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Buyer Beware? Not Anymore!

As Featured in the Equestrian Catalog

By Barbara Pinnella

T. Randolph Catanese, or Randy as he is best known, is a well-respected attorney, and the founder of Catanese & Wells. His law practice has made equine law their expertise, with their focus being general horse law and equine litigation. Randy believes that the bulk of problems that occur between people in the business usually revolve around the purchase and sale of a horse.

“I have been doing this for 37 years,” Randy told us. “I would say that I have done hundreds of cases regarding purchases and sales around the whole country. So let me start with this; the biggest problem that I see is that people are very trusting, and that’s problem number one. I think people need to be more business-like when dealing with the purchase of a horse, or even the sale of a horse. They need to be more careful as to how they do the transaction.”

Catanese pointed out that in the horse business, due to the nature and character of it, nobody really wants to do that, because people are having fun and it’s a sport. The last thing they want to do is treat it like a business.

“But because they don’t do that, that’s when the problems happen,” he said. “I had a client one time buy a horse and wire almost $800,000 to Germany to somebody that they trusted and had worked with before. The horse comes from Germany to California, and when it gets here it’s not the horse they thought they were buying.

“So when the person comes into my office and they say, ‘Hey, I need to get my money back, they sold me a horse I didn’t want.’ I ask if they had any emails. ‘No.’ ‘Do you have a written Bill of Sale?’ ‘No.’ ‘Do you have anything in writing between you and the seller?’ ‘No.’ ‘Do you know who the seller is?’ ‘No.’ ‘Well, who did this?’ ‘Well, my friend was the trainer and they were over there and everything went through them.’ So you can only imagine the difficulties we had in trying to get that money back.”

So being too trusting is the first problem. The second thing of importance to Randy is regarding the health history of the horse.

“People believe that they do not need to know about the prior health history or the performance history of a horse, particularly in the hunter / jumper industry. People will say, ‘Well, I’m buying this horse based on the way it looks to me today. I’m buying the horse based on what the pre-purchase examination / veterinarian tells me today. I don’t really need to know about the past health history. I don’t need to know about past performance history.’

“In my mind that is very bad thinking and you are setting yourself up for failure and big disappointment when you buy a horse that way,” Randy stated emphatically. “So the second thing I would say is that people want to get as much information on the horse as they can before they buy it.”

Randy said that people need to get as much health history on the horse as they can, and he means written health history from the treating veterinarian. Do not just rely on the pre-purchase exam, because what the vets will say on the pre-purchase exam is, ‘Look, I can only work with what I have in front of me.’ And what will often happen is the vet will say that they did ask for a prior health history of the horse but they never received one, or that it wasn’t important.

Many times someone will buy a horse, only to find out after the fact that there was an undisclosed serious or significant health condition. For instance, a persistent lameness issue, or soft tissue or bone problem.

“So often the buyer will say that he relied on the pre-purchase exam. Then you talk to the veterinarian who did the pre-purchase exam and they will say that no one gave them any information and he just passed the horse on what he saw that day.”

As far as performance history is concerned, Randy suggests getting as much as that information as you can as well. That includes an FEI passport if one exists, as well as a USEF passport. He feels it is important to talk with the prior trainer or rider if possible, and look up the performance history in Europe or here in the United States.

“Many times that performance history is going to tell you stuff about that horse, for example, big gaps in competition. Well, if you saw that you could go to the seller and ask why that horse did not compete last year. What you need to do as a buyer is inquire; you need to be inquisitive.

“There are a lot of people in the horse business that have this idea that it’s the old law of caveat emptor – let the buyer beware. That doctrine is a doctrine from the 17th century; 18th century! It had no place in 20th century American law, and REALLY has no place in 21st century American law.

“The law today in all states, and particularly in states like California, Florida, Kentucky, New York, where there’s a lot of horse business is they expect full disclosure. And you as a seller are obligated to disclose what you know, and some of those states have very significant laws today that require a written Bill of Sale.”

Randy elaborated on that, stating that most of the time if the value is in excess of $500 you must have that written Bill of Sale. And there must be specific information included in it. In some states like Kentucky, Colorado and Florida, explicit information must be in there. For example, whether the horse has never had a problem before, or if it has had lameness issues, those are required to be included in that Bill of Sale That way there is no dispute about what was said or not said.

Catanese continued by saying, “This is still under point number two, which is investigate. The USEF wants to have a general rule that requires this; meaning that a rule at the USEF level mirrors if you will, the laws in some of these states; full disclosure and written Bill of Sale, for example.”

According to Randy there are 10 things that have to be disclosed, among them the name of the horse, the proper registration number, the dam and the sire, and the age of the horse (which is one that is frequently a questionable issue).

And what about that ‘as-is’ sale? That let’s everybody off the hook, right? Wrong! That too must be in the Bill of Sale, and there is another problem associated with that.

“Even if you are selling the horse ‘as-is’, people have the idea that they don’t have to say anything if the horse is sold ‘as-is’ but they do. For example, if there is a health history that is not disclosed and the seller signs the Bill of Sale with the ‘as-is’ clause, the buyer could say that he was fraudulently induced to sign that Bill of Sale with the ‘as-is’ clause. The buyer will say that if he had known the true health history, he never would have signed it.”

Randy’s third rule is to properly document the transaction. He believes it is not of great importance if you are buying a horse that is $500 or less or in some cases $2,000 or less. Documenting everything is not that imperative. If you are going to spend $50,000 and up however, that documentation becomes very, very important.

“Some of my clients spend a million dollars or more on a horse,” he said. “In cases like that you really want to be sure you document the sale. That is very important because if there is a dispute later on, the very first thing the lawyer is going to ask is, ‘Where is the written agreement?’ That’s what we want to start with.

“And again, in the horse business, this is just a character of the industry. All breeds and disciplines; Thoroughbreds, hunter / jumpers, dressage, polo horses, Arabian horses, Quarter horses, they are different types of horses but the attitude is very similar across all of them – it’s the horse business. My word is my bond, I’m gonna shake your hand, we’re good.

“And most of the time that works, it really does. But when there is a problem,” Randy reminded us, “it’s a BIG problem. And the assumption is that it’s always the buyer that is getting ripped off but that is not always the case. Sometimes the seller is a very honest seller. He sells the horse and the buyer damages the horse, or the buyer does something that they shouldn’t have done. Perhaps their expectations were not reasonable, and he comes back to the seller and tells him he needs to take the horse back.”

At that point the poor seller knows he sold a really nice horse that the buyer broke, either mentally or physically. It’s not fair to expect the seller to refund the money and take back the horse. But if there is no written contract, it is the buyer’s word against the seller. In the absence of that written agreement, the buyer is going to be in a much better position than the seller.

There have always been questions regarding commissions paid on a horse sale. Many states now say that if a commission of more than $500 is being paid it must be written and disclosed in the Bill of Sale, regardless of the sale price! And both buyer and seller must sign the paperwork acknowledging that they know the commission was disclosed to them.

“So in summary, my opinion is that those three things, remember to not be too trusting, investigate and help your veterinarian get as much information as you can, and properly document the transaction are the major things to remember. If you keep these things in mind, most of the time the buyer and the seller will have a better transaction and avoid litigation later. There is no amount of information that’s bad, the more information you have the better.”

And one more thing that is important to clarify here. Randy is not saying that the buyer needs to be in the middle of the transaction. What he does feel is necessary is that the buyers’ trainer and/or agent needs to make sure that the above-mentioned things are dealt with properly.