Horses and the Law
The Stallion Lease

Disclaimer - This article is intended as general discussion and information on the topic covered, and is not to be construed as rendering legal advice. If legal advice is needed, you should contact an attorney. This article may not be reprinted or reproduced in any manner without prior written permission of the author.

“Three things I never lends—my horse, my wife and my name.” Robert Smith Surtees, “Hillingdon Hall” (1845)

It has become common for a breeder to lease a stallion and stand the stallion at the breeder’s farm. It is important in such a situation to have a lease, which clearly identifies the rights and responsibilities of the parties.

Every lease must clearly identify the stallion by breed, color, age, markings, name and registration number. In addition, the term of the lease must be identified from starting date to ending date. It is common practice for the lessee to be responsible for risk mortality insurance at an agreed upon value with the lessor listed as beneficiary.

All transportation and care costs, including feed, water, deworming, vaccinations, veterinarian and farrier, should be the lessee’s responsibility. The items discussed thus far are standard in most horse leases. The stallion lease, however, must cover situations not typically found in a standard lease. The remainder of this article will analyze provisions applicable to stallion leases.

Stud fees and number of mares to be bred are the crux of any stallion lease. Generally the lessee is permitted to breed a certain number of his mares and outside mares charging a fee for all outside mares. The fee is generally set by agreement between the lessee and lessor, or in the lessee’s discretion. This breeding fee is then split between the lessor and lessee as they can agree. Many stallion leases split the fee on a 50/50 basis, but there is no set rule. Further, the lessee is permitted to breed his mares at no cost.

The breeding fee charged on the number of outside mares is obviously critical, as it is here where both parties stand to make a profit. For this reason, the number of lessee’s mares and the number of outside mares should be set forth in the lease. It is not uncommon for a top stallion to have a total book of 75 to 100 mares or more for any particular breeding season.

The draft horse industry does not have any rules or regulations on the number of mares which can be bred, or the manner of breeding, except, in some cases, on embryo transplants. For example, Thoroughbreds must be bred by natural cover and are therefore limited in number of bookings according to Jockey Club rules and regulations. On the other hand, Standardbred stallions can breed by artificial insemination according to the rules and regulations of the United States Trotting Association, thus greatly increasing the number of mare bookings. All methods are permitted in the draft horse industry.

Another critical issue which must be addressed in the lease is who has the right to register the foals. Normally the lessor, or owner of the stallion, has the right to register the foals. However, this can be changed if the lessor agrees and it is a good idea to have that agreement in writing.

Should a stallion lease contain a live foal guarantee? Most do, but in a modified manner. The typical stallion lease should address this issue in terms of the lessor’s responsibility to rebreed a mare upon return of the stallion to the lessor. This requires a clause in the stallion lease which lessee must agree to spell out in his breeding agreement with outside mare owners. If a mare is not in foal after 45 days from last breeding, lessee agrees to rebreed the mare. If the mare does not foal after rebreeding, then there is no further responsibility on the lessee or lessor for further breeding.

The same clause should be used for a mare in foal, but who could not deliver a live foal, defined as standing and nursing at least 48 hours after birth. The lessee will once again agree to rebreed the mare but shall have no further obligation after the rebreeding.

What protection can be afforded the lessor if lessee does not make payments under the lease, short of a lawsuit and the time and expense associated therewith? I recommend that the lease include a Lessor’s Lien. This lien provides the lessor with a first lien on any foals produced from lessee’s mares bred to lessor’s stallion. This lien, however, would not apply to outside mare foals. Depending on the state you are in, this lien may need to be perfected under the Uniform Commercial Code and, thus, it is wise to check with a local attorney to determine if additional filings need to be made to perfect the lien.

If things just are not working out, can the lease be terminated before the ending date? Yes. The easiest way to terminate the lease before the ending date is if both parties agree and sign a release of any further obligation under the lease. The lease should also contain a clause whereby the lease is terminated if the lessee fails to timely pay the breeding fees as defined in the lease. Further, if a statement is rendered by a veterinarian that the stallion is not being cared for properly, the lease can be terminated. Finally, a stallion lease should include a clause that the lease can be terminated if the stallion is impotent or unable to breed.

Stallion leases should be carefully reviewed by all parties, and the parties should be certain that the terms and conditions are understood before signing. It is a good idea to have legal counsel either prepare or review the lease and explain the rights and obligations of the parties. Financially, much can be at stake. A good stallion can generate considerable breeding fees over his lifetime.

Enough legal talk–it’s time to hitch horses!

Ken is a practicing attorney in Myerstown, Pennsylvania, where a good bit of his practice involves negligence cases. Ken and his wife, Karen, own Sunny Hill Farm Belgians, and they have been exhibiting their six horse hitch for the past few years at most major shows in the east.