giving up some or all of the $5,000 she got from Rita. What is a court likely to do if Sally sues Betty? As men- tioned above, in a lawsuit between Sally and Betty, there is no legal basis for a court to strip Rita of her ownership rights. But will a court enforce the Restriction and award money damages to Sally? While it is possible that a court would order Betty to pay Sally some or all of the monies Rita paid to purchase Leroy, it is equally likely that the court would find the Restriction un- enforceable. First, the Bill of Sale did not provide any helpful detail about the transfer restriction in terms of how or when Betty would trigger Sally’s buy-back obligation. Second, the agreed upon buy-back price was well below Leroy’s fair mar- ket value at the time Betty had to sell, and so she may have an argument that it would not be fair to force her to sell Leroy at such a deep discount. This would be a good argument, par- ticularly if paired with the observation that Betty paid full mar- ket value for Leroy at the time and she didn’t receive any price discount in return for agreeing to the Restriction. (As an aside, the Restriction probably would be enforceable if it had been agreed to in consideration of a discounted price.) Third, Betty
has a good argument that Sally prevented her from honoring the Restriction by not keeping in touch and not giving Betty good contact information. While I could see a court going ei- ther way, I suspect most judges would try to find a way to “split the baby,” and resolve the case by awarding Sally something less than $5,000. Transfer restrictions of this kind are difficult, if not impos-
sible, for a seller to enforce because there is no central registry for equine title documents (like there is for cars or real prop- erty). If a horse owner wants to transfer custody of a horse to another, but still retain some right to get the horse back in the future, the best vehicle for that is a lease. Otherwise, a seller is really relying on the buyer’s good faith willingness to comply with the agreement.
Krysia Carmel Nelson is a Virginia attorney who is a nationally-recognized expert in equine law. She represents horse owners, trainers, riders, breeders, equestrian facili- ties, farms, clubs and associations across all nationally and internationally recognized disciplines. She currently rides and competes her Hanoverian Affirmed on Appeal in the amateur hunters. She can be reached at
eqlaw@aol.com.
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© The Book LLC 2011
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