the person signing the liability release agrees to pay to defend the person being sued, and to pay the cost of any legal judgment. Equine Legal Solutions offers a wide range of liability releases meeting these requirements, including liability releases specifically designed for situations involving minors.
Labels: equine liability, horse boarding, horse leasing, horse sales, horse training
Wednesday, December 31, 2008
Unattended Children at Boarding Stables
At Equine Legal Solutions, our boarding stable clients often ask about parents dropping off their children and leaving them for hours at a time. As one of our clients remarked with some frustration, "I'm running a boarding stable, not a daycare!"
What is the risk of having unattended minors (e.g., persons under 18) at your facility? The primary risk is that the child or teen could be involved in an accident. As a boarding stable owner, of course you don't want anyone to get hurt, human or equine. In addition to that, you also don't want to get sued. If a child or teen is hurt in an accident, and the parent isn't present, there's a risk that the parent could bring a negligence claim. The negligence claim would likely allege that the stable was aware that the child or teen was there alone, and therefore the stable had a duty to supervise the child's activities.
There's also a secondary risk to having unattended minors on the premises, which is that they can cause someone else to have an accident. Even the most innocent activities can easily spook a horse, such as a rambunctious game of tag or hide-and-go-seek. Kids like to pet horses and feed them treats, which can cause big problems if they choose the wrong horses to pet and/or feed. If kids don't have something to do, they will find something to do, and what they choose to do won't always be suitable for a boarding stable environment.
Having unattended minors on the premises can be bad for business, too. If a serious rider is in the arena, and kids are out there playing around, it can be really annoying to the rider who's trying to accomplish something. It's helpful to have an adult there to intervene before the kids get too disruptive. If the boarding stable staff are the ones who have to play traffic cop, it takes them away from their regular jobs, and it's also frustrating for them.
What if the child or teen is at the barn to take a lesson? During the lesson, the child will of course be under the instructor's supervision. But before and after the lesson, the child will still be unsupervised unless a parent is present. And, accidents can easily occur on the ground, such as during tacking and untacking.
For these reasons, Equine Legal Solutions recommends that boarding stables require that persons under 18 be accompanied by a parent or responsible adult. In fact, it's one of the suggested barn rules in the boarding contract that Equine Legal Solutions offers as part of its Boarding Stable Agreement forms package.
What is the risk of having unattended minors (e.g., persons under 18) at your facility? The primary risk is that the child or teen could be involved in an accident. As a boarding stable owner, of course you don't want anyone to get hurt, human or equine. In addition to that, you also don't want to get sued. If a child or teen is hurt in an accident, and the parent isn't present, there's a risk that the parent could bring a negligence claim. The negligence claim would likely allege that the stable was aware that the child or teen was there alone, and therefore the stable had a duty to supervise the child's activities.
There's also a secondary risk to having unattended minors on the premises, which is that they can cause someone else to have an accident. Even the most innocent activities can easily spook a horse, such as a rambunctious game of tag or hide-and-go-seek. Kids like to pet horses and feed them treats, which can cause big problems if they choose the wrong horses to pet and/or feed. If kids don't have something to do, they will find something to do, and what they choose to do won't always be suitable for a boarding stable environment.
Having unattended minors on the premises can be bad for business, too. If a serious rider is in the arena, and kids are out there playing around, it can be really annoying to the rider who's trying to accomplish something. It's helpful to have an adult there to intervene before the kids get too disruptive. If the boarding stable staff are the ones who have to play traffic cop, it takes them away from their regular jobs, and it's also frustrating for them.
What if the child or teen is at the barn to take a lesson? During the lesson, the child will of course be under the instructor's supervision. But before and after the lesson, the child will still be unsupervised unless a parent is present. And, accidents can easily occur on the ground, such as during tacking and untacking.
For these reasons, Equine Legal Solutions recommends that boarding stables require that persons under 18 be accompanied by a parent or responsible adult. In fact, it's one of the suggested barn rules in the boarding contract that Equine Legal Solutions offers as part of its Boarding Stable Agreement forms package.
Labels: equine liability, horse boarding
Monday, February 25, 2008
When It's Better to Just Let the Horses Go...
Non-paying boarders and abandoned horses have always been a significant problem for boarding stables, and judging from the volume of calls we receive at Equine Legal Solutions, the problem is escalating quickly. While state agister's lien laws typically provide the boarding stable with an automatic lien on the horses for unpaid past due board, foreclosing on that lien may not make sense. Here's why:
-Worthless Collateral. The horses seldom have much market value, and even if they do, that market value will be compromised by the situation. Registration papers (if the horse is even registered) will be hard, if not impossible, to obtain. Agister's lien statutes frequently require that the horse be sold at public auction, which almost certainly means a lower price than a private sale. Even if a private sale is permitted by the agister's lien statutes, prospective buyers will be spooked by the possibility of title problems. Note that all of these issues are exacerbated in a soft horse market.
-Expense. Horses are expensive to keep, and getting more expensive all the time due to the rising costs of hay, feed and bedding. To properly foreclose on an agister's lien and sell the horses, it will likely take at least 60-90 days, often longer. During that entire time, you will have to feed and care for the horses at your own expense, and you may not ever recoup those expenses. Not only that, you will have to hire an attorney to represent you in the civil lawsuit you will almost certainly need to bring to properly foreclose on the lien. Most attorneys charge several hundred dollars per hour and require a substantial deposit or retainer up front, and unless you have a signed boarding contract that provides for attorneys' fees in the event of a lawsuit, you will have virtually no chance of recouping your attorneys' fees.
-Better Alternatives. If you allow the horses to leave the property, it limits the amount that the boarder owes you, making it more likely that the claim can be brought in small claims court. And, you can usually convince the boarder to make at least some cash payment when they take the horses, reducing the amount of money that you have to chase. If, when the boarder arrives to take the horses, you can convince the boarder to sign a statement that they do owe you the amount in question, it will make pursuing your claim that much easier. In small claims, you can represent yourself and therefore do not have to incur the expense of hiring an attorney. And, contrary to popular opinion, small claims judgments CAN be enforced. For example, if the boarder has a job, you can garnish their wages. If the boarder owns a home, you can put a lien on it, ensuring that you will be paid if the property sells. A claim reduced to a court judgment is far easier to enforce than a claim of lien, and in most instances, judgments earn interest until they are paid and you can usually recoup the cost of enforcing a judgment.
-Liability. Horses are fragile. During the months it will take to foreclose on your agister's lien, you will be caring for the horses and if something happens to them, the horse owner could sue you.
-Opportunity Cost. While you are feeding and caring for horses that belong to a non-paying boarder, those horses are occupying stalls or pastures that could be occupied by horses belonging to a good paying customer.
-Stress. Let's not forget about your quality of life. Foreclosing on an agister's lien is a lengthy, expensive and time-consuming process that typically leads to a lot of stress for the boarding stable owner. The horse owner often surfaces at the 11th hour wanting to negotiate a deal or try to stop the foreclosure process, and they always seem to show up on a holiday or weekend. When the stable owner refuses to allow the boarder to take the horses, the horse owner will usually try to bring the sheriff out to intervene. Typically, the sheriff will arrive, hear the other side of the story and tell the parties that the situation is a civil matter and therefore law enforcement will not get involved or allow the boarder to take the horses. However, such situations frequently turn into a scene before that happens, with shouting, threats and worse.
