Why should I use horseclosings.com?

Buyers – get what you pay for.

Kate started riding last year when she was 8.  She has been riding ponies at her trainer’s barn, and now she wants her own pony.  Her trainer, Cindy, has told Kate’s parents that she knows a great pony that belongs to a girl who is ready to move up to a larger pony.  Cindy tells Kate’s parents that the price for the pony, known as Snowflake, is $10,000.  Kate’s parents relent and Cindy tells them to make the check payable to her.  Kate’s parents ask: “Don’t we need some paperwork to show that we own Snowflake now?  Like a title or something?”  Cindy then produces a “Bill of Sale” that says “For the small pony, Snowflake, paid in full.  Sold AS IS.  /signed/ Cindy Trainer.” 

            While this type of documentation (or lack thereof) is commonplace in the horse industry, it is insufficient and problematic to all parties for a number of reasons.  Here is an example of why the “customary” handling of this transaction could prove problematic for Kate’s parents. 

            The problem is not just with the documentation, but with the story behind Snowflake that Kate’s parents are never told.  Snowflake’s previous owner was a girl named Allison who rides at another barn with another trainer.  Allison is 12 and ready to move up to a larger pony.  Cindy had a large pony in her barn that had also belonged to another student.  The larger pony is called Killer.  Killer’s owner, Jennifer, lost interest in horses when she turned 14, and she stopped riding.  Jennifer’s parents stopped paying Killer’s board bills, and then moved out of town.  After not getting any money from Killer’s owners or seeing them for about a year, Cindy decided that Killer’s owners weren’t coming back for him and that since she had a “lien” on the pony, Killer was now hers.  She ran into Allison’s trainer at a show and suggested that they do an “even trade” and that Allison could “move up” to Killer, and that Cindy would take Snowflake. 

            Fast forward a few months, and Allison decides that she wants to register Killer in her own name with USEF.  Her parents send in the forms to register Killer as owned by Allison.  The USEF writes back, saying that Killer’s last registered owners (Jennifer’s parents) need to sign a transfer form, and that Allison’s parents will need to send in the form and a copy of a bill of sale.  Allison’s parents locate Jennifer’s parents out of state, and ask them to sign the transfer form.  Jennifer’s parents go ballistic, screaming at Allison’s parents that they have never gotten any money for Killer, that he is still Jennifer’s pony, and that THEY WILL NOT sign any transfer forms.  Jennifer’s parents then contact USEF and inform it that there is an ownership dispute.  Now, Allison cannot register the pony in her own name, nor can she register the pony under a different name because USEF already knows there is a problem and registering the pony under a new name would be a violation of USEF’s rules.  Even worse, Jennifer’s parents are threatening to sue.  Allison’s parents consult a lawyer and are told that since they didn’t pay any money for the pony and have no documentation of the transaction, they will have a hard time convincing a judge that this was a legitimate transaction.  The lawyer advises them to talk to Cindy and try to “undo” the trade.

            Meanwhile, Cindy has moved on to work at a different barn in another state.  When she is contacted by Allison’s parents, she tells them that she can’t “undo” the trade because Snowflake has been sold.  Cindy pleads poverty and says that she used the money she got from Snowflake to pay off some debt and that she has no assets she can use to give Kate’s parents a refund. 

            Now the problem with Snowflake’s “Bill of Sale” comes into focus:  there is nothing that says how much was paid, and by whom, for the pony; there is no warranty of title whereby Cindy (or anyone else) guaranteed that she owned the pony or had any right to sell it.  The fact that USEF issued registry papers for the pony known as “Snowflake” is meaningless because USEF registry papers are not title documents.  When Kate’s parents bought Snowflake, they didn’t know they were buying into a lawsuit and the risk that Snowflake would be taken away from their daughter.   

            By using HorseClosings.com, you will GET WHAT YOU PAY FOR.  If Kate’s parents had used HorseClosings.com, Cindy would have had to sign a warranty of title.  Kate’s parents would have gotten a Certificate of Title, and a proper Bill of Sale.  It wouldn’t change the fact that Cindy wrongly traded Killer to Allison’s parents, but it would protect Kate’s parents in a lawsuit.    

