LEASE AGREEMENTS – WHAT SHOULD BE COVERED?
Disclaimer–This article is intended as general discussion and information on the topic covered, and is not to be construed as rendering legal advice. If legal advice is needed, you should contact an attorney. This article may not be reprinted or reproduced in any manner without prior written permission of the author.
First and foremost, a lease should always be IN WRITING! Verbal leases are much more difficult to prove and enforce. A written lease will solve the “he said-she said” dispute and remove doubt about the parties’ intent.
There are many kinds of equine leases: a Stallion Lease, Mare Lease, Gelding Lease, General Lease, Show Lease, Breeding Lease and so forth. However, every lease should contain certain clauses and you want to make sure the following are included.
The horse subject to the lease must be identified by breed, gender, age and registration number, if available. The term of the lease must also be set forth. The term can be an annual lease, month-to-month, show season, breeding season–whatever the parties can agree upon. Be sure to specifically define the start date and end date of the lease. If there is to be an option to renew the lease, that should also be set forth including a specific time to notify all parties when the option is to be exercised.
Every lease should also set forth the consideration or payment generally expressed as a dollar amount per month or whatever time period is agreeable to the parties. Many leases are for a dollar, which is fine, just be sure to specifically set forth the amount in writing.
The lessor of the horse should set forth the horse’s condition including soundness and health and any other known characteristics which would be important for the lessee to know. The lease should also set forth the lessee’s responsibility relating to care for the horse and should specifically cover such things as feed, water, stalling, pasture, use, farrier expenses and veterinary expenses. The lease should also define any restrictions or activities which are not to be performed by the lessee. For example, if a horse is leased for show or work purposes and not for commercial or carriage purposes, this should be specifically set forth in the lease. The owner or lessor should always have the right to examine the horse during the lease period and terminate the lease if the horse is not properly cared for.
The lessor, or horse owner must decide how much protection he should have. The lessor may require the lessee to carry mortality insurance (life insurance), major medical insurance, loss of use insurance, liability insurance, including custody care and control coverage. For example, if the horse is injured while under the care of the lessee and requires veterinary care and will no longer be able to be used for its intended purpose, insurance would compensate the owner for loss of use and pay all medical bills up to the policy limit less any stated deductible.
The lessor or horse owner will also need liability protection while the horse is in the lessee’s care. For example, the lessee is giving a hayride and an accident occurs and some of the wagon riders are injured. The injured parties could sue the lessee and lessor (new Equine Liability laws would come into play but may not be 100% protective). The lessor, in order to feel secure in the above situation, can require the lessee to obtain liability insurance with a $1,000,000 liability policy.
In addition, the lessor should require that the lessee indemnify and hold harmless the lessor from all claims, lawsuits, demands for payment and the like. An indemnification
and hold harmless clause is legal terminology where the lessee agrees to be responsible for injury, death and property damage suffered by third parties as a result of damage inflicted by the leased horse. Every lease should also contain a release of liability by the lessee for any injury, death or property damage suffered by the lessee from the horse subject to the lease.
The purpose or use of the horse subject to the lease is also important and should be specifically defined. Leases can be general use or pleasure leases, work leases, carriage and commercial leases, show leases, etc. The purpose is important so the right kind of insurance can be purchased to cover the purpose set forth in the lease. Further, a lessee should not be able to move the location of the horse or sub-lease the horse without the lessor’s consent.
Many owners will lease a mare for breeding purposes. The mare can be kept at the lessor’s barn, lessee’s barn or a boarding facility. It is important to know the mare’s vaccination and breeding record. Further, ownership of the foal, breeding fees and provisions for registering the foal must be set forth in writing. The right to examine the mare during the lease and end the lease if the mare is not properly cared for should also be included.
The lease should also provide that the horse is current on vaccinations and deworming and that the lessee will continue to make sure the horse’s vaccinations and deworming continues in an appropriate fashion.
Many of the breed associations have lease forms on their web sites. The purpose of many of these forms is to authorize the lessee to sign applications for registration and breeding reports. Most breed organizations allow a lessee to sign applications for registration and breeding reports, as well as transfers so long as they are countersigned by the owner or lessor. Further, many of the breed associations require a lease form in order to recognize the lessee as owner solely for the purpose of showing horses and publishing show results.
It is important to remember that leases are controlled by state law. Each state is different and may contain a peculiar obligation or requirement. Thus, you should have the lease checked by an attorney to be certain all provisions are in compliance with state law. In that same thought, the lease should define which state law controls the interpretation of the lease.
As one can see, there are many considerations which go into a lease agreement. As such, standard or “canned” lease agreements may be adequate, but there are a number of cases where one size does not fit all. A form lease only goes so far. To be sure your lease covers all the bases and everything you want included, you should have it drafted and specifically tailored to your case.
Enough legal talk–it’s time to hitch horses!
Ken is a practicing attorney in Myerstown, PA, where a good bit of his practice involves negligence cases. He and his wife, Karen, own Sunny Hill Farm Belgians, and they have been exhibiting their six-horse hitch for the past few years at most major shows in the East.