-Worthless Collateral. The horses seldom have much market value, and even if they do, that market value will be compromised by the situation. Registration papers (if the horse is even registered) will be hard, if not impossible, to obtain. Agister's lien statutes frequently require that the horse be sold at public auction, which almost certainly means a lower price than a private sale. Even if a private sale is permitted by the agister's lien statutes, prospective buyers will be spooked by the possibility of title problems. Note that all of these issues are exacerbated in a soft horse market.
-Expense. Horses are expensive to keep, and getting more expensive all the time due to the rising costs of hay, feed and bedding. To properly foreclose on an agister's lien and sell the horses, it will likely take at least 60-90 days, often longer. During that entire time, you will have to feed and care for the horses at your own expense, and you may not ever recoup those expenses. Not only that, you will have to hire an attorney to represent you in the civil lawsuit you will almost certainly need to bring to properly foreclose on the lien. Most attorneys charge several hundred dollars per hour and require a substantial deposit or retainer up front, and unless you have a signed boarding contract that provides for attorneys' fees in the event of a lawsuit, you will have virtually no chance of recouping your attorneys' fees.
-Better Alternatives. If you allow the horses to leave the property, it limits the amount that the boarder owes you, making it more likely that the claim can be brought in small claims court. And, you can usually convince the boarder to make at least some cash payment when they take the horses, reducing the amount of money that you have to chase. If, when the boarder arrives to take the horses, you can convince the boarder to sign a statement that they do owe you the amount in question, it will make pursuing your claim that much easier. In small claims, you can represent yourself and therefore do not have to incur the expense of hiring an attorney. And, contrary to popular opinion, small claims judgments CAN be enforced. For example, if the boarder has a job, you can garnish their wages. If the boarder owns a home, you can put a lien on it, ensuring that you will be paid if the property sells. A claim reduced to a court judgment is far easier to enforce than a claim of lien, and in most instances, judgments earn interest until they are paid and you can usually recoup the cost of enforcing a judgment.
-Liability. Horses are fragile. During the months it will take to foreclose on your agister's lien, you will be caring for the horses and if something happens to them, the horse owner could sue you.
-Opportunity Cost. While you are feeding and caring for horses that belong to a non-paying boarder, those horses are occupying stalls or pastures that could be occupied by horses belonging to a good paying customer.
-Stress. Let's not forget about your quality of life. Foreclosing on an agister's lien is a lengthy, expensive and time-consuming process that typically leads to a lot of stress for the boarding stable owner. The horse owner often surfaces at the 11th hour wanting to negotiate a deal or try to stop the foreclosure process, and they always seem to show up on a holiday or weekend. When the stable owner refuses to allow the boarder to take the horses, the horse owner will usually try to bring the sheriff out to intervene. Typically, the sheriff will arrive, hear the other side of the story and tell the parties that the situation is a civil matter and therefore law enforcement will not get involved or allow the boarder to take the horses. However, such situations frequently turn into a scene before that happens, with shouting, threats and worse.
Labels: agister's lien, horse boarding
Wednesday, February 13, 2008
Top Five Foolish Reasons Not to Get Liability Insurance
If you are doing business, no matter how small or unprofitable your business is, you need commercial liability insurance. Period. Here are some of the common reasons we hear about why trainers, boarding stables, etc. do not have liability insurance, and why those reasons don't make sense.
(1) I Don't Need Insurance Because All of My Clients Sign Liability Releases
Liability releases are not a substitute for liability insurance, because insurance and contracts play very different roles. Contracts that include liability releases serve a number of valuable functions. They help set appropriate expectations for a business relationship so that the parties are less likely to have disputes. Contracts also provide the parties with legally enforceable rights. Liability releases discourage injured parties from suing and also help prevent them from prevailing in a lawsuit.
In contrast, insurance serves other valuable functions. If you are sued and the claim is covered by your insurance policy, your insurer will manage your defense and pay for your legal fees and court costs. Without insurance, if you are sued, you will have to pay for your legal defense out of pocket. The cost of defending an average civil suit easily runs into the tens of thousands of dollars, and an average retainer for a civil litigation attorney in a relatively small case is $10,000 - $20,000. Unless you have a contract providing for an award of attorneys' fees and costs to the winner of a lawsuit, you will have no way to recoup the cost of your legal defense, even if you ultimately prevail in the lawsuit. Representing yourself as a defendant in a lawsuit is simply not a viable option, as the other side's attorney will certainly use your lack of legal expertise to his or her client's advantage, and many judges are impatient with do-it-yourself litigants.
Your insurance will also cover the cost of any judgment that is issued against you in a lawsuit (up to your policy limits), provided that the claim that is the subject of the lawsuit is covered by your policy. Without such coverage, you will be forced to pay the judgment out of your own pocket, leading to potential financial ruin. If you cannot afford to pay the judgment and default in payment, the judgment holder can garnish your business' income and seize your business' assets to pay the judgment. If you do business as a partnership or sole proprietorship rather than a corporation, your personal assets will also be subject to seizure and your wages can be garnished to pay the judgment. Not all legal judgments are dischargeable in bankruptcy, either.
(2) I Don't Need Insurance Because My State Has an Equine Activity Statute
Equine activity statutes are often misinterpreted as "get out of lawsuit free" laws. In reality, equine activity statutes are limited in scope and other than serving to discourage some potential plaintiffs, they do not prevent lawsuits at all. Rather, much like a liability release, equine activity statutes provide a potential affirmative defense to claims in a lawsuit. As described in (1) above, defending a lawsuit and paying a judgment (functions typically performed by an insurer) can be financially ruinous.
(3) I Don't Need Insurance Because I Don't Have Very Many Clients
If you are accepting compensation for boarding, training, lessons or other horse-related services, you are in business. It only takes one client to sue you. Horses are very unpredictable and accidents can happen even in the safest possible environment. Even if you have only one client and you feel confident that they would never sue you, their insurance company or family may sue you if they are injured or killed in connection with your activities.
(4) I Can't Afford Liability Insurance
Many horse-related businesses are not particularly lucrative, and therefore it is often tempting to go without insurance because it seems cost-ineffective. However, given that the cost of defending just one lawsuit could be tens of thousands of dollars and all of your assets (however modest) are at risk, you really can't afford NOT to have insurance.
(5) I Don't Need Insurance Because I Don't Have Any Assets
Closely related to (4) above, this excuse also doesn't make financial sense. If you are not making any money and have very few assets, your financial situation makes it even less likely that you can afford the high cost of defending a lawsuit. Insurance serves to protect the assets that you do have.
(1) I Don't Need Insurance Because All of My Clients Sign Liability Releases
Liability releases are not a substitute for liability insurance, because insurance and contracts play very different roles. Contracts that include liability releases serve a number of valuable functions. They help set appropriate expectations for a business relationship so that the parties are less likely to have disputes. Contracts also provide the parties with legally enforceable rights. Liability releases discourage injured parties from suing and also help prevent them from prevailing in a lawsuit.
