If you are thinking about buying or selling a horse on a “trial basis”, or if you are entering into a horse sale agreement with a trial period, here are five of the most important things you should consider:
1) The Timing of the Pre-Purchase Exam. The most important consideration in horse sales is usually, “is the horse sound”? If the horse is not sound enough to perform the intended tasks of the prospective buyer, the prospective buyer shouldn’t be taking it “on trial” anyway. It doesn’t happen often, but a horse can sustain an injury or get sick during even a short trial period. Therefore, the pre-purchase exam should be conducted before the horse is ever taken by a prospective buyer to “try out.” If a question is ever raised as to whose possession the horse was in when the horse was injured or got sick, both parties will be informed of the horse’s condition when it left the seller’s property if the pre-purchase exam is conducted before the horse leaves. See the following posts for more information on the types of tests that should be conducted in a pre-purchase exam.
Guest Post: Top 10 Pre-Purchase Exam Considerations
Tips for Equine Pre-Purchase Exams
2) Insurance. If the horse is nice / expensive, the seller should insure it for mortality and major medical before the prospective buyer leaves with the horse. Note: Sellers should speak with their insurance agent to make sure the seller’s insurance will cover incidents that occur during the trial period. If the seller’s insurance will not cover the trial period, good equine insurance agents can often sell the prospective buyer a short-term insurance “binder” that will cover incidents that occur during the trial period. These short-term "binders" may be extended by a formal policy if the prospective purchaser decides to keep the horse. If the prospective buyer purchases an insurance “binder”, the seller should be named as additional insured.
3) Written Purchase & Sale Agreement. All terms of a purchase agreement “on trial” should be reduced to writing. Among other things, the specific term of the trial period should be set out, as well as who will bear the risk if the horse is injured or dies during the trial period. A “security deposit” can also be provided for in the agreement, along with specifics on when the seller can keep the deposit and in which instances the deposit will be refunded to the prospective buyer. The bill of sale (which transfers title to the horse) and the registration papers should not be signed over until after the trial period has expired.
4) Liability Release. The seller should consider having the prospective buyer sign a release of liability should the prospective buyer or its property be damaged during the trial period. This will not cover injury to third parties in most instances. A seller can procure a liability insurance policy to cover accidents involving the horse and third parties.
5) Location of Horse During Trial Period. A seller should have a prospective buyer agree in writing as to a single location where the horse will be kept during the trial period. The seller can deliver the horse to said location or make other arrangements to either approve or disapprove the living conditions of the horse before the horse is released to the prospective buyer. If the prospective buyer intends to board the horse with a third-party, it is wise for sellers to make sure that the prospective buyer pre-pays board for the trial period in advance. This is to guard against stableman’s or agister’s liens being placed on the horse if the prospective buyer does not pay board during the trial period.
Due to all of these concerns (and others), I do not typically recommend that prospective buyers or sellers enter into "trial period" sale agreements. In the best case scenario, a seller would allow a prospective buyer to inspect the horse as much as needed prior to the sale, either 1) on the seller's premises; or 2) at some other venue to which the seller would transport the horse for purposes of inspection.
This post was in response to a special request I received from a reader for a blog post on horse sales with trial periods. I’m kind of like one of those music groups that takes requests as long as the song is in their repertoire, and I don’t even ask for tips in return! So please contact me if you have any special requests for a blog topic. I’m always looking for good content that will be helpful to my readers.
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