To Lease or Not To Lease? What is the question?

not a good idea for the Lessee/potential purchaser to structure an installment purchase agreement as a “lease with purchase option” because at the end of the lease period you will have no vested financial in- terest in the horse. If you know you are going to buy the horse, then just commit to buy it. Of course, the flipside of this is that the “lease with purchase option” is the much safer bet for the owner/potential seller of the horse, because if the Lessee never comes up with the balance of the purchase price, the Lessor/owner takes back the horse free and clear with no strings attached. So, whatever side of the deal you are on, know what you are getting yourself into. Ticking time bomb? It might be wise to evalu-

ate what that horse has been doing lately and what kind of maintenance has been done. Horses are not machines, and if the horse has been ridden hard and put up wet, then the Lessee may not get much use out of the horse before it breaks. How about “reasonable wear and tear”? I’ve seen some leases that require the Lessee to return the horse in “the same condition” as at the start of the

lease. This statement makes no sense. Obviously, what is intended is that the horse will be returned in substantially the same condition, reasonable wear and tear expected and accepted. But it is important that everyone to the transaction be on the same page about the Lessor’s expectations, because I have seen disputes over whether a new scar on the horse’s leg was a breach of the lease because it hadn’t been there at the start of the lease. Is leasing a good idea? That is hard to say. At the end of the day, with horses we have no guaran- tees. Leasing a horse can be riskier for the owner, but it can also be a risk worth taking if there is more money to be made on consecutive leases of the horse than on an outright sale. Ultimately, leasing a horse can be less of a financial commitment (than an outright purchase) for the Lessee, but it provides no better security: you can buy a horse today and it can break tomorrow; likewise you can lease a horse today and it can break tomorrow. Either way, you can spend a lot of money for nothing. But that’s the nature of the sport. So how important is a written contract?

While you might think that my answer to that ques- tion would be obvious, I’ll throw a little uncertainty into the picture and give you an answer you may not expect: depending on what you are talking about, a written lease agreement may be a waste of the paper it’s written on. High dollar, long term lease—get it in writing! But sometimes no written contract works out better than a badly written contract. So keep that in mind. But if you are leasing a horse for not a lot of money, for a very short term (especially if the horse is not leaving the care of the owner or the owner’s trainer), then the terms of the contract may not be complex enough to justify writing down. If the horse is supposed to meet you at the ring, and he does, and you show him, then you have to pay the fee. Sometimes things are that simple.

Krysia Carmel Nelson is a Virginia attorney who is a nationally-recognized expert in equine law. She repre- sents horse owners, trainers, riders, breeders, eques- trian facilities, farms, clubs and associations across all nationally and internationally recognized disciplines. She can be reached at

60 March/April 2019



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