Considerations for Equine Lease Agreements (FS-1062)

Knowing the lingo can be helpful, but note that these terms are broad and specifics can vary in different lease situations. If these terms are included in a written lease agreement, sufficient detail should also be provided to ensure the owners’ intentions are clearly communicated.

Full versus Partial lease

A full lease means there are no restrictions on when the lessee can ride or otherwise use the horse. In a full lease, the owner typically does not use the horse. A partial lease, sometimes called a half lease, means the lessee can use the horse only part of the time. Partial lease agreements should spell out exactly when the lessee is permitted to use the horse.

On-site versus Off-site lease

An on-site lease means the horse will be housed at a farm specified by the owner. In an off-site lease, the lessee is typically permitted to keep the horse at a farm of their own choosing.

Paid versus Free lease 

In a paid lease, the lessee pays fees to the owner for use of the horse. The lessee may or may not be financially responsible for some or all of the horse’s care in addition to the lease fee. In a free lease, the lessee does not pay a fee for use of the horse but is usually required to pay for all of the horse’s care. It is a common misconception that a free lease is actually free.

An equine lease should state the duration of the lease: 1 month, 6 months, 1 year, 3 years, or some other term. Consider the following:

• How long will the lease be valid? The initial lease period can be any amount of time, but most leases are valid for a minimum of 6 months. The lease agreement should specify the beginning and ending dates.
   
• How or when will the lease renew? A lease may be written so that it’s valid for only a certain amount of time and must be re-signed by both parties in order to renew. Alternatively, a lease may be written so that it renews automatically, such as on a month-to month basis.
   
• How can the lease be terminated? A lease may give one or both parties the right to terminate at any time or only after a certain date. The lease agreement should specify who has the right to terminate, how much notice is required, and how that notice must be given (by phone call, e-mail, certified letter, et cetera). For example, a lease may read that either party may terminate the lease after one year, and the party requesting termination must give at least 30 days notice via e-mail.
   
• Upon termination, what will the lessee be responsible for? What will the owner be responsible for? For example, who will transport the horse back to the owner’s possession? Who will ensure the horse has required documentation (such as a valid Coggins and certificate of veterinary inspection) before transportation?

A lease should also include detail about how the lessee may ride or otherwise use the horse. Considerations should include the following:

• Who may ride the horse? A lease may specify that only the lessee, only individuals over the age of 18, or only riders with a certain amount of experience may ride the horse. The owner may wish to specify that anyone who rides the horse must first sign a hold harmless waiver indemnifying them of liability.
   
• What types of riding or use are permitted or not permitted? A lease may specify that the horse may only be used for trail riding, may not be jumped over a certain height, or may not be used for breeding purposes.
   
• Will the lessee be permitted to trailer the horse, and if so, for what purposes (pleasure riding, competitions, to obtain medical treatment, et cetera)? A lease may specify a permitted radius for travel, such as trailering is allowed only within a 100-mile radius. In this situation, the lease would also need to specify the address of the horse’s home stable.

It is important to define who will be responsible for the care of the horse over the life of the lease. Some questions to consider are:

• Who will be in possession of the horse? In some lease situations, the horse is maintained at the owner’s discretion and the lessee has rights to utilize the horse. In other situations, the horse is maintained at the lessee’s discretion with little or no input from the owner.
   
• Where will the horse be kept? A lease may specify that the horse must be housed at a certain farm or in a certain city, county, or state.
   
• What care is the owner responsible for providing? What care is the lessee responsible for providing? A lease agreement should specify who is responsible for ensuring the horse receives adequate shelter, feed and water, grooming, exercise, farrier care, dental care, and veterinary care, including vaccines and deworming.
   
• Does the horse require special care? A lease may specify that the horse receives certain supplements, wears a blanket during cold weather, is shod with certain shoes, et cetera.

The owner may receive some form of compensation, or lease fees, in return for lessee’s use of the horse.

• Will the lessee pay the owner fees for use of the horse? How and when will payments be made? A lease should specify the monthly fee, when the fee must be received (such as by the first of each month), and what type of payments will be acceptable (such as cash or check).
   
• Who will pay for the horse’s care? If lessee and owner share portions of the care, the lease agreement should specify who is responsible for each type of expense (such as board, feed, medical care, farrier care, dental care, et cetera). The lease agreement should also specify how expenses are paid. For example, will the lessee pay the owner or pay the vendor/service provider directly?

A horse may become injured or fall ill during the life of the lease and require veterinary care. How will this responsibility be handled? Who will make the medical decisions? How will the parties distinguish when a lessee has authority and when the owner has authority? These are all important considerations before entering into the lease.

• Who will ensure the horse receives veterinary care?
   
• Who will pay for veterinary care? The lease may differentiate between routine versus emergency care, or for care for a pre-existing condition.
   
