Your Horse and The Law: Why Do You Need An Attorney?
An article originally written for The Aiken Horse Magazine
“Horse people are good people.” I heard that often growing up with horses in Virginia. It was reassuring and gave us the sense that folks in the equestrian community could handle matters informally. However, the horse world has changed dramatically in recent years. There is far more potential liability and money at stake. A recent study by the University of South Carolina reported that the Palmetto state is home to over 73,000 horses and ponies. The equine sector of the state’s economy generates 22,500 jobs and produces an annual economic impact of $1,900,000. The equine community has grown up and trainers, owners, riders, breeders, barn operators and event organizers need to handle their business and legal matters in ways that reflect the new reality.
A key resource for meeting these challenges is an attorney who understands equestrian sport and business. An experienced equine law attorney will identify potential liability issues, help you limit risk, advise you on complying with state laws, guide you through complex insurance, business planning and employment matters, and provide practical advice on other important legal issues. Just as a horse and rider create a partnership to achieve success, an equine law attorney and his client form a team to prevent legal problems and resolve disputes.
Let’s take a look at some common legal issues that affect the equestrian community.
Barn operators regularly face significant business and liability issues from many sources. The first thing I recommend for my equine business clients is to establish an ownership structure that protects their assets. This usually means forming a limited liability company or corporation – or both, depending on the circumstances. Next, we develop written agreements that provide protection, clarity and predictability when working with riders, trainers, boarders, vendors and the public. Of course, one of the least costly and most important action items is posting proper legal notices on the property.
Most lesson barns have only riders sign a liability release. What about spectators like the rider’s parents or siblings who are around the barn? They can be considered “participants” in an “equine activity” and, if injured on the property, could bring a lawsuit against the barn owner. Did you know that a young child who is injured in South Carolina can wait until she is eighteen to assert her claim? Barn owners and trainers should obtain liability releases from adult riders, the parent or guardian of a minor student and all others who come to the barn with them. Keeping good records of lessons and releases is essential as they provide important evidence to defend many claims.
Written boarding agreements are vital for smooth operations. Beyond the basics – boarding services, payment and duration – they should address authorizing emergency vet treatment (and payment), emergency contacts, remedies for non-payment, damage caused by the horse/owner, medications and vaccinations, and rights to terminate the agreement for important rule violations. Anticipating serious events and putting a plan in writing may not only save a horse’s life, it can save your business.
Equestrian industry employment and immigration issues. Is a trainer based at a lesson barn an employee or an independent contractor? If considered an employee, the owner is likely liable for the trainer’s injuries, negligence and business transactions. As a business owner, unless you want to assume those risks, you need a clear independent contractor agreement. Similarly, if you hire foreign nationals, you need to obtain proper employment documentation to protect you from potential criminal and civil liability.
Trainers have legal situations that need special attention. In addition to the employment issues, another risk area involving trainers is horse leasing and sales transactions. Trainers need to firmly establish who they represent in a transaction to avoid conflicts of interest and potential liability. No one wants to face accusations by a disgruntled buyer or seller over a lack of transparency. A trainer can protect her reputation and her business with clear agreements that anticipate conflicts, shield her from liability and provide a remedy for disputes.
Liability exposure for event organizers, managers and sponsors. Can liability be extended to an organization’s board members, officers and owners? There are several ways to guard against claims arising from an equestrian event, but one area is often overlooked and neglecting it can be devastating. If an organization fails to operate in compliance with state law on a day-to-day basis or ignores its internal governance documents such as bylaws, the organization and its leaders may be held personally liable for injuries and damages. You can avoid these threats by collaborating with your attorney to conduct business properly and insulate your board members, officers and owners from “piercing the veil” lawsuits that target their personal assets. Preventive action can reduce these risks and facilitate successful events.
Horse owners using private land have some particularly tricky issues. How do you handle requests by friends or relatives to ride your horse or to keep their horse at your farm free of charge? Asking them to sign a release can be awkward, but you should do it, if you want to be protected. Should you post a legal warning to protect you from liability even though you are not operating a business? Yes! Does your homeowner’s insurance cover equestrian activities? Should you form a limited liability company or corporation to better protect you from personal liability? If you plan to declare your horse farm a business, are you taking the necessary steps to enable you to deduct losses for tax purposes? These challenges require thoughtful planning and reviewing key documents to find the right answers. An equine law attorney working with your insurance and tax advisors can provide you with a good plan.
Buying, selling or leasing a horse? Get it in writing! Given the significant costs of horses involved in every discipline at virtually every level, the traditional “handshake” deal is, unfortunately, a formula for disaster. Nonetheless, I see situations where a client’s new horse is diagnosed with a serious health problem that was not disclosed by the seller/broker/trainer and there is no Bill of Sale or written contract. Resolving these disputes and similar situations can be expensive. You can avoid these problems and save money by using thorough written purchase or lease agreements. Essential terms include price and financing, details on the horse and her performance capability, trial period terms, transportation and the risk of loss before purchase, veterinary history, pre-purchase exams, insurance, all relevant disclosures about the horse and the parties involved, and a Bill of Sale. This level of detail and transparency gives the participants confidence in the process and minimizes the potential for disputes.
Participation in our sport carries a certain amount of safety risk, however, you can significantly reduce your legal and financial risks by working with an experienced equine law attorney. Good planning and practical business agreements can protect your assets, limit liability, promote transparency in your dealings, and manage employment and business matters more effectively. By taking these necessary steps, “good horse people” can keep equestrian activity growing and improving in South Carolina for years to come.
Jim Ritchie is head of Ritchie & Associates, LLC and an avid horseman. He represents business and equine law clients across the Carolinas. For more information visit tryonequinelaw.com or call 864.527.5955.
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