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Do You Really Need A Loan Agreement - YES!
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Do You Really Need A Loan Agreement - YES!

Sometimes an unexpected change in circumstances can mean that an owner can temporarily no longer spare the money or time for their much loved horse. An alternative to an outright sale can be to offer the horse for temporary loan or lease giving the owner the option to have the horse back when circumstances change. Loaning can also be a good option for someone who does not have the lump sum required to buy their own horse but who could otherwise afford to keep one.

Loaning can however be fraught with danger and problems for both parties (and the horse) and this is where a loan agreement comes in.

A written loan agreement is a legal document signed by both the owner and the loanee of the horse. The document sets out the terms under which the loan or lease has been agreed and details the responsibilities each party agrees to undertake during the term of the loan. In the event of any subsequent dispute between the parties, the loan agreement can be referred to for clarification. A copy should be kept by both the owner and the loanee.

Benefits for the owner

From the owner's point of view the most obvious benefit is the protection of the horse's welfare during the term of the loan. If at any point the owner feels that the horse is not being looked after properly as per the terms of the loan agreement, she can retrieve him as the loanee will be deemed to be in breach of contract.

Benefits for the loanee

If you are taking a horse on loan, it is important that you fully understand what is expected of you by the owner particularly in respect of costs. A written agreement can help to avoid any confusion over unexpected bills. The owner will probably expect to have visiting rights. This is perfectly reasonable but the loanee should also have some control over the regularity and duration of such visits and the loan agreement caters for this.

What should your loan agreement cover?

The precise contents of the agreement are clearly down to each individual owner and loanee and will to some extent be determined by the role the horse is intended to perform during the term of the loan.

First of all, enter full details of both the owner and the loanee including home addresses, telephone numbers and email addresses. Full details of the horse should be completed including a comprehensive description and diagram showing any distinguishing marks, white markings etc.

Note the date of commencement of the loan and the term it is to run for before review. Agree what will happen when the loan expires. Will the horse be returned to the owner or will there be the option to negotiate an extension to the loan if desired by both parties? You will also need to consider what will happen if either party needs to pull out of the agreement before its expiry date. What period of notice will be required? Should you include an emergency get-out clause and if so, what should the terms of this include?

If the owner requires references for the loanee before placing the horse in her care, these should be mentioned in the agreement.

Next, the following questions should be considered:

Where is the horse to be kept? Will he be stabled at livery or out at grass at the loanee's property? Does the owner require prior notification if the horse is to be moved?

If the horse is to be ridden, who has permission to ride him and for what purpose? The owner should specify if the horse is to be used for light hacking or dressage only and not jumped, for example. Is the loanee permitted to compete the horse and if so, does the owner require prior notification of this so that she may come and watch?

What visiting rights have been agreed? Does the loanee require prior notification of a visit? Will the owner require updates on the horse's progress and wellbeing during the course of the loan period and if so, how often and in what form?

Who is responsible for insuring the horse? What about any equipment or tack that comes with the horse – does the owner have their own insurance for this or is the loanee required to arrange suitable cover. What condition is the tack in when the loanee takes delivery of it?

Does the owner insist on a specific vet? Does the owner want to be notified in the event of any veterinary treatment being required and what is the procedure in an emergency?

Who is responsible for the costs of shoeing and is there a specific farrier to be used?

Are there any special conditions to be taken in consideration; for example medication or physiotherapy that may be required by the horse for the duration of the loan?

It should be stated clearly that the owner retains ownership of the horse for the duration of the loan agreement and that the loanee does NOT have permission to sell the horse or loan it to anyone else. If the owner decides to sell the horse before the expiry of the loan agreement, does the loanee have first refusal. If the horse is offered for loan with an option to purchase, is the price to be agreed at the commencement of the loan or at the end?

Finally, make sure both parties sign the agreement and have it witnessed by an independent third party.

Having had personal experience as both owner and loanee, I would very strongly recommend that anyone entering into such an arrangement insists on a written agreement.

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  1. PonyGirl
    Excellent advice, as always.
    1. autumnap
      Thank you. I'd be really interested to read a blog about what you do in your job. We don't generally see racehorses ponied down to post over here, unless they're US visitors at the bigger meetings. A day in the life of a pony girl would be really interesting ...! x
      1. PonyGirl
        I will definitely give that a try. I'll have to give it some thought first though, since I'll be writing a blog, and not a whole book. :D Thanks for the idea!
  2. Pippatassie
    A must read for horse owners and loaners.

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