POWERFUL TOOLS FOR FEE COLLECTION
FOR TRAINERS AND STABLE OWNERS

As an owner of training and boarding facilities, you face collection problems just like all business people. Unlike standard business debt, which remains fixed and liquidated, you face accruing maintenance costs for feeding and boarding the animal until the dispute is resolved. Your proactive use of the agister’s lien or contractual security interest gives you the leverage needed to compel prompt bill payment when necessary.

The agister’s lien gives you an enforceable legal interest in the animal. Once perfected, the lien permits you to keep the horse until the lien is satisfied, or to sell the animal with the proceeds going towards satisfaction of the debt. Once perfected, the lien grants you certain priority interests over other creditors.

However, the agister’s lien is a slow, expensive process. You must hire an attorney to create and perfect the lien. Foreclosure requires a judicial hearing followed by a legal sale. You continue to incur legal fees, as well as ongoing maintenance costs for the animal.

An alternate safeguard is implementation of a contractual security interest in the boarded animal. Simpler from a legal and time perspective, the security interest is created by a contractual agreement by the owner. The owner identifies the horse as collateral for any sums due under the training or boarding agreement.. "Perfection" of the security interest occurs upon physical possession of the horse.

If boarding or training bills later go unpaid, you may utilize the contractual security interest in the horse to authorize sale of the horse without prior court approval. Even if you do not sell the animal, the threat of such a sale is generally sufficient to compel payment of the debt.

The security interest may be created through standard language in your boarding contract. A sample clause is included in this article. When executing the contract, have the horse owner place his initials directly by or beneath the clause to give it added emphasis. If a sale later becomes necessary, contact your attorney to verify the basis of your claim and the validity of the security interest. Your attorney should also advise you with respect to the necessary sales and notice procedures to be followed.

SAMPLE SECURITY CLAUSE
"To secure payment of all sums under this boarding agreement, the owner hereby grants the Farm a security interest in all horses described in this document. In addition, the owner authorizes the Farm and its agents to act as attorney-in-fact for the owner for the purpose of signing any financing statements or other documents which the Farm may, in its sole discretion, deem necessary or appropriate to perfect its security interest. Upon the failure of the owner to make payment within thirty (30) days following the receipt of a statement, the Farm may declare the owner to be in default hereunder and may exercise all rights which are granted to a secured party under (state) law." "To secure payment of all sums under this boarding agreement, the owner hereby grants the Farm a security interest in all horses described in this document. In addition, the owner authorizes the Farm and its agents to act as attorney-in-fact for the owner for the purpose of signing any financing statements or other documents which the Farm may, in its sole discretion, deem necessary or appropriate to perfect its security interest. Upon the failure of the owner to make payment within thirty (30) days following the receipt of a statement, the Farm may declare the owner to be in default hereunder and may exercise all rights which are granted to a secured party under (state) law."

About the Author