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  Discussion on Buy-back clause in Sale Agreement
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Posted on Saturday, Jan 13, 2001 - 3:29 am:

With much sadness I have decided to sell my 13 year old Thoroughbred gelding that I have had for the past 9 years. I am selling him to a woman who has been half leasing him for the past year, and I think this is a good match and someone I trust and know will take good care of him.

Nevertheless, this is a very hard and painful decision to make. I want this horse to go to a home for life, but I also know that is not always possible. Has anyone know of a good "buy-back" clause that I could put in my Bill of Sale which would give me first right to buy back the horse should she decide to sell him? I am wondering, do you set the price up front or put any provisions on the price or would it just be for whatever price she is selling him for?

Also, I'm going to be leasing a new horse starting this month. I have leased my own horse out and leased several other horses, but I'm wondering about insurance. I've been paying the insurance premiums on the horse I was leasing this past year, but this new horse has a much higher premium and I'm wondering if it makes sense for me to pay it. Really the insurance is a protection for the owner, as the horse is her investment, right? So it seems that maybe this is something she should pay, and I pay for all the costs associated with the immediate care of the horse while it is in my care. What have other people done with regards to insurance?

Thanks,
Jaime

Posted on Saturday, Jan 13, 2001 - 5:20 pm:

If the owner of the horse is holding you responsible for the horse it may be in your own best interest to insure the horse for whatever the declared value is, hoping that is realistic. I have a horse leased out with an option to buy for the lessee and our contract holds her responsible for the horse (it is leased off premises so I have no realistic control over its environment). I did not require insurance but when she read the contract she felt better if she carried it. I felt I was protected anyway by the contract. The insurance actually benefits both of us...security for her in the event something happens to the horse and an assurance for me that there will be means available to pay for the loss of the horse.

Posted on Monday, Jan 15, 2001 - 1:42 pm:

That does make sense, I hadn't thought of it that way. I don't want to have to pay the vet bills if something serious happens to her. I think I will go ahead and offer to pay it, although I think she was willing to split it with me. Thanks for the advice!

Anyone have any thoughts on the buy-back clause question?

Posted on Monday, Jan 15, 2001 - 3:31 pm:

Jaime, we just bought a 5 year old quarter horse gelding, well started and very calm disposition. The seller is very attached to him, her first foal, imprinted, handled every day and so on. She included a first option to buy-back for a period of 3 years from date of sale at the sale price. We thought twice about this clause, because in three years he could possibly be worth more because of more experience, more training, refinement and so on. We're sure the seller's intention was it go to a good home if we sold him, not to get a "better" horse back at the same price. Knowing how you feel about selling your horse, you'd probably have more peace of mind with a buy-back. It was just a one sentence clause: "The seller shall be given the right of first refusal at the original purchase price for a period of 3 years." She would not have sold us the horse without this clause.

Posted on Monday, Jan 15, 2001 - 4:10 pm:

Linda,
This was helpful, but I want my buy-back option to be for life. As he is already 13 years old almost, and she is only going to be trail riding him, I anticipate his value will decrease, not increase, with time. So even the original purchase price seems a bit high. Maybe I could do something like "at the original purchase price or the sale price, whichever is lower". That seems reasonable to me, and there isn't much risk to her that I would abuse this clause (and of course I don't intend to) as the purchase price is already very reasonable and I doubt I could beat it, especially as he continues to get older and his training does not advance much as a trail horse.

Thanks,
Jaime

Posted on Monday, Jan 22, 2001 - 9:06 pm:

Jaime,
I am in the same boat as you, selling a 12 yr old horse I want to buy back if the new owner EVER decides to sell.
I did buy a mare and the home written contract states: "seller will have the first option to buy "name of horse" if buyer decides to sell her."
This is something as the buyer I typed up at the sellers request and we both signed and dated it.
I honestly am not sure how legally binding or inforceable this is, no witnesses/lawyer etc...(it also states that buyer is entitled to her 2nd foal)
BUT, I am now selling a registered horse and do want him back if he is ever to be sold.
I am not sure how to make this possible or if it is really legally inforceable.
The horse I am selling is very healthy and 12 yrs old....and hopefully with many years left. I want him to have a good life and a humane death.
Any help appreciated.
He is a tattooed TB and I have his papers. I wonder if I should hold (buyer doesn't know or care about them)the papers or write a note on the papers to contact me.
~Barbara

Posted on Tuesday, Jan 23, 2001 - 2:26 pm:

Hi all, I'm not a lawyer. I was recently involved (as a witness) in a contract purchase dispute between 2 people. Out of this whole mess I learned one thing about contracts, that may apply to a buy back situation.

When you write a contract, there has to be a consequence written down, that will happen if the contract is not completed as written. In your case I would guess this to mean that if they didn't sell you the horse back, there would be a statement in the contract as to what would happen to them. For instance, if they sold the horse to someone else, they would be required to give you a certain amount of money. According to the Justice of the Peace we were talking to, many people write contracts that say something has to happen, but they fail to write in the consequence of what will happen if the contract is broken. If the contract ends up in court, the judge can't do much (as far as awarding damages) if there aren't any damages listed in the contract.

I hope that was as clear as mud. Again, that was just from talking to one JP, in a contract dispute in AZ. Laws may be different elsewhere.

Posted on Tuesday, Jan 23, 2001 - 6:02 pm:

Very interesting...... I will add a penalty to my contract. Thanks!
~Barbara

Posted on Tuesday, Jan 23, 2001 - 9:25 pm:

At our stud we use the buy back option a fair bit, usually on property and sometimes on stallion shares. This is usually worded along the lines of: FIRST RIGHT OF REFUSAL, during the term of this agreement ****** must not sell or agree to sell or offer to sell ******* to any person other than ***** unless (a)****** must serve on ******* a written offer to sell back to ******* for* (agreed amount an option) (b) ****** has not accepted the offer within ** days after service of said written offer.

You may also want to include in it something that coveres if the horse is injured and the person does not want to pay for the vet bills it would take to save the horse that they must contact you and ask if you want to pay the bills on the horses behalf thus rendering the horse back to your sole possession. this is something i put in a "mare share agreement" so that they did not destroy the mare if something went wrong as i know they are short on cash.
I hope this helps.
PS witnessess are important if it gets messy, a J.P is even better.
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