In contrast, insurance serves other valuable functions. If you are sued and the claim is covered by your insurance policy, your insurer will manage your defense and pay for your legal fees and court costs. Without insurance, if you are sued, you will have to pay for your legal defense out of pocket. The cost of defending an average civil suit easily runs into the tens of thousands of dollars, and an average retainer for a civil litigation attorney in a relatively small case is $10,000 - $20,000. Unless you have a contract providing for an award of attorneys' fees and costs to the winner of a lawsuit, you will have no way to recoup the cost of your legal defense, even if you ultimately prevail in the lawsuit. Representing yourself as a defendant in a lawsuit is simply not a viable option, as the other side's attorney will certainly use your lack of legal expertise to his or her client's advantage, and many judges are impatient with do-it-yourself litigants.
Your insurance will also cover the cost of any judgment that is issued against you in a lawsuit (up to your policy limits), provided that the claim that is the subject of the lawsuit is covered by your policy. Without such coverage, you will be forced to pay the judgment out of your own pocket, leading to potential financial ruin. If you cannot afford to pay the judgment and default in payment, the judgment holder can garnish your business' income and seize your business' assets to pay the judgment. If you do business as a partnership or sole proprietorship rather than a corporation, your personal assets will also be subject to seizure and your wages can be garnished to pay the judgment. Not all legal judgments are dischargeable in bankruptcy, either.
(2) I Don't Need Insurance Because My State Has an Equine Activity Statute
Equine activity statutes are often misinterpreted as "get out of lawsuit free" laws. In reality, equine activity statutes are limited in scope and other than serving to discourage some potential plaintiffs, they do not prevent lawsuits at all. Rather, much like a liability release, equine activity statutes provide a potential affirmative defense to claims in a lawsuit. As described in (1) above, defending a lawsuit and paying a judgment (functions typically performed by an insurer) can be financially ruinous.
(3) I Don't Need Insurance Because I Don't Have Very Many Clients
If you are accepting compensation for boarding, training, lessons or other horse-related services, you are in business. It only takes one client to sue you. Horses are very unpredictable and accidents can happen even in the safest possible environment. Even if you have only one client and you feel confident that they would never sue you, their insurance company or family may sue you if they are injured or killed in connection with your activities.
(4) I Can't Afford Liability Insurance
Many horse-related businesses are not particularly lucrative, and therefore it is often tempting to go without insurance because it seems cost-ineffective. However, given that the cost of defending just one lawsuit could be tens of thousands of dollars and all of your assets (however modest) are at risk, you really can't afford NOT to have insurance.
(5) I Don't Need Insurance Because I Don't Have Any Assets
Closely related to (4) above, this excuse also doesn't make financial sense. If you are not making any money and have very few assets, your financial situation makes it even less likely that you can afford the high cost of defending a lawsuit. Insurance serves to protect the assets that you do have.
Labels: equine insurance, equine liability, horse boarding, horse training
Friday, February 1, 2008
Boarding Stable Tenure - Can a Stable Evict Long-time Boarders?
One of today's callers had just received a letter terminating the caller's boarding contract. The caller was outraged because the caller had been boarding at this particular facility for ten years. The caller felt that there should be some kind of penalty for terminating such a long-standing relationship.
The business relationship between a boarding stable and its boarder is exclusively governed by contract. Accordingly, boarders have no specific legal rights regarding termination other than those provided by the boarding contract. Either party can end the relationship by terminating the contract. When the boarding stable and boarder have a written boarding contract, the boarding stable must provide the boarder with the notice of termination required in the boarding contract. If there is no written contract, or the contract does not address termination, the boarding stable is not bound to provide the boarder with any specific type or amount of notice. Unless the contract states otherwise, the length of time that a boarder has been at a stable has no legal impact and confers no special rights upon the boarder.
The business relationship between a boarding stable and its boarder is exclusively governed by contract. Accordingly, boarders have no specific legal rights regarding termination other than those provided by the boarding contract. Either party can end the relationship by terminating the contract. When the boarding stable and boarder have a written boarding contract, the boarding stable must provide the boarder with the notice of termination required in the boarding contract. If there is no written contract, or the contract does not address termination, the boarding stable is not bound to provide the boarder with any specific type or amount of notice. Unless the contract states otherwise, the length of time that a boarder has been at a stable has no legal impact and confers no special rights upon the boarder.
Labels: horse boarding
Friday, January 18, 2008
The Boarder Who Just Won't Leave
As the costs of keeping a horse rise, more and more boarding stables are finding themselves with boarders who will not remove their horses at the end of a boarding relationship. Typically, the boarder knows the contract has been terminated. However, the boarder makes unfulfilled promises to move the horses and keeps offering excuses for why they are still there. The boarding stable owner usually has a good reason for terminating the boarding contract (such as the boarder not paying their boarding bills) and therefore is justifiably concerned when the horses remain on the property. What can they do to get the horses and the boarder off of the property?
The following steps have proven helpful for some of Equine Legal Solutions' boarding stable clients.
(1) Prior to the termination date, the boarding stable should make sure that it has provided the boarder with written notice of termination and has proof of delivery. The termination notice should specify a date and time by which the horses and all property belonging to the boarder must be removed. To give the boarder an incentive to move out on time, the letter should specify a daily charge that will be incurred for each day that the boarder's horses and/or personal property are still on the premises after the termination date. Do not send the notice via registered or certified mail, because most people know that no good news ever arrives that way, and they will not sign for the notice. Instead, send it via Federal Express. This important step will be valuable evidence to refute any credible argument that the boarder might have that they "didn't know" or that they didn't receive proper notice.
*If the horse is still on the property after the termination date:
(2) Secure the boarding stable grounds and refuse entry to the boarder, unless they arrive with a horse trailer to pick up the horse. If the grounds cannot be secured, secure the horse's stall or enclosure (but be sure not to create a fire hazard in doing so). Because the boarding relationship is terminated, the boarder no longer has a legal right to be on the property.
(3) Send a follow up letter via a method that provides for proof of delivery. In the letter, state that the boarder will not be permitted on the property unless they make prior arrangements with you to pick up the horse. Note that if they try to enter the property without your permission, you will call the sheriff.
(4) If the boarder comes onto the property without permission for any reason other than to pick up the horse, call the sheriff. Have a copy of your boarding contract termination letter handy. If you have sent a follow up letter, have a copy of that handy, too. Be sure to let the sheriff know that all you want is for the horses to be gone, and perhaps he or she will help talk some sense into the boarder.
(5) Continue to provide reasonable care (i.e., food and water) for the horse, but do not take any steps that may provide the boarder with a basis for legal claims against you, such as riding the horse, using the horse in riding lessons, allowing others to ride the horse, etc. Do not provide any extras, such as grooming, turnout, worming, farrier care, etc. If the horses are receiving better care at your facility than they would if the boarder took possession of them, the boarder will have no incentive to move them.
(6) Be the squeaky wheel. Call the boarder daily to find out when they will be removing the horses. Boarder won't take the calls anymore? Use a phone number they will not recognize. Know who their friends and relatives are? Call them to find out if they have any information about when the horses will be leaving.
(7) Follow the legal process to foreclose on your agister's lien. (See the September 21, 2007 entry for more information)
The following steps have proven helpful for some of Equine Legal Solutions' boarding stable clients.
(1) Prior to the termination date, the boarding stable should make sure that it has provided the boarder with written notice of termination and has proof of delivery. The termination notice should specify a date and time by which the horses and all property belonging to the boarder must be removed. To give the boarder an incentive to move out on time, the letter should specify a daily charge that will be incurred for each day that the boarder's horses and/or personal property are still on the premises after the termination date. Do not send the notice via registered or certified mail, because most people know that no good news ever arrives that way, and they will not sign for the notice. Instead, send it via Federal Express. This important step will be valuable evidence to refute any credible argument that the boarder might have that they "didn't know" or that they didn't receive proper notice.
