Problems with Selling a Horse on Payments
Horses are often expensive to buy, and for various reasons, horse sellers occasionally agree to sell a horse on a payment plan. Smart horse sellers will take steps to minimize their risks in selling a horse on payments, but it’s impossible to completely eliminate those risks. Here’s what goes wrong when selling a horse on a payment plan, and what the horse seller can do about it.
The Horse Buyer Doesn’t Pay
A horse buyer who doesn’t pay is the most common problem with selling a horse on payments. Typically, horse sellers will require a deposit up front and then regular payments after that until the horse is paid in full. But what happens if the horse buyer stops making payments? Here’s what the horse seller can do:
The Horse Develops a Health or Soundness Issue
Horses who go lame, get injured or develop another health issue before the buyer has paid in full is the second most common problem with selling a horse on payments. If the buyer has possession of the horse, they often demand the seller take the horse back and refund their money. If the seller has possession of the horse, the buyer often stops paying, tells the seller they no longer want the horse and demand a refund. In this situation, the horse seller should immediately contact an equine attorney to determine what their options are:
The Horse Buyer Doesn’t Pay
A horse buyer who doesn’t pay is the most common problem with selling a horse on payments. Typically, horse sellers will require a deposit up front and then regular payments after that until the horse is paid in full. But what happens if the horse buyer stops making payments? Here’s what the horse seller can do:
- Contact the buyer as soon as the buyer misses a payment. Be polite but businesslike. Try to get the buyer to pay the past-due payment right then and there via bank wire transfer, PayPal or another service that offers same-day funds transfers. If the buyer doesn’t respond to the seller’s calls, texts and emails, or responds with excuses and promises, the seller can be pretty sure they have a problem, and should immediately take further action.
- Impose late fees and interest. Note: The seller can only do this if the buyer signed a horse sale contract that provides for late fees and interest, like Equine Legal Solutions’ form contract for selling a horse on payments. If the horse sale contract does provide for late fees and interest, the seller should promptly send the buyer an invoice itemizing these charges (in addition to the past-due payment). Doing so puts the buyer on notice that not paying on time has expensive consequences. Invoices for late fees and interest are also helpful documentation to have if the seller needs to take legal action against the buyer.
- Exercise their contractual rights. In the best scenarios, the seller has a horse sale contract stating what the seller’s rights are if the buyer doesn’t pay. For example, a contract for selling a horse on payments that is designed to protect the seller will typically require the horse to stay in the seller’s possession until it is paid off, allow the seller to resell the horse promptly if the buyer doesn’t pay, and specify that the buyer forfeits any payments they have made on the horse if they stop paying. Before reselling the horse, the horse seller should consult with an equine attorney in their state to make sure the horse sale contract the buyer signed allows the seller to take that step, and determine if the seller needs to notify the buyer or take any other steps before reselling the horse.
- Consider taking legal action. If the horse seller has exhausted the options above and the buyer still hasn’t paid in full, the next practical step is to consult with an equine attorney and discuss the horse seller’s legal options. If the buyer owes less than $10,000 and the buyer has possession of the horse, the seller’s most practical and cost-effective option might be to file a small claims court case and obtain a money judgment against the buyer. Other options may include filing a regular civil case against the buyer and as part of that case, requesting a court order allowing the seller to repossess the horse and sell it to satisfy the debt. But each situation is unique and the seller should rely on his or her equine attorney’s advice, giving careful consideration to practical concerns such as cost.
The Horse Develops a Health or Soundness Issue
Horses who go lame, get injured or develop another health issue before the buyer has paid in full is the second most common problem with selling a horse on payments. If the buyer has possession of the horse, they often demand the seller take the horse back and refund their money. If the seller has possession of the horse, the buyer often stops paying, tells the seller they no longer want the horse and demand a refund. In this situation, the horse seller should immediately contact an equine attorney to determine what their options are:
- What does the horse sale contract say? The first thing the equine attorney will consider is what the horse sale contract says. When a horse sale contract with payments is designed to protect the seller, it will specify that the risk of loss or injury to the horse passes to the buyer immediately when the buyer signs the contract, regardless of who has possession of the horse and what payments the buyer has made. That generally means the buyer is obligated to continue making payments until the horse is paid in full, even if the horse dies, and the seller is not required to take the horse back or pay for diagnosing and treating the health or soundness problem.
- What if the contract doesn’t say what will happen if the horse becomes ill, injured, lame or dies before the buyer has paid in full? The seller’s legal rights and obligations are much less clear and will depend on the facts and circumstances of the particular situation, such as what is wrong with the horse, what the cause of the lameness/illness/injury is, who has possession of the horse and so on.