• In the event of an emergency which may require extreme measures like surgery or euthanasia of the horse, who will make medical decisions? The owner may wish to maintain the right to make the decisions or defer that right to the lessee. If the owner maintains the right to make decisions, what will happen if he or she is unreachable in the event of an emergency?

• Does the horse require special tack or equipment? For example, a lease may specify which bits may be used on the horse or require the horse always be turned out wearing a fly mask.
   
• Some owners choose to lend tack or equipment to the lessee along with the horse. The lease agreement should specify the items being lent with the horse and whether the lessee may use these items with other horses.

• Will the owner have the right to ride or visit the horse? This is of particular concern in full lease situations where the lessee has full possession of the horse. (In a partial lease situation, this should be described in the section of the lease detailing use of the horse.) The owner may wish to include language giving him or her the right to show and/or ride the horse for potential purchasers or lessees.

A consideration often overlooked is how the parties will communicate. Do you prefer to deal in text message, e-mails, phone calls, or a combination? The lease should establish shared expectations for how the parties will communicate.

A lease should specify what is acceptable notice in cases where lessee is required to notify owner, such as exercising the right to terminate the lease. It should also specify how that communication should be given; a lease may state that only notice in writing and/or via certain forms of communication (certified mail, e-mail, phone call) is acceptable.

Insurance is available for horses; specifics vary, but most companies offer mortality, loss of use, and medical/surgical insurance. If the horse will be insured, the lease should specify what type of insurance will cover the horse, the value of the policy, who will pay the premiums, which party will be named as the insured on the policy, and which party will be named as a third party beneficiary.

It’s common for a lease agreement to require the horse be returned to the owner in good condition. It’s a good idea for a lease to specify what will happen if that requirement is not met. For example, what will happen if the horse has been injured during the course of the lease and is lame when the lease expires? A lease may specify that if the horse is returned in less than ideal condition (as determined by a veterinarian), the lessee will be responsible for the costs of medical expenses for the illness or injury incurred during the term of the lease. Alternatively, a lease may specify that if the horse is returned in less than ideal condition, the lessee will pay a flat (pre-determined) fee based on the value of the injury or illness.

Limiting the owner’s liability and costs through an indemnity clause and assumption of the risk clause are important features of any lease from an owner’s perspective. Lessees should understand what those clauses mean before signing a lease.

• Indemnity is a protection against a financial loss or burden. In lease situations, the lessee typically indemnifies (reimburses/compensates) the owner from potential losses based on the lessee’s use of the horse during the lease. For example, if the horse causes damage to fencing at a boarding farm, an indemnification clause in the lease would require lessee, not owner, to pay any claims from the damages.
   
• Assumption of the risk provides an affirmative defense for the owner should the lessee become injured. An affirmative defense means that even if the facts of the case are just as the lessee describes, the owner will not be responsible for the damages. The idea behind this defense is that the injured person who voluntarily consented to a known risk cannot later sue for damages (Crews, 2000). Maryland courts have previously ruled that to prove assumption of the risk, three elements need to be shown: 1) knowledge of the danger; 2) appreciation of the risk; and 3) voluntarily confronting the risk. It is important from an owner’s perspective to include language in the lease specifying the lessee is expressly assuming the risk of riding the horse during the term of the lease.

No one likes to think about a relationship going bad, but occasionally one party does not uphold the agreement. It is advisable to determine how such a situation will be handled before a dispute arises. Consider the following:

• If the owner finds that the lessee is not upholding part of the agreement, such as not paying fees on time or not providing the care detailed in the lease, how long does the lessee have to resolve the noncompliance? What will happen if the lessee does not resolve the noncompliance within that time period?
   
• What if the horse dies while in the care of lessee and the horse’s death is the lessee’s fault? How will the parties determine the value of the horse?
   
• Other defaults may arise; it’s advisable for owner and lessee to consider other possible situations and how they would be handled.
   
• Should the parties be required to utilize alternative dispute resolution (ADR) before going to court? ADR is often quicker and more efficient at resolving disputes than going to court. Forms of ADR include mediation and arbitration.
   
  • Arbitration is where the parties allow the dispute to be heard by a panel of arbitrators (typically three) who resolve the dispute. The parties are bound by the arbitrators’ decision.
     
  • Mediation is where parties work with a mediator to find common ground and work out an agreement to resolve the dispute.

When the owner and lessee live in different states, choice of law and venue can be very important.

• Choice of law means which state’s law will apply in a dispute. This can make a big difference if one state’s law is more favorable to the owner or lessee. It is common for the choice-of-law clause to be set favoring the home state of the owner.
   
• Venue addresses which court will have jurisdiction to hear a dispute. Should it be in a jurisdiction near the lessee’s home or the owner’s? Again, venue is traditionally picked for the owner’s home county court.

For example, Terry, a resident of Pennsylvania, leases a horse for his daughter from Ashley, a resident of Maryland. In the lease, Terry and Ashley agree that Maryland law will apply but venue is proper in York County, Pennsylvania (where Terry lives).