*If the horse is still on the property after the termination date:
(2) Secure the boarding stable grounds and refuse entry to the boarder, unless they arrive with a horse trailer to pick up the horse. If the grounds cannot be secured, secure the horse's stall or enclosure (but be sure not to create a fire hazard in doing so). Because the boarding relationship is terminated, the boarder no longer has a legal right to be on the property.
(3) Send a follow up letter via a method that provides for proof of delivery. In the letter, state that the boarder will not be permitted on the property unless they make prior arrangements with you to pick up the horse. Note that if they try to enter the property without your permission, you will call the sheriff.
(4) If the boarder comes onto the property without permission for any reason other than to pick up the horse, call the sheriff. Have a copy of your boarding contract termination letter handy. If you have sent a follow up letter, have a copy of that handy, too. Be sure to let the sheriff know that all you want is for the horses to be gone, and perhaps he or she will help talk some sense into the boarder.
(5) Continue to provide reasonable care (i.e., food and water) for the horse, but do not take any steps that may provide the boarder with a basis for legal claims against you, such as riding the horse, using the horse in riding lessons, allowing others to ride the horse, etc. Do not provide any extras, such as grooming, turnout, worming, farrier care, etc. If the horses are receiving better care at your facility than they would if the boarder took possession of them, the boarder will have no incentive to move them.
(6) Be the squeaky wheel. Call the boarder daily to find out when they will be removing the horses. Boarder won't take the calls anymore? Use a phone number they will not recognize. Know who their friends and relatives are? Call them to find out if they have any information about when the horses will be leaving.
(7) Follow the legal process to foreclose on your agister's lien. (See the September 21, 2007 entry for more information)
Labels: horse boarding
Sunday, December 16, 2007
Should You Operate a Boarding Stable?
At Equine Legal Solutions, we receive many requests for guidance from people who are considering operating a boarding business. The scale of their plans range from taking in one horse to defray expenses to taking over an existing stable to building and operating a stable of their own.
Common reasons for boarding horses
-Affording the mortgage. The property is unaffordable unless it produces income.
-Help with maintaining the property and/or caring for horses. With employees and/or extra cash flow, the boarding stable can help maintain the property and care for horses (including the property owner's horses).
-Doing a friend (or several friends) a favor. The property owner has friends without horse property, so they want to share. A friend is down on their luck and can't afford board at a conventional facility, so the property owner wants to help them out.
-Making some horse-related and/or property-related expenses tax-deductible.
-Supporting the sustainability of horsemanship in the community.
-Qualifying for agricultural property tax exemptions.
Regardless of the reasons for operating a boarding facility, the initial business considerations should be the same.
Is it lawful to operate a boarding facility on the property?
If the property is leased, make sure that the terms of the lease allow all of the planned activities.
Whether the property is owned or leased, the planned uses must be compliant with all zoning regulations. In rural areas, zoning is typically set forth by county government, and in urban and suburban areas, zoning is typically set forth by municipal government. Equine Legal Solutions highly recommends visiting the local zoning office in person and discussing the planned uses of the property to make sure they are lawful, and what permits, accommodations and licenses may be needed to lawfully operate (and the costs associated with same).
Common zoning considerations:
-Number of animals permitted on the property, and what animals count toward that total
-Storage and disposal of manure
-Dust and other forms of potential air pollution
-Restrictions on noise
-Restrictions on outdoor lighting
-Allowable size, appearance and location of signs
-Parking on the property and traffic to and from the property
-Restroom facilities on the property
-Accommodations for disabled persons (note that these requirements typically apply whether or not there are actually disabled persons boarding at the facility)
-Setbacks - minimum distances required between the property lines and buildings and fences
"Is it possible to make a profit, or at least break even?"
If the stable operator plans to take tax deductions related to the boarding business, they must have a business plan (formal or informal) that shows they can actually make a profit by doing what they plan to do.
Common startup expenses:
-Obtaining a permit or zoning variance
-Obtaining a business license. Business licenses are required by many counties and towns. Generally, they are relatively inexpensive, but if the stable operator does not obtain a business license in advance of operating the business, the penalties can be very steep. Note that a business license does not bear at all on the legitimacy of the operation. A business license is not a "seal of approval" stating that the business is lawfully operated (e.g., complying with rules and regulations other than those governing the collection of business license fees), but rather merely evidence that the business has paid a tax. Essentially, the business license process is no more than a revenue generator for the municipality.
-Incorporating the business. See Incorporating Your Horse-related Business for more information on why incorporation is a necessary element of starting an equine business.
-Obtaining the necessary boarding contracts and liability releases.
-Purchasing equipment necessary to maintain the property, such as a tractor and arena drag, fence chargers, etc.
-Purchasing office equipment, such as a computer and printer.
-Improving or repairing the property so that it can safely and comfortably accommodate boarders and their horses and so that it is in compliance with all applicable regulations as well as best safety practices. Examples of one-time expenses that may be needed to make the facility boarder-ready: leveling and matting stalls; installation of drainage, gravel and other mud-control measures in paddocks, parking lots and high traffic areas; replacing or repairing arena footing; replacing, repairing and/or installing lighting in barns, tack rooms, wash racks, arenas, and parking areas; installing or refurbishing a wash rack; installing or refurbishing tack rooms; installing or repairing tie areas; installing or repairing storage areas for bedding, feed and manure; installing or repairing arena, paddock and pasture fencing; installing or repairing gates on pastures, paddocks, arenas, round pens and property entrances and exits; and installing or repairing automatic waterers.
-Designing, purchasing and installing signs for the property entrance, arena rules, any warning signs required by state equine activity statutes, etc.
Common ongoing expenses:
-Insurance. At a minimum, the stable operator will need care, custody and control insurance, commercial liability insurance and property insurance. If the stable has employees, it will also need workers' compensation insurance. If the stable has tractors or other valuable assets, it will need insurance to cover those assets.
-Wages and benefits for employees. Note that the true cost of employees includes payroll taxes. Paying persons in cash to avoid payroll taxes is a false economy (and a short-term one at that).
-The cost of accounting software or hiring a bookkeeper.
-Supplies, such as bedding and feed, tractor fuel, weed killer, etc.
-Office supplies, such as paper, stationery, printer ink, and business cards.
-Utilities, such as electricity, gas, water and sewer. The stable operator can expect all of these expenses to multiply when additional horses and people come onto the property.
-Property maintenance, such as landscaping, repair, replacement of worn out materials, etc.
Common sources of revenue:
-Board payments.
-Fees received for services and items not included in board, such as turnouts, trailer parking and extra feed.
-Fees received from trainers or clinicians who do business on the property.
-Fees received from temporary facility use, such as haul-ins for lessons or arena use.
What else should be considered?
In addition to the pure business considerations of running a boarding facility, there are numerous intangible considerations. For example:
-Stress. Running a boarding facility is stressful. The mix of personalities and intense passions of horse owners make for a volatile environment in the best of circumstances. Even if the stable owners have a good manager who is responsible for the day-to-day operations, the owners must still be involved in the occasional dispute or other problem.
