PAPERS, PAPERS - WHO HAS THE PAPERS?

Two months ago you bought the horse you always wanted. Your goal was to win championships in breed-recognized horse shows. Now, however, it appears that a terrible problem has ended your plans: The seller will not transfer the horse's breed registration papers into your name. Your arsenal of weapons is limited -- there is no written sales contract, but you recall the seller promising to send you the horse's papers "right away" the day you gave him your money (a promise he now denies ever making). What can you do?

This article explores the buyer's legal rights against sellers who fail or refuse to provide breed registration papers.

What are the Buyer's Options in this Scenario?
In the scenario above, the buyer has a few legal options. However, none will be easy and none will be cheap. here are some of them:

* Sue the seller to fulfill (or to "specifically perform") his promise of transferring the horse's papers into your name. This option, although it seems easy, can be very complex. Courts may be unwilling to grant this remedy, known as "specific performance," unless you can convincingly prove: (1) the horse is unique, and only with its registration papers in your name will it have value; and (2) there is no other legal remedy, aside from getting the registration papers in your name, that will adequately compensate you in this situation. The sad fact is, if the seller lacks registration papers and cannot convey them to you, you are left to pursue other legal options.

* Sue the seller to nullify ("rescind") the sale, take back the horse, and compensate you. In a case of this type, you would assert that the seller sold the horse to you through a fraudulent deception -- he represented that the horse had transferable breed registration papers, when, in reality, he either had none or could not transfer them. A lawsuit of this type tries to restore everyone's position as though there had never been a sale. That is, you would demand, at a minimum, that the seller take back the horse, refund your full purchase price, and reimburse you for all expenses you incurred in keeping the horse.

* Sue the seller to recover the difference between the horse's value with papers (which you thought you had bought) and the horse's value without the papers (which you have). This option makes sense if you want to keep the horse, and you would seek to recover the overpayment. Pursuing this option may require you to procure expert testimony to compare the horse's value with and without breed registration papers.

* Some other options. Other options against the seller may include a lawsuit alleging a violation of an applicable state's consumer protection/deceptive trade practice law, violation of provisions in a state Uniform Commercial Code, and more. Because of the complexities in the law, and the variations among the many states, your lawyer can help you explore these and other options.

Whose Side, if Any, Will the Breed Registry Take?
If you called or wrote to the horse's breed registry, explained your situation, and asked it to transfer the horse's papers into your name, would the registry comply? Unlikely. Breed registries, because of the risk of being sued if they make a hasty judgment, have little incentive to honor your request. In the example above, the chance for a mistake by the registry is simply too great since the seller gave you no signed transfer of ownership form, and you do not even have a written sales contract proving that you are the buyer.

Over the years, breed registries have received requests for papers to be transferred without the former owner's written permission. These requests arise from a wide variety of settings. For example, a horse's half owner may claim that the partnership has ended and ask to change the horse's ownership into his or her name alone -- leaving out the "former" partner. Or, someone may be bought a horse from a boarding stable that claimed to be holding a "stablemens lien sale" (due to the horse owner's unpaid boarding fees) but failed to follow the procedural requirements of the stablemen's lien law.

So what will a breed registry likely do in response to these requests? Generally, it will wait until the legal issues have been fully resolved in a court of law and after the court has issued a legally-binding and enforceable ruling. In limited situations, the registry might only want you to produce an attorney's opinion letter explaining how you are legally entitled to receive the papers based on the applicable state's law.

Suggestions for Avoiding this Problem in the Future
As unfortunate as the scenario is, it can be avoided. Here are some suggestions:

1. Insist on a written sales contract. Written sales contracts might not eliminate every sales dispute, but they can narrow disputes substantially. As this author has written in her book, Equine Law & Horse Sense, a simple sales contract can take as little as five minutes to write. In particular, two essential ingredients of a sales contract, that would have prevented this scenario, are: the seller's warranty that he owns the horse and is legally capable of transferring ownership to the buyer, and a requirement that the seller will immediately transfer papers to the buyer in a form required by the applicable breed registries.
2. Ask to see the horse's current breed registration papers. Maybe the seller lacks papers; maybe the horse has never been registered anywhere. Before parting with your money, demand to see the papers now.
3. Call the breed registry. Some breed registries might help you identify the horse's last recorded owner of record. For example, the American Quarter Horse Association Records Department will provide this information. This may help confirm the seller's interest in the horse, but keep in mind that there might be other (non-recorded) owners of the horse.
4. Demand proof of an agency relationship from the "seller." What if you are not directly dealing with the horse's owner but rather with someone acting on the owner's behalf? When this occurs, be sure to ask plenty of questions. Although the person with whom you are dealing might call himself the sales agent, the law may impose a duty on you to confirm this. Under the circumstances, you may be required to find out whether an agency relationship truly exists and whether the agency has authority to sell you the horse. When in doubt, ask to speak to the horse's owner and demand that he or she confirm the agent's authority to make the sale. Also, consider having the horse's owner sign the sales contract.

This article does not constitute legal advice. Direct your questions involving specific matters to a knowledgeable attorney.

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