| I have received several inquiries about selling on | | | | any doubt that he owes you money. |
| contract from horse owners who need to get rid of | | | | The contract and the promissory note should include |
| their surplus and still want to make a profit or at least | | | | the length of time involved in paying off the amount. It |
| break even. In this time of slow market conditions, | | | | should state the interest rate, amount of payment, late |
| supply greater than demand and many horse breeders | | | | charges and be signed both by the buyer and seller. |
| who are dispersing their stock, one should be looking | | | | From my personal experience, a security clause or a |
| for different ways to market their product. Offering to | | | | separate page containing the security phrasing is most |
| sell on contract may work for you if you act in a | | | | important. It states that you have a financial interest in |
| business-like manner and do your research. | | | | the horse until he is paid for and you release your |
| Selling on a contract can be profitable if you follow | | | | interest in the horse. Lack of such documentation |
| some simple rules. It is important to get everything in | | | | means that if the buyer defaults, you have to go to |
| writing. You can use the sample contracts you find in | | | | court and prove that you have a financial interest in |
| books on horse businesses or procure one at your | | | | the animal. This expense is often the reason that |
| local office supply to act as a guide. You should check | | | | sellers do not pursue legal action. You should not |
| with your attorney about the laws in your state before | | | | assume that you could just go and take the horse |
| you begin or have him do it for you. You would want | | | | without legal documentation giving you permission to |
| to have the attorney review it before presenting it to | | | | do so. |
| the prospective buyer. | | | | Insuring the animal is not different from insuring your |
| Get a credit check upfront. You should ask the | | | | vehicle. It is the buyer's responsibility and the seller is |
| prospective buyer to sign a credit application, (available | | | | the named beneficiary until the horse is paid for. |
| at most office supply stores), so you can legally look | | | | Mortality, accidental death or anything that renders the |
| into his references and check with his creditors. You | | | | animal unusable for the original purpose intended is to |
| can check their credit with one of the credit reporting | | | | be considered. Sellers should be adamant about this as |
| bureaus using the information provided on the credit | | | | they don't have control of the horse or it's |
| application. Credit reports are available online for a | | | | surroundings. If something happens to the horse, the |
| small fee. | | | | buyer often feels that his contract to pay for the |
| The contract should have some very specific | | | | horse is over. In order to prevent this; insure the animal |
| language in it. It should have the buyer's address, phone | | | | for the sale price. You can always reduce the amount |
| number, closest relative and their address and phone | | | | owed the seller by the payments made and the buyer |
| number, and where the horse will be stabled, (address, | | | | can keep the residual amount. |
| city, state). The seller's address, phone number should | | | | The contract should spell out in very specific wording |
| be in the contract. | | | | what is expected as to maintenance of the horse |
| A complete description of the horse(s) that are being | | | | during the course of the contract. Worming, shots, |
| sold, such as height, weight, color, age, registration | | | | general care of the animal are items that are seldom |
| number, health certificate, etc. Take photos of the | | | | addressed in contracts and are often the cause of |
| animals on all four sides. Give one set of photos to the | | | | seller remorse. If it is important to you, either as the |
| buyer and keep one set for your records. | | | | seller or buyer, have it put into the contract before you |
| The contract should state the down payment, length | | | | take sell or take possession of the animal. |
| of time involved, the interest rate, who pays if you | | | | I find that sellers of horses on contract seldom file an |
| have to repossess the horse, type of insurance | | | | UCC (Uniform Commercial Code) with the state when |
| required by seller and a security clause. | | | | they sell the horse. An UCC effectively puts on notice |
| The down payment can be any amount that you want | | | | to the public that you have a financial interest in the |
| but is typically 20 to 25%. It should be a sufficient | | | | horse. The cost is small in relation to the selling price |
| amount to insure that the buyer has a monetary | | | | and should be done immediately upon closing the sale. |
| interest in the horse. A low down may move your | | | | If the horse is to be domiciled in another state, you |
| horse faster but may work against you. The buyer | | | | should file a UCC in that state as well as the state |
| may not feel responsible to make any payments | | | | where the sale took place. |
| beyond the down. The buyer should be made to feel | | | | Leases with option to buy contracts are similar to a |
| that it is in his best interests to make the payments. | | | | sale contract. The same criteria should be used with |
| The contract should state what happens to the down | | | | the addition of the lease period and amount to be paid |
| payment if the buyer does not make the payments or | | | | for the lease. The period of the lease should be |
| defaults on the contract for any reason. | | | | reasonable. Forty five to 60 days should be sufficient |
| Every contract should have an interest rate. You are | | | | for the prospective buyer to evaluate the horse and its |
| loaning money that you could use for other things. | | | | suitability to the buyer's purpose. The lease payments |
| Charge the going interest rate for loans. The buyer | | | | can be applied to the down payment in full or part if |
| may pay off the loan earlier to avoid paying the | | | | the option is picked up. If the option is not picked up, |
| interest. In addition to signing the contract, you should | | | | then all lease monies should become the property of |
| have the buyer sign a promissory note so there is not | | | | the seller. |