-Cash flow. No matter what precautionary measures are taken, some boarders will not pay on time, and some boarders will not pay at all. The operation will need to have the cash on hand (or a line of credit) to be able to cover monthly expenses even if some boarders don't pay. Unfortunately, horses don't stop eating just because their owners haven't paid their board. And Murphy's Law is alive and well at boarding stables - the month when the stable has to hire an attorney to evict a troublesome boarder will be the same month that the barn roof develops a huge leak and the pipes under the wash rack need repair.
-Lack of privacy. Especially if the stable operator lives on the property, they will find that their "quiet time" is constantly interrupted, either literally or figuratively, by the goings on of the barn.
-Less time for the stable operator's own horses. Because it will be next to impossible for the stable operator to go out to the barn and get their own horses worked without dealing with some barn issues or stopping mid-ride to talk to a boarder, they won't have as much time to ride.
After going through the above analysis, many would-be boarding stable owners find that it is not feasible for them to operate a boarding facility, or that the number of boarders required to make a profit would be unduly burdensome on the property and/or their lifestyle. To be sure, there are innumerable investments whose potential return far exceed that of operating a boarding facility.
Decided to go for it? See Running a Boarding Business: What You Need to Know
Common reasons for boarding horses
-Affording the mortgage. The property is unaffordable unless it produces income.
-Help with maintaining the property and/or caring for horses. With employees and/or extra cash flow, the boarding stable can help maintain the property and care for horses (including the property owner's horses).
-Doing a friend (or several friends) a favor. The property owner has friends without horse property, so they want to share. A friend is down on their luck and can't afford board at a conventional facility, so the property owner wants to help them out.
-Making some horse-related and/or property-related expenses tax-deductible.
-Supporting the sustainability of horsemanship in the community.
-Qualifying for agricultural property tax exemptions.
Regardless of the reasons for operating a boarding facility, the initial business considerations should be the same.
Is it lawful to operate a boarding facility on the property?
If the property is leased, make sure that the terms of the lease allow all of the planned activities.
Whether the property is owned or leased, the planned uses must be compliant with all zoning regulations. In rural areas, zoning is typically set forth by county government, and in urban and suburban areas, zoning is typically set forth by municipal government. Equine Legal Solutions highly recommends visiting the local zoning office in person and discussing the planned uses of the property to make sure they are lawful, and what permits, accommodations and licenses may be needed to lawfully operate (and the costs associated with same).
Common zoning considerations:
-Number of animals permitted on the property, and what animals count toward that total
-Storage and disposal of manure
-Dust and other forms of potential air pollution
-Restrictions on noise
-Restrictions on outdoor lighting
-Allowable size, appearance and location of signs
-Parking on the property and traffic to and from the property
-Restroom facilities on the property
-Accommodations for disabled persons (note that these requirements typically apply whether or not there are actually disabled persons boarding at the facility)
-Setbacks - minimum distances required between the property lines and buildings and fences
"Is it possible to make a profit, or at least break even?"
If the stable operator plans to take tax deductions related to the boarding business, they must have a business plan (formal or informal) that shows they can actually make a profit by doing what they plan to do.
Common startup expenses:
-Obtaining a permit or zoning variance
-Obtaining a business license. Business licenses are required by many counties and towns. Generally, they are relatively inexpensive, but if the stable operator does not obtain a business license in advance of operating the business, the penalties can be very steep. Note that a business license does not bear at all on the legitimacy of the operation. A business license is not a "seal of approval" stating that the business is lawfully operated (e.g., complying with rules and regulations other than those governing the collection of business license fees), but rather merely evidence that the business has paid a tax. Essentially, the business license process is no more than a revenue generator for the municipality.
-Incorporating the business. See Incorporating Your Horse-related Business for more information on why incorporation is a necessary element of starting an equine business.
-Obtaining the necessary boarding contracts and liability releases.
-Purchasing equipment necessary to maintain the property, such as a tractor and arena drag, fence chargers, etc.
-Purchasing office equipment, such as a computer and printer.
-Improving or repairing the property so that it can safely and comfortably accommodate boarders and their horses and so that it is in compliance with all applicable regulations as well as best safety practices. Examples of one-time expenses that may be needed to make the facility boarder-ready: leveling and matting stalls; installation of drainage, gravel and other mud-control measures in paddocks, parking lots and high traffic areas; replacing or repairing arena footing; replacing, repairing and/or installing lighting in barns, tack rooms, wash racks, arenas, and parking areas; installing or refurbishing a wash rack; installing or refurbishing tack rooms; installing or repairing tie areas; installing or repairing storage areas for bedding, feed and manure; installing or repairing arena, paddock and pasture fencing; installing or repairing gates on pastures, paddocks, arenas, round pens and property entrances and exits; and installing or repairing automatic waterers.
-Designing, purchasing and installing signs for the property entrance, arena rules, any warning signs required by state equine activity statutes, etc.
Common ongoing expenses:
-Insurance. At a minimum, the stable operator will need care, custody and control insurance, commercial liability insurance and property insurance. If the stable has employees, it will also need workers' compensation insurance. If the stable has tractors or other valuable assets, it will need insurance to cover those assets.
-Wages and benefits for employees. Note that the true cost of employees includes payroll taxes. Paying persons in cash to avoid payroll taxes is a false economy (and a short-term one at that).
-The cost of accounting software or hiring a bookkeeper.
-Supplies, such as bedding and feed, tractor fuel, weed killer, etc.
-Office supplies, such as paper, stationery, printer ink, and business cards.
-Utilities, such as electricity, gas, water and sewer. The stable operator can expect all of these expenses to multiply when additional horses and people come onto the property.
-Property maintenance, such as landscaping, repair, replacement of worn out materials, etc.
Common sources of revenue:
-Board payments.
-Fees received for services and items not included in board, such as turnouts, trailer parking and extra feed.
-Fees received from trainers or clinicians who do business on the property.
-Fees received from temporary facility use, such as haul-ins for lessons or arena use.
What else should be considered?
In addition to the pure business considerations of running a boarding facility, there are numerous intangible considerations. For example:
-Stress. Running a boarding facility is stressful. The mix of personalities and intense passions of horse owners make for a volatile environment in the best of circumstances. Even if the stable owners have a good manager who is responsible for the day-to-day operations, the owners must still be involved in the occasional dispute or other problem.
-Cash flow. No matter what precautionary measures are taken, some boarders will not pay on time, and some boarders will not pay at all. The operation will need to have the cash on hand (or a line of credit) to be able to cover monthly expenses even if some boarders don't pay. Unfortunately, horses don't stop eating just because their owners haven't paid their board. And Murphy's Law is alive and well at boarding stables - the month when the stable has to hire an attorney to evict a troublesome boarder will be the same month that the barn roof develops a huge leak and the pipes under the wash rack need repair.
-Lack of privacy. Especially if the stable operator lives on the property, they will find that their "quiet time" is constantly interrupted, either literally or figuratively, by the goings on of the barn.
-Less time for the stable operator's own horses. Because it will be next to impossible for the stable operator to go out to the barn and get their own horses worked without dealing with some barn issues or stopping mid-ride to talk to a boarder, they won't have as much time to ride.