Lease agreements can take many forms, depending on the situation and the needs and wants of the owner and lessee. The following examples will help you understand the breadth and diversity of forms a lease can take.

Mare With No Breeding Rights

Joyce operates an Arabian breeding facility producing top-notch foals. She has recently retired her prized mare from breeding and plans to give the mare to her granddaughter as a college graduation gift in three years. Joyce has an injury preventing her from riding and wants the mare to stay in work until her granddaughter graduates. Her lease agreement specifies:

• The lease is valid for a period of three years with no option to terminate early or renew.
   
• The fee for the lease is $1,000 to be paid at the time lessee takes possession of the horse.
   
• The horse must be housed within 50 miles of the owner’s farm.
   
• The horse may not be bred.
   
• The lessee is responsible for providing and financing all care for the horse.
   
• The horse must be exercised at least three times per week.
   
• The owner retains the right to make decisions regarding care for major medical issues such as life-threatening illness or surgery.
   
• The owner retains the right to visit the horse during daylight hours without advanced notice.
   
• If the owner finds the lessee in default of the lease, the owner has the right to recover possession of the horse immediately without any notice.

Old Trail Horse

Tricia has owned her 18-year-old trail master since she was 16 years old. She is expecting her first baby and anticipates she won’t have the time or the means to provide the horse the attention and care he needs for the next few years. Tricia doesn’t want to sell her horse, so she leases him under the following conditions:

• The initial lease period is two years, after which time the lease will automatically renew month-to-month. 90 days’ notice is required from either party to terminate the lease.
   
• At the termination of the lease, the lessee will be responsible for ensuring the horse is current on all vaccines and possesses a current negative Coggins test. The lessee will be responsible for delivering the horse to the owner.
   
• The lessee is not obligated to pay the owner fees for use of the horse.
   
• The lessee will be responsible for providing and financing all care for the horse. Decisions regarding veterinary and farrier care will be at the lessee’s discretion, made in conjunction with advice from the attending veterinarian and farrier.
   
• The owner retains the right to visit and ride the horse during mutually agreed upon times.
   
• Once either party has given notice of termination, the owner retains the right to show and/or ride the horse for prospective lessees or purchasers with 24 hours’ notice to the lessee.

Lesson Horse

Lynne runs a lesson stable, but not all of her horses are utilized in lessons every day. To augment her profit and keep her horses in regular work, she offers some of the lesson horses for lease to students at her barn. Lynne’s lease agreement specifies:

• The horse must be kept on the owner’s farm.
   
• The owner retains the right to make all decisions about care the horse receives.
   
• The owner provides and pays for all care the horse receives.
   
• The lessee may use the horse only on days the horse is not being used in lessons.
   
• Only the lessee may ride or otherwise use the horse.
   
• The horse must be ridden only in the tack and equipment provided with the horse.
   
• The horse may not be jumped over fences higher than two feet.
   
• The horse may be trailered to trails or shows within a 25-mile radius.
   
• The lessee pays the owner a fee of $250 per month to use the horse, payable by cash or check on the first of each month.
   
• The lease automatically renews on a month-to-month basis with 30 days’ notice if either party wishes to terminate.

Competition Horse

Jeff is an amateur event competitor. He will be relocating to Spain for at least 6 months for his job and cannot take his horse with him. Jeff wants his horse’s training to continue in his absence so he can resume competing when he returns. Jeff’s lease agreement specifies:

• The term of the lease is six months with the option to renew for an additional six months if both parties agree.
   
• The horse must be housed at the barn where currently boarded.
   
• The boarding barn manager makes all decisions regarding care and provides care to the horse.
   
• The lessee pays a fee of $400 per month for use of the horse.
   
• The lessee pays all horse care costs except for board; the owner pays for the horse’s board. The barn manager makes payments for horse care received directly to the vendors and provides the lessee with invoices for reimbursement.
   
• The lessee makes payments for fees and horse care costs to the barn manager by the end of each month.
   
• Only the lessee may ride or otherwise use the horse.
   
• The lessee must ride the horse in biweekly lessons with the owner’s trainer. The lessee pays the cost of the lessons.
   
• The horse must be ridden in the bridle and bit supplied by the owner.
   
• The lessee must use a saddle which properly fits the horse, as determined by a professional saddle fitter.
   
• The horse may be competed at events within a 200-mile radius of the boarding farm.

Crews v. Hollenbach, 751 A.2d 481, 488 (Md. 2000).

Maryland Agricultural Conflict Resolution Service (ACRS), Maryland Department of Agriculture.

Newhall, Ashley and Kathleen Tabor. “Generic Liability Waiver.” Center for Agricultural and Natural Resource Policy Form. Oct. 2014.

Tabor, Kathleen J.P. Esq and Jan I. Berlage, Esq. “Maryland Equine Law.” (Maryland: Go Dutch Publishing, 2011).

Tabor, Kathleen. “What is an Equine Lease Agreement?” Equestrian Professional.