* Disclaimer: This vignette is a work of fiction. Names and incidents are used fictitiously and any resemblance to actual persons, horses, or businesses is entirely coincidental.

Nancy is a “retired” amateur rider who has started a successful breeding program.  When her prospects are old enough to show, she sends them to a trainer to be sold.  The trainer shows them actively until they are sold.  Nancy relies on her trainer’s advice in pricing her horses.

            One particularly nice colt of Nancy’s had a rough start as a baby.  He foundered as a foal, had a bad case of lymphangitis, and had two colic surgeries before the age of two.  Despite this unhealthy youth, he had no more problems after the age of two, and turned into a lovely prospect who stayed sound in training and was doing well at the shows.  Nancy’s trainer told her she could get $40,000 for the colt, “easy.”  Nancy assumed that meant the asking price would be $40,000, and the trainer would take his 10% commission out of that.  As a result, she expected to get a check for at least $36,000 – or a phone call explaining a lower price.

            In fact, a month or so later, Nancy got a check from her trainer for $40,000 and a voice mail message saying the colt had sold.  The trainer said that he sent the new owners a bill of sale, with the standard “AS IS” language, and he was waiting for the people to sign it and send it back to him.  She waited, but never got a signed copy of the Bill of Sale.

            The check bounced.  Nancy’s trainer stopped taking her calls, but said he would send her a “good check” when he could. 

            A few months later, Nancy gets a call from the people who bought her colt.  They sound very nice, but they are asking her to send them the breed registry papers and to sign a bill of sale so that they can transfer the horse into their name with USEF and the breed registry.  They explain that the bill of sale that her trainer sent didn’t have the purchase price on it, and they needed some written documentation of the purchase price for their accountant or something. When Nancy gets the bill of sale they want her to sign, it has no “AS IS” language, and it lists the purchase price for the horse as $100,000!  Nancy doesn’t know what to do.  After all, she’s never actually been paid for the horse.  So she’s not going to sign a piece of paper saying she got $100,000 for it.  So she does nothing.

             A few months later, Nancy gets another call from the people, telling her the colt died during colic surgery.  They are really upset because apparently the insurance company won’t pay on the mortality policy because the colt had had colic surgery before that had not been disclosed.  They are demanding their money back.  Nancy doesn’t know what to do… so she does nothing.  Until she gets served with a lawsuit, and then she goes to her lawyer.

            Nancy didn’t know that all horses are sold with all warranties unless the buyer agrees in writing that s/he is buying the horse “AS IS.”  So, when the buyers of her colt didn’t sign the bill of sale that her agent had given them, that colt was sold with all warranties.  What’s worse is that now Nancy doesn’t know who got the money these people paid for the colt.  But they are suing Nancy for the whole $100,000 they paid!  Where is Nancy going to come up with that kind of money?  And how is she going to be able to pay her lawyer the $40,000 he says it will cost to defend her?

By using HorseClosings.com, Nancy could have avoided this lawsuit.  Our standard terms and conditions of sale provide that all horses are bought “AS IS” – just like industry custom assumes is the case.  The buyer would have sent us the $100,000 to hold in escrow, and before we paid anyone any money, all parties would sign our Horse HUD-I statement showing how the proceeds would be disbursed.  If Nancy had had a problem with the amount of money the agents were making on the deal, she could have refused to close the deal.  And if she had a problem with the transaction, HorseClosings.com would have returned the money to the buyer.  If everyone had signed off on the deal, then the buyers would have agreed to binding arbitration – so even if problems came up later on, everyone could avoid court and the matter would be resolved out of the public eye and in a cost-efficient forum.  

The point of transparency and disclosure is not to sour deals.  If a trainer is secretly making more money than their clients suspect, then having HorseClosings.com close the deal will either force them to come clean or cause them to lose business.  The honest agent with nothing to hide should have no issue with full disclosure.  Full disclosure is in the best interests of buyers and sellers, because it practically guarantees that they won’t be later be on the hook for an agent’s failure to complete paperwork… or dishonesty.

