1998Julie I. Fershtman, Attorney at Law. All rights Reserved

Know the Pitfalls Before You Leap

Julie I. Fershtman, Attorney at Law
Author of Equine Law & Horse Sense
(248) 851-4111


Banks do it. Credit Card issuers do it. Horses can be expensive, and buyers often want to spread out their payments over time. Should you, the horse seller, do it?

Whether you are a lending institution or a horse seller, the business of extending credit can be risky. The horse seller, the bank, and the credit card company have much in common when they agree to extend financing to someone -- all of them are undertaking a risk that the buyer will make payments faithfully and honor all obligations.

But that is where the similarities end. Banks and credit card companies protect themselves by demanding credit checks, financial disclosures, and detailed contracts before extending credit. Not so in the horse industry. Horse sellers, in sharp comparison, sometimes part with a horse merely on a handshake and with only a tiny fraction of the purchase price paid up front -- just minutes after meeting a total stranger who wants to buy their horse.

Installment payment disputes are common in the horse industry. As this author, an experienced lawyer, has learned, many disputes can be avoided when those who act like a bank are willing to think more like one, too. This article discusses common pitfalls of installment sales transactions and offers some practical suggestions for avoiding them.


What is an Installment Payment Arrangement?

In an installment payment arrangement, the horse seller and buyer agree that the purchase price can be satisfied through a series of payments (often called installments) spread out over months and sometimes even years. Where horses are involved, the arrangements differ. For example, some sellers will transfer registration papers before the final payment arrives; others will not. Some sellers demand most of the purchase price up front; other do not.


Problems in Installment Sales and Ways to Address Them

Problem: The Buyer Stops Making Payment

With installment payment arrangements, the most common risk is also the most foreseeable - the buyer might fail or neglect to pay. How can the seller avoid this? For starters, here are two simple ideas:

Problem: The Horse Becomes Injured, Ill, or Dies Before the Buyer Makes the Final Payment

What if the horse, while left in the buyer's care, becomes lame or sick? Even worse, what if the horse dies before the seller has been fully paid? When these unfortunate events occur, some buyers simply stop paying. Of the many ways to avoid the problem, here are two:

Problem: The Seller is Either Paid in Full or Has Repossessed the Horse -- But It Took a Fortune in Legal Fees to Get This Result

Installment sales arrangements can, and do, generate costly legal battles. Banks are always prepared when the time comes for legal action and often keep a staff of lawyers. In the horse industry, sellers often have very limited funds to hire a lawyer. Here are two options to address the problem:


Installment sales transactions have tremendous risks. Those who sell horses under this arrangement act like a bank - and would be wise to think more like one, too. All it takes is good advance planning an carefully-written contracts to make the transaction run smoothly for all persons involved.

This article does not constitute legal advice. When questions arise based on specific situations, direct them to a knowledgeable attorney.


About the Author

Julie I. Fershtman is an attorney with a law practice serving the horse industry.  In her 15 years as a lawyer, she has achieved numerous courtroom victories and has drafted hundreds of contracts.  An independent lawyer rating service gives her its highest rating for abilities.  She can be reached at (248) 851-4111.

Looking for good resources on Equine Law?  Ms. Fershtman's books are highly informative, easy to understand, and even easier to order.  MORE Equine Law & Horse Sense, the newest book, sells for $22.95 + $4 shipping and handling.  Equine Law & Horse Sense, the first book, sells for $17.95 + $4 shipping and handling.  Michigan residents add 6% sales tax.  To order, contact Horses & The Law Publishing at (866) 5-EQUINE, a toll-free number, or send check or money order to Horses & The Law Publishing, P.O. Box 250696 Franklin, MI 48025-0696.