After going through the above analysis, many would-be boarding stable owners find that it is not feasible for them to operate a boarding facility, or that the number of boarders required to make a profit would be unduly burdensome on the property and/or their lifestyle. To be sure, there are innumerable investments whose potential return far exceed that of operating a boarding facility.
Decided to go for it? See Running a Boarding Business: What You Need to Know
Labels: horse boarding
Friday, October 19, 2007
It's Your Property and You Can Decide Who Does Business There
Many boarding stable owners have asked ELS whether they have any say in who comes onto their property. They have expressed concern about the professionalism and methods of various trainers and instructors, and often are worried that they may have liability if the service providers hurt someone on their property. These concerns are very realistic. Even if the boarding stable doesn't have any actual liability for an incident that occurs on its property, the stable is still likely to be named in a lawsuit and therefore will have to pay to defend itself (or make a claim on its own insurance policy for the defense).
Contrary to popular opinion, boarding stables are not "public places" where anyone can conduct any horse-related business. As the property owner (or the leaseholder), you can certainly set reasonable policies about who is and is not permitted onto your property. In particular, no one should be earning income from activities taking place on your property without your knowledge and permission. Doing business on your property is a privilege and not a right.
ELS recommends that boarding stables require all independent contractors, including but not limited to trainers, instructors and persons who provide grooming and turnout services, to have commercial liability insurance. All such contractors should provide proof of insurance to the boarding stable, and name the boarding stable owners as additional named insureds on their policies. When adopting a contractor policy, the stable should put the requirements in writing and post them prominently at barn entrances and other locations where boarders and contractors will see them. ELS recommends sending a copy of the policy to each boarder with a cover letter introducing the new policy and noting that any contractors that the boarders invite onto the premises will have to comply with the policy. The barn manager should have copies of the policy on hand so that they can approach new contractors and inform them of the barn policy.
Contrary to popular opinion, boarding stables are not "public places" where anyone can conduct any horse-related business. As the property owner (or the leaseholder), you can certainly set reasonable policies about who is and is not permitted onto your property. In particular, no one should be earning income from activities taking place on your property without your knowledge and permission. Doing business on your property is a privilege and not a right.
ELS recommends that boarding stables require all independent contractors, including but not limited to trainers, instructors and persons who provide grooming and turnout services, to have commercial liability insurance. All such contractors should provide proof of insurance to the boarding stable, and name the boarding stable owners as additional named insureds on their policies. When adopting a contractor policy, the stable should put the requirements in writing and post them prominently at barn entrances and other locations where boarders and contractors will see them. ELS recommends sending a copy of the policy to each boarder with a cover letter introducing the new policy and noting that any contractors that the boarders invite onto the premises will have to comply with the policy. The barn manager should have copies of the policy on hand so that they can approach new contractors and inform them of the barn policy.
Labels: equine liability, horse boarding, horse training
Friday, September 21, 2007
Evicting a Boarder from Your Boarding Stable
From time to time, boarding stables find themselves in the difficult situation of having to evict a boarder. Much erroneous information circulates in the horse community about boarding stable evictions and what is and is not lawful. However, unlike evicting a tenant from an apartment, boarding stable evictions are not subject to state landlord/tenant laws unless your boarder actually resides on the property. Horses are considered personal property and therefore the eviction process is governed exclusively by contract.
When Can You Evict a Boarder?
As the owner of a boarding stable, you can generally evict boarders for any reason that is not based upon unlawful discrimination (i.e., age, race, sex, national origin, physical disability). Common (and lawful) reasons for evicting boarders include late or non-payment, personality mismatches, destructive horses and unsafe horsemanship. However, you do not even need to have a reason!
How Much Notice Do You Have to Give?
If you have a written boarding contract, you must provide the amount of notice specified in your boarding contract. If you do not have a written boarding contract, Equine Legal Solutions recommends that you provide your boarder with one month's advance notice, although this time period is not legally required. This 30-day period allows your boarder to find new accommodations without undue hardship, and in most cases, the boarder will vacate before the 30-day period has expired. However, there are certain circumstances where you may need to evict your boarder immediately, such as in cases where the boarder is engaging in unsafe or unlawful behavior. In such instances, you should provide the boarder with the shortest amount of time in which they can reasonably be expected to find a new place and move out. Typically, a week would be reasonable under such circumstances. Note that if you have reason to believe that your boarder has been engaging in unlawful behavior, such as threatening another boarder with bodily harm, willfully injuring a horse or stealing, you should immediately contact law enforcement and report the alleged crime. In addition, because your other boarders may be in danger, you may want to give such a boarder as little as 24 hours' notice to vacate the premises.
What Should the Notice Say?
In eviction notices, as in many of life's most difficult communications, less is more. Include only the most basic information: the date and time by which the boarder needs to be out, and the amount, if any, that will be due upon the boarder's departure. Do not specify the reasons for termination, as it will provide the boarder with a basis for arguing with you. To give the boarder an incentive to move out as soon as possible, state that you will provide a prorated refund of any prepaid board if the boarder moves out before the termination date. Also state that if the boarder does not move out by the termination date, that a daily board charge per horse and a daily storage fee for personal property will apply.
What Format Should the Eviction Notice Be In?
Boarding contract termination notices should always be in writing and signed by a person with authority to act for the boarding stable, such as a stable manager.
How Should I Deliver the Eviction Notice?
Deliver the notice of termination to the boarder's home address (or the address given by the boarder in the boarding contract) via a method that provides proof of delivery. Fax notice, with confirmation of delivery, is acceptable. Email notice is not, unless acknowledged in a reply email from the recipient. For mail deliveries, Equine Legal Solutions highly recommends Federal Express rather than U.S. Postal Service registered or certified mail. Not only is it faster, the likelihood of the recipient signing for it is much higher. Most folks with credit and/or legal problems are well aware that no good news ever arrives by certified or registered mail, so they will not sign for it, and by the time that the stable determines the notice hasn't been delivered, more time has passed. Personal delivery (i.e., handing the notice to the boarder) is not recommended, because the boarding stable will have no independent proof of the date of delivery. Plus, the boarder may be very angry when they receive the notice and cause a scene (or worse).
What If I Don't Know Where to Find the Boarder?
In many cases in which the boarder owes a substantial sum of money in back board, the boarder cannot be located. In such instances, it may be helpful to use free Internet-based search services such as reversephonedirectory.com and whitepages.com. Paid searches through online services such as Intelius.com can also yield excellent results. If these methods fail, you can contact a professional process server to run a "skip trace" for you and serve the boarder with the notice. You can find a professional process server in your area by contacting the National Association of Professional Process Servers.
Do I Have to Give the Boarder a Refund?
While your boarding contract may not require you to give your boarder a partial refund for the unused period, it is often an excellent idea to do so. Stating in the termination notice that you will give your boarder a refund of any unused board will give them a reason to move out earlier. Otherwise, they may feel like they should stay until the last day to "get their money's worth," meanwhile creating ill will at the barn. Offering a prorated refund will also help to keep the process as smooth as possible by making the boarder feel as though you are treating them fairly.
Do I Have a Lien on the Boarder's Horses for Unpaid Board?
If your boarder has signed Equine Legal Solutions' boarding contract, it specifies that you have an automatic lien on horses for unpaid board, and that you can sell or otherwise dispose of the horses if they remain on your property after a certain specified time period following termination of the boarding agreement. Because the boarder has specifically waived any rights that they might have otherwise had under your state's agister's lien law, you can typically take action to sell the horses without having to go through the typical lien sale process, though Equine Legal Solutions strongly recommends that you consult local counsel before doing so.