When selling a horse, you want to be able to keep that money and not get sued.  HorseClosings.com can give you extra peace of mind.

* Disclaimer: This vignette is a work of fiction. Names and incidents are used fictitiously and any resemblance to actual persons, horses, or businesses is entirely coincidental.

Pat is a successful trainer/rider.  An old friend of Pat’s, Janet, calls Pat out of the blue.  She just had a baby last year and has now found out that she is pregnant again… with twins.  She rescued a Thoroughbred off the track a while back, and was bringing him along to be her next show hunter.  They’d only gone to a few schooling shows when she found out she was pregnant the first time.  When she got too big to ride, she turned him out in a field and planned to get back to him.. but now with the twins on the way, she can’t imagine getting back into the saddle before he’s too old to bring back into a program.  She asks Pat to take him “on consignment,” because she can’t afford to pay training board, and the horse needs a “few months” to get back in shape.  “But he’s a really lovely horse.  I want to get $20,000 for him, and you can add your commission on top of that.  I don’t care how long it takes to get him sold, but I want him to go to a good home.”  Janet adds, “If you think $20,000 is too ambitious, let me know and we can talk.  But he’s really lovely.  I’m sure you can get that for him in a few months.”

Janet has had some really lovely horses in the past, and she was always a good rider.  So, trusting her judgment in horse flesh and knowing that she would have given the horse a good foundation before taking him to a show, Pat agrees to take him on. 

Pat goes to pick up the horse out of some cow field in the middle of nowhere.  The horse is rangy, covered in rain-rot, and his feet are a wreck.  Pat brings him home and grudgingly starts the rehab.  Corrective shoeing, worming, good nutrition, lots of grooming, a few adjustments by the chiropractor… Pat puts the horse into work and suddenly starts to see his potential.  He has a great work ethic, a wonderful disposition, he’s a “10” mover, and his form over fences is classic.   Pat takes him to an “AA” show and he sweeps the baby green division against some pretty stiff competition.  A local horseman approaches Pat at the show and asks “what would you take for that one?”  Knowing this is a bird in hand, Pat says “$40,000.”  The man pulls out his checkbook, strokes Pat a check, and takes the horse home with him.

Pat dutifully sends Janet a check for $20,000 and she is thrilled. 

Six months go by and Pat gets any angry voicemail from Janet.  She says she went to watch a friend at a local horse show and she saw her “old” horse.  Janet got to talking with his new owner, and found out that the woman paid $70,000 for him.  Now, Janet is yelling at Pat that she wants her money and that she expects a check for $43,000 ($70,000 – 10% commission - $20,000 Pat already paid her) within ten days or she is going to file a lawsuit.  She even threatens to go to the police!

Yes, it is true that Pat agreed to take a chance on the horse because Janet agreed she only wanted $20,000 back. And Pat sent her the money she said she wanted out of the horse -- $20,000.  The problem is that even though what Pat did seems perfectly OK to most horse people, Pat faces civil and criminal liability for how the transaction was handled.

This is exactly the kind of scenario that is driving the “Sales Integrity” movement within the industry.  In fact, last year USEF proposed a new rule (that didn’t pass) that would have exposed Pat to sanctions (fines and/or suspension) for not disclosing the details of the transaction – how much the horse sold for and how much money each agent made.  Industry leaders are saying that if the industry doesn’t start policing itself, the government is going to get involved and start regulating the “dishonest” sales practices that “run rampant” in the horse industry.

The only thing “running rampant” in the horse industry is a lack of know-how …. Industry leaders want horse sales to be treated like land/house sales, and they want agents to be held to the same standards of disclosure as real estate agents.  The problem is, they expect horse sales agents to generate the same paperwork that lawyers generate in a real estate closing.  Real estate agents don’t handle closings – so neither should horsemen!!

By having your clients use HorseClosings.com, you will protect yourself from the Janets of the world. You should be out there doing business – horse business – not paperwork that, if done improperly, can cause you to lose money, face jail time, and maybe even lose your competition privileges.

* Disclaimer: This vignette is a work of fiction. Names and incidents are used fictitiously and any resemblance to actual persons, horses, or businesses is entirely coincidental.