Full loan arrangements are commonplace within the equestrian world. They allow someone to take on the day-to-day care and financial responsibility of a horse without purchasing it, while the legal ownership remains with the original owner.
For livery yard owners, however, full loans can create a potential complication. The person who signs your livery contract and is responsible for paying the fees may not actually own the horse.
This distinction is particularly important if the livery client falls into debt, abandons the horse or terminates their loan agreement but leaves the horse on your premises.
So, what happens if the person responsible for the livery fees is no longer willing or able to care for the horse, and the legal owner is someone else?
1. Understand Who Owns the Horse
When accepting a horse onto your yard, it is important to establish whether the person taking out the livery contract is the legal owner or has the horse on loan.
With a full loan, the loaner may be responsible for all the horse’s day-to-day care, routine expenses and livery fees, but ownership remains with the original owner unless it has been formally transferred.
Your livery contract will normally be with the person who has brought the horse onto the yard, not necessarily the legal owner.
This means that if the livery client fails to pay their fees, the horse is not automatically financial collateral belonging to that client. You cannot simply assume that you have the same rights over the horse as you might if the horse were owned by the person who owes you money.
Equally, the legal owner may have no direct contractual relationship with you, despite owning the animal that is being kept on your premises.
This can leave the yard in a difficult position if the loan arrangement breaks down.
2. What Happens if the Loan Agreement Ends?
There are several situations that could leave a yard owner with a horse but no clear person taking responsibility for it.
For example:
- The loaner falls into financial difficulty and can no longer afford the livery fees.
- The loaner abandons the horse or stops attending the yard.
- The loaner terminates the loan agreement and expects the owner to collect the horse.
- The legal owner ends the loan agreement but does not make arrangements to remove the horse.
- The loaner disappears or becomes uncontactable, leaving the yard to continue providing care.
Whatever the circumstances, the horse still needs to be fed, cared for and safely housed. The yard cannot simply stop providing essential care because the person responsible for the fees has failed to meet their obligations.
Without an agreement with the legal owner, you may find yourself trying to establish who is responsible for the horse, who should arrange its removal and who is liable for any outstanding costs.
3. Have a Separate Agreement with the Legal Owner
One of the most important steps you can take is to obtain the legal owner’s details and have them sign a separate agreement or undertaking when accepting a full-loan horse onto your yard.
This should acknowledge that the horse is being kept at the premises under a loan arrangement and that the person signing the livery contract is not necessarily its legal owner.
The agreement should establish what happens if the livery client can no longer meet their responsibilities or the loan arrangement comes to an end.
In particular, it should cover:
- The identity and contact details of the legal owner.
- Confirmation that the horse is on full loan to the contracted livery client.
- An undertaking from the legal owner to arrange the horse’s removal if the loan agreement ends or the livery client abandons it.
- Who is responsible for arranging and paying for the horse’s ongoing care while removal is organised.
- Responsibility for outstanding livery fees and any reasonable additional costs incurred by the yard.
- What happens if the legal owner cannot be contacted or fails to arrange collection.
The aim is to ensure that the yard has a direct point of contact and a clear route for dealing with the horse if the original livery arrangement breaks down.
It also makes the legal owner aware that their horse is being kept at your premises and that they may need to take responsibility for its removal if the loan arrangement fails.
4. Make Sure Your Livery Contract Covers Loan Arrangements
As well as obtaining an agreement from the legal owner, your standard livery contract should ask clients to declare whether the horse is owned by them or kept under a loan arrangement.
It should make clear that the contracted livery client remains responsible for paying the livery fees and meeting their contractual obligations, regardless of who legally owns the horse.
You should also require clients to notify you of any changes to the loan arrangement, including termination of the loan or a change in the person responsible for the horse.
It is important not to assume that an agreement between the horse owner and loaner automatically protects the yard. Your own contractual arrangements need to address the specific relationship between the yard, the livery client and the legal owner.
5. Don’t Assume You Can Retain or Sell the Horse
This is an important distinction for yard owners.
If a livery client owes you money, you may be entitled to pursue them for the outstanding debt under your livery agreement. However, if the horse belongs to someone else, you should not assume that you can retain, sell or otherwise dispose of the animal to recover those fees.
The legal position can be more complicated when the horse belongs to a third party who has no direct contractual relationship with the yard.
You should seek legal advice before taking any action involving the horse, particularly if the owner refuses to collect it or the animal has effectively been abandoned.
A properly drafted agreement with the legal owner can help establish responsibilities in advance, rather than leaving you to resolve the situation when a problem has already arisen.
6. Protect Yourself Before the Horse Arrives
Full-loan arrangements can work perfectly well, and there is no reason to treat them as a problem in themselves. However, it is important that yard owners recognise the potential complications and take steps to protect their business.
Before accepting a full-loan horse, make sure you:
- Establish whether the horse is owned or on loan.
- Obtain the legal owner’s full contact details and an emergency contact.
- Have the contracted livery client declare the loan arrangement.
- Make sure your livery contract clearly identifies who is responsible for the fees and day-to-day care.
- Obtain a separate written undertaking from the legal owner covering the horse’s removal and associated responsibilities if the loan arrangement ends.
A little additional administration at the beginning can save considerable time, expense and frustration later.
Ultimately, if you are providing livery for a horse that belongs to someone other than the person paying you, you need to make sure you know who the legal owner is and have a clear agreement about what happens if the person responsible for the livery can no longer fulfil their obligations.