Without a contract stating that the boarding stable can sell the horses AND that the boarder waives his/her rights under the state agister's lien laws, the lien process is more complicated. In most states, boarding stables have an automatic lien on livestock for unpaid board. Typically, no formal filings are necessary, but the lien applies only for so long as the horses are in the possession of the stable. Having a possessory lien means that once you allow the horses to be removed from your property, you no longer have a valid lien.
However, to foreclose on your statutory lien and be able to sell the horses, you will typically need a court order and have to follow a specific sale process, which is usually cumbersome, time-consuming and expensive. See your state's agister's lien law for more information. Equine Legal Solutions highly recommends that you seek advice from a qualified attorney in your state prior to taking any action on your lien, as the boarder could successfully sue you for conversion if you proceed improperly.
Practically speaking, even though you may have a lien on the boarder's horses for unpaid board, it may be in your best financial interest to allow the boarder to take possession of the horses upon termination, even if they owe you money. Foreclosing on your lien is usually cumbersome and expensive, and during the foreclosure process (which usually takes a month or more), you have to continue to take reasonable care of the horses, incurring out of pocket expenses. Although the boarder must reimburse you for this care, you may not ever be able to collect from the boarder. Meanwhile, the boarder's horses are occupying stalls or pasture that could be used by paying customers' horses. Moreover, in the typical agister's lien situation, the boarder's horses are seldom worth more than a few hundred dollars, particularly because the public auction required by most lien statutes tends to result in much lower prices than a private sale would.
Therefore, the boarding stable may be more likely to limit its losses by allowing the boarder to take the horses and then immediately filing suit against the boarder, either in small claims court or in regular civil court. This is particularly true when the boarder has a job, because if the boarding stable obtains a money judgment and the boarder doesn't pay it, the boarding stable can seek garnishment of the boarder's wages, which is both effective for the boarding stable and embarrassing for the boarder.
Can I Sell the Boarder's Tack and Equipment to Satisfy the Debt?
In many cases, the boarder's tack and equipment is worth more money than the boarder's horses, and is also more readily salable than the horses. Plus, it doesn't eat! If your boarder has signed Equine Legal Solutions' boarding contract, it specifies that you have an automatic lien on the boarder's personal for unpaid board, and that you can sell or otherwise dispose of it if it remains on your property after a certain specified time period following termination of the boarding agreement. Because the boarder has specifically waived any rights that they might have otherwise had under your state's lien laws, you can typically take action to sell the personal property without having to go through the typical lien sale process. However, Equine Legal Solutions highly recommends that you consult local counsel before doing so.
Without such a contract stating that the boarding stable has a lien on the boarder's personal property, very few states' lien laws provide for a lien. See your state's agister's lien law for more information. Equine Legal Solutions highly recommends that you seek advice from a qualified attorney in your state prior to taking any action with respect to a boarder's personal property, as the boarder could successfully sue you for conversion if you proceed improperly.
What If the Boarder Doesn't Leave?
Once the eviction date has come and gone, the boarder is no longer lawfully entitled to be on the stable premises. If the boarder tries to come onto the stable premises after the eviction date, the boarding stable should call law enforcement to report the trespass. Note that if the boarder wants to take possession of their horses and personal property after the eviction date (and you consent - see above regarding your lien rights), you can accomplish the hand-off by meeting the boarder at the entrance to your facility rather than allowing them access to your property.
When Can You Evict a Boarder?
As the owner of a boarding stable, you can generally evict boarders for any reason that is not based upon unlawful discrimination (i.e., age, race, sex, national origin, physical disability). Common (and lawful) reasons for evicting boarders include late or non-payment, personality mismatches, destructive horses and unsafe horsemanship. However, you do not even need to have a reason!
How Much Notice Do You Have to Give?
If you have a written boarding contract, you must provide the amount of notice specified in your boarding contract. If you do not have a written boarding contract, Equine Legal Solutions recommends that you provide your boarder with one month's advance notice, although this time period is not legally required. This 30-day period allows your boarder to find new accommodations without undue hardship, and in most cases, the boarder will vacate before the 30-day period has expired. However, there are certain circumstances where you may need to evict your boarder immediately, such as in cases where the boarder is engaging in unsafe or unlawful behavior. In such instances, you should provide the boarder with the shortest amount of time in which they can reasonably be expected to find a new place and move out. Typically, a week would be reasonable under such circumstances. Note that if you have reason to believe that your boarder has been engaging in unlawful behavior, such as threatening another boarder with bodily harm, willfully injuring a horse or stealing, you should immediately contact law enforcement and report the alleged crime. In addition, because your other boarders may be in danger, you may want to give such a boarder as little as 24 hours' notice to vacate the premises.
What Should the Notice Say?
In eviction notices, as in many of life's most difficult communications, less is more. Include only the most basic information: the date and time by which the boarder needs to be out, and the amount, if any, that will be due upon the boarder's departure. Do not specify the reasons for termination, as it will provide the boarder with a basis for arguing with you. To give the boarder an incentive to move out as soon as possible, state that you will provide a prorated refund of any prepaid board if the boarder moves out before the termination date. Also state that if the boarder does not move out by the termination date, that a daily board charge per horse and a daily storage fee for personal property will apply.
What Format Should the Eviction Notice Be In?
Boarding contract termination notices should always be in writing and signed by a person with authority to act for the boarding stable, such as a stable manager.
How Should I Deliver the Eviction Notice?
Deliver the notice of termination to the boarder's home address (or the address given by the boarder in the boarding contract) via a method that provides proof of delivery. Fax notice, with confirmation of delivery, is acceptable. Email notice is not, unless acknowledged in a reply email from the recipient. For mail deliveries, Equine Legal Solutions highly recommends Federal Express rather than U.S. Postal Service registered or certified mail. Not only is it faster, the likelihood of the recipient signing for it is much higher. Most folks with credit and/or legal problems are well aware that no good news ever arrives by certified or registered mail, so they will not sign for it, and by the time that the stable determines the notice hasn't been delivered, more time has passed. Personal delivery (i.e., handing the notice to the boarder) is not recommended, because the boarding stable will have no independent proof of the date of delivery. Plus, the boarder may be very angry when they receive the notice and cause a scene (or worse).
What If I Don't Know Where to Find the Boarder?
In many cases in which the boarder owes a substantial sum of money in back board, the boarder cannot be located. In such instances, it may be helpful to use free Internet-based search services such as reversephonedirectory.com and whitepages.com. Paid searches through online services such as Intelius.com can also yield excellent results. If these methods fail, you can contact a professional process server to run a "skip trace" for you and serve the boarder with the notice. You can find a professional process server in your area by contacting the National Association of Professional Process Servers.
Do I Have to Give the Boarder a Refund?
While your boarding contract may not require you to give your boarder a partial refund for the unused period, it is often an excellent idea to do so. Stating in the termination notice that you will give your boarder a refund of any unused board will give them a reason to move out earlier. Otherwise, they may feel like they should stay until the last day to "get their money's worth," meanwhile creating ill will at the barn. Offering a prorated refund will also help to keep the process as smooth as possible by making the boarder feel as though you are treating them fairly.
