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Securing Board Payments

As New England horses and their owners flee indoors for the winter, one topic arises that deserves special mention: how to secure timely board payments. Paying the board charges is the bane of most horse owners, and the lifeblood of most farms. Though it hurts to write that check every month for the individual boarder, farms depend on timely payment to keep the lights on, the oats bought, and the stalls mucked. The extended consequences of failing to pay timely are not well understood by most owners and farm operators though. Here are some of the hidden problems that can arise on both sides:

For Horse Owners:

Under the laws of most states, farmers who provide agricultural services have the right to recover the fair value of those services via an agricultural lien. Though not every farm will qualify (for example, racing stables are typically not farms for purposes of filing an agricultural lien), many boarding stables would qualify, especially if they grow hay or keep other farm livestock such as cattle. The significance of being able to file an agricultural lien is that the farm operator does not need the permission of the debtor (that is you) to file his lien, and once filed, that lien gives the farm operator a security interest in the horse to cover the outstanding board charges. Though the farm operator would have to go to court to perfect his lien, at that point the chances are good that a court could authorize the farm operator to seize the horse and sell it to recoup the value of the services provided. Obviously, if the horse has significant value, this would be a shocking event for the owner, and something to be avoided at all costs. Under this method of repayment, the owner would be entitled to notice about the board dispute via the suit in court, and would have a chance to argue about the amount at that time.

Boarding stables can also secure their board arrangements by the board contract itself, and should do this in any event, in case the court were to decide that the stable was not a farm for purposes of filing an agricultural lien. The rights of the parties in that case have to be spelled out in the contract. Boarding stables should have their board contracts reviewed by an attorney, and provision to seize the animals for unpaid board should be a part of such contracts, and these contracts should include provision for attorney's fees and court costs in the event that the farm operator has to go to court to seize the horse.

For Farm Operators:

If the above formalities are not obeyed, and the farm owner moves to seize a horse without legal protection, then the farm operator could be liable for trespass to chattel and conversion in the event of a board dispute. A trespass to chattel is where someone interferes with the ownership rights enjoyed by the owner of personal property, whereas conversion is interference that rises to the level of theft. A lawsuit for either causes of action would be disastrous to the reputation of any farm, and could result in far greater losses in the form of fleeing boarders.

Failing to require timely board charges is the out taken by many farms. But allowing arrears to build up over time carries hidden dangers for farms, as farm operators become squeezed in a monthly bind causing a slow deterioration in the maintenance of the premises, usually showing up in the condition of farm fencing, and the outbuildings. This leads to a series of steadily increasing risks. For example, farm operators, if horses escape, are primarily liable for any damages caused by escaping animals. Dangerous conditions on the premises, such as caused by rusting nails and downed wire, could also cause the farm to be liable to those injured thereby, equine or human. Some farms can also try to cut costs by shorting on hay quality or quantity, or grain quality. Though more insidious, the condition of the animals at the farm, if deteriorating quickly enough, could give rise to criminal charges of cruelty to animals. Those who have ever tried to keep weight on an aging thoroughbred in winter, for example, know that loss of weight can occur even with the best of hay and feed available. Add a slipping hay inventory, and conditions are ripe for serious, though unintended, trouble.

The fix for all of these problems is to attend, at the front end, to the issue of timely board payments. Put it in the board contract, and spell out what happens in the event of late payments. With a little attention to detail, big trouble should NOT happen.

Kathleen A. Reagan, Esq. is an equine attorney practicing in Braintree, MA, available at www.kathleenreaganlaw.com, has developed a course in equine law at www.concordlawschool.com, and is co-founder and Vice President of QueryHorse, the largest horse information resource on the Internet.

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