This blog was created for purposes of keeping people informed of the legal issues facing the horse industry. Tracie Dinehart is an attorney licensed in Michigan and an active equestrian. Because of these dual roles, she has a strong understanding of the legal issues facing the equine industry. The information provided in this article is intended for informational purposes only and is not considered legal advice.
Tuesday, November 2, 2010
Registration Papers and Ownership: Does One Prove the Other?
As a horse person for many years, I was shocked to find out that registration papers do not necessarily prove ownership of the horse. I know what your thinking, “How could that be?” To tell you the truth, it took me going to law school to really figure it out.
Imagine this situation. You buy a horse from someone on an installment contract (meaning you regular make monthly payments). As part of the agreement, you and the seller both agree that you can take the horse home, but the registration papers will not be transferred or turned over until the last payment is made. You get your new companion home and the neighbor comes over. Out of the blue, the horse bolts injuring your neighbor. The neighbor sues the person listed on the registration papers to recover for her injuries. Does that seem fair to you? I mean, you just bought the horse.
In the horse industry, it is common belief that if your name appears on a horse’s registration papers, then you are the owner. However, in the example above, the person named on the registration papers was not the owner. You are. Some courts have determined that the name that appears on the registration papers may not be the true owner of the horse. In the example above, that is precisely that case.
So, how does a horse owner void these types of disputes? Well, as a good friend once told me, “Get it in writing.” When you sell or buy a horse, demand a sales contract or a Bill of Sale. This will allow you to layout the agreement in full. If you are selling a horse to someone else on an installment contract with the intention to transfer the registration papers after the last payment is made, put it in writing. Then, if a legal dispute did arise, as the seller you would be able to indicate that he/she is not the owner of the horse. You are merely holding the registration papers as security for payment. Think about what banks do when they hold your car title until you have paid off the auto loan. They are not the owner of the car, and they certainly would not pay for any injuries if you got in an accident with another person.
Doing business on a handshake is what gets a lot of equine professionals in trouble. Put it in writing and protect yourselves and your companions. Stay tuned for the next post regarding what should go in an equine sales agreement to provide that