Do I Have a Lien on the Boarder's Horses for Unpaid Board?
If your boarder has signed Equine Legal Solutions' boarding contract, it specifies that you have an automatic lien on horses for unpaid board, and that you can sell or otherwise dispose of the horses if they remain on your property after a certain specified time period following termination of the boarding agreement. Because the boarder has specifically waived any rights that they might have otherwise had under your state's agister's lien law, you can typically take action to sell the horses without having to go through the typical lien sale process, though Equine Legal Solutions strongly recommends that you consult local counsel before doing so.
Without a contract stating that the boarding stable can sell the horses AND that the boarder waives his/her rights under the state agister's lien laws, the lien process is more complicated. In most states, boarding stables have an automatic lien on livestock for unpaid board. Typically, no formal filings are necessary, but the lien applies only for so long as the horses are in the possession of the stable. Having a possessory lien means that once you allow the horses to be removed from your property, you no longer have a valid lien.
However, to foreclose on your statutory lien and be able to sell the horses, you will typically need a court order and have to follow a specific sale process, which is usually cumbersome, time-consuming and expensive. See your state's agister's lien law for more information. Equine Legal Solutions highly recommends that you seek advice from a qualified attorney in your state prior to taking any action on your lien, as the boarder could successfully sue you for conversion if you proceed improperly.
Practically speaking, even though you may have a lien on the boarder's horses for unpaid board, it may be in your best financial interest to allow the boarder to take possession of the horses upon termination, even if they owe you money. Foreclosing on your lien is usually cumbersome and expensive, and during the foreclosure process (which usually takes a month or more), you have to continue to take reasonable care of the horses, incurring out of pocket expenses. Although the boarder must reimburse you for this care, you may not ever be able to collect from the boarder. Meanwhile, the boarder's horses are occupying stalls or pasture that could be used by paying customers' horses. Moreover, in the typical agister's lien situation, the boarder's horses are seldom worth more than a few hundred dollars, particularly because the public auction required by most lien statutes tends to result in much lower prices than a private sale would.
Therefore, the boarding stable may be more likely to limit its losses by allowing the boarder to take the horses and then immediately filing suit against the boarder, either in small claims court or in regular civil court. This is particularly true when the boarder has a job, because if the boarding stable obtains a money judgment and the boarder doesn't pay it, the boarding stable can seek garnishment of the boarder's wages, which is both effective for the boarding stable and embarrassing for the boarder.
Can I Sell the Boarder's Tack and Equipment to Satisfy the Debt?
In many cases, the boarder's tack and equipment is worth more money than the boarder's horses, and is also more readily salable than the horses. Plus, it doesn't eat! If your boarder has signed Equine Legal Solutions' boarding contract, it specifies that you have an automatic lien on the boarder's personal for unpaid board, and that you can sell or otherwise dispose of it if it remains on your property after a certain specified time period following termination of the boarding agreement. Because the boarder has specifically waived any rights that they might have otherwise had under your state's lien laws, you can typically take action to sell the personal property without having to go through the typical lien sale process. However, Equine Legal Solutions highly recommends that you consult local counsel before doing so.
Without such a contract stating that the boarding stable has a lien on the boarder's personal property, very few states' lien laws provide for a lien. See your state's agister's lien law for more information. Equine Legal Solutions highly recommends that you seek advice from a qualified attorney in your state prior to taking any action with respect to a boarder's personal property, as the boarder could successfully sue you for conversion if you proceed improperly.
What If the Boarder Doesn't Leave?
Once the eviction date has come and gone, the boarder is no longer lawfully entitled to be on the stable premises. If the boarder tries to come onto the stable premises after the eviction date, the boarding stable should call law enforcement to report the trespass. Note that if the boarder wants to take possession of their horses and personal property after the eviction date (and you consent - see above regarding your lien rights), you can accomplish the hand-off by meeting the boarder at the entrance to your facility rather than allowing them access to your property.
Labels: agister's lien, horse boarding
Wednesday, May 23, 2007
There Is No Free Lunch, Even in Pasture...
One of our callers today found themselves in a situation that arises fairly often in friendships among horse owners. The callers were keeping their horses in two different pastures and the land owners (who were at the time friends of theirs) had apparently offered them free pasture board. The horse owners had no written agreement with the property owners, because at the time, they were all friends and this was a friendly arrangement.
Now, the friendship had soured and the former friends had sold two of the horses, leading to the horse owners' call to our practice. What could they do?
We reviewed their state's agister's lien law with them and determined the land owners hadn't followed the required process prior to selling the horses, which means the horse owners now had legal claims for conversion (a civil form of theft). Their state's lien law had required the land owners to first notify the horse owners of the lien and then obtain a court order prior to selling the horses.
Because the horse owners thought the sold horses were worth approximately $5,000 each, we suggested they pursue their claims in their state's small claims court. Even though their state's small claims court limit was $4,000, filing two claims (one against each of the two land owners, as each one had sold one horse) made more sense than filing a regular civil suit for $5,000 because attorneys' fees for a regular civil case would likely far exceed $5,000.
Of course, legal cases are never as cut-and-dried as they sometimes sound. Accordingly, we noted the horse owners could expect the land owners to file counterclaims demanding payment of back board, because in such situations, it has been our experience that the land owners typically claim the arrangement was not in fact free, but that the horse owners had agreed to pay (and didn't do so). The horse owners should also expect the land owners to claim the horses were worth (much) less than $5,000 and therefore the horse owners should come to small claims prepared to prove value. For example, the horse owners could provide a bill of sale showing what they paid for the horses, or they could have a qualified equine appraiser prepare a written appraisal based on the horses' pedigree and show record.
On their day in small claims, the horse owners can expect a fairly vigorous argument, and the case will likely turn on which story the judge believes, particularly because there was no written agreement. What a sad ending to a friendship among horse people!
Now, the friendship had soured and the former friends had sold two of the horses, leading to the horse owners' call to our practice. What could they do?
We reviewed their state's agister's lien law with them and determined the land owners hadn't followed the required process prior to selling the horses, which means the horse owners now had legal claims for conversion (a civil form of theft). Their state's lien law had required the land owners to first notify the horse owners of the lien and then obtain a court order prior to selling the horses.
Because the horse owners thought the sold horses were worth approximately $5,000 each, we suggested they pursue their claims in their state's small claims court. Even though their state's small claims court limit was $4,000, filing two claims (one against each of the two land owners, as each one had sold one horse) made more sense than filing a regular civil suit for $5,000 because attorneys' fees for a regular civil case would likely far exceed $5,000.
Of course, legal cases are never as cut-and-dried as they sometimes sound. Accordingly, we noted the horse owners could expect the land owners to file counterclaims demanding payment of back board, because in such situations, it has been our experience that the land owners typically claim the arrangement was not in fact free, but that the horse owners had agreed to pay (and didn't do so). The horse owners should also expect the land owners to claim the horses were worth (much) less than $5,000 and therefore the horse owners should come to small claims prepared to prove value. For example, the horse owners could provide a bill of sale showing what they paid for the horses, or they could have a qualified equine appraiser prepare a written appraisal based on the horses' pedigree and show record.
On their day in small claims, the horse owners can expect a fairly vigorous argument, and the case will likely turn on which story the judge believes, particularly because there was no written agreement. What a sad ending to a friendship among horse people!
Labels: agister's lien, horse boarding
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