If you own a horse that is boarded at a commercial stable or that is serviced by a veterinarian or farrier or if you have a mare that has been bred by another's stallion, you need to know something about liens on horses. Conversely, if you run a commercial stable or provide veterinarian, farrier or breeding services to horse owners, liens could be important to you.
What's a lien? A lien is a special type of property right. If someone has a lien on your property, they are a part-owner of your property. If you are purchasing a house or motor vehicle "on time" the lender (bank, finance company, or your mother-in-law) has a lien on the house or motor vehicle. That means that if you don't make all your payments on time, after going through some legal obstacles, the bank, finance company or mother- in-law can take your house or car and sell it. What is obtained from that sale can be applied to pay off the loan and expenses of the seizure and sale. If anything is left over (usually there is not) then you get what's left. That's a lien. Lien is pronounced "lean" as in the body-type goal of most people.
People would be more reluctant to lend money without liens to secure repayment and interest on those loans would be much greater to compensate for the increased risk of non-repayment. Just consider the difference in interest rate on your home mortgage or truck note payments as compared to the rate that is charged if you don't pay off your credit card balance on time. The former are secured by liens, while the latter is not.
What are possessory liens? The lien that exists on your house or car is not a possessory lien. You have possession and use of the property and the lender has a non- possessory interest in the property that infringes only a little on your use of the property. The lender will require that the property be insured in a certain way to make the loan more secure, but if the payments are made on time, the lien has no effect on much of anything except the ability of the owner to sell it.
A possessory lien is different. When you are broke and decide to pawn your best silver trophy, you actually give possession of the trophy to the pawn shop. The shop lends you money secured by the trophy. If you don't repay the loan by the due date, then the pawn shop will put the trophy up for sale and keep all the sale proceeds. That is a possessory lien. The creditor has the property while the lien is in effect and the owner does not. Another example of a possessory lien is if you take your truck to a garage for repairs, the garage can keep possession of your truck until you pay the repair bill. The garage is entitled to see the green of your money before releasing possession of the truck to you. It is not required to accept your promise that the check is in the mail.
Most liens that apply specifically to horses are possessory liens that secure payment for service on the horse.
What are service liens? Most people have some experience with contractual liens, such as house mortgages or car payment liens. When you buy the house or pickup, you agree to give the lender the lien to get the loan. But service liens are different. They are created by law rather than by agreement of the people involved in the transaction. When you engage in certain kinds of transactions, you enter "lien land" in the sense that under certain circumstances a lien can be placed on your property even though you did not specifically agree to it. The best example is a "mechanic's lien." If someone does work on your house and is not paid, he/she can file a mechanics lien on your property at the courthouse. That keeps you from selling the property until the debt is paid and the lien removed. It gets your attention!
Why are liens important to people who own or service horses? There are service liens that apply specifically to horses. Most, but not all, are possessory liens. If you own a horse or perform service on the horses of others, these liens are important to you because they either give you an edge in collecting a debt or impose a burden on your enjoyment of your equine property. Either way, you need to know something about them.
There are four types of liens that apply to horses: (1) agister's lien, (2) veterinarian's lien, (3) farrier's lien, and (4) horse breeder's lien. Almost all states have at least one type of service lien that could be applied to horses; some states have all four.
(1) Agister's Lien. The word "agister" means a person who permits another to graze livestock on his/her pasture, but it has also come to mean anyone who has possession of and takes care of the horses or other livestock of another, as by operating a commercial boarding facility. Almost all states provide for agister's liens to assist in collecting boarding bills.
If a person boards his/her horse at a stable and is not current on the board bill, the owner or operator of the facility is entitled to keep possession of the horse until the bill is paid in full. No court proceedings are required before this step is taken, which makes it particularly useful in collecting the bill--just give notice to the horse's owner that possession of the horse will not be relinquished until the bill is paid. If you want, you can insist on cash, certified check or money order if you are concerned about a bad check or that the person may stop payment on the check after taking the horse away.
While the horse is in your possession, you are required to care for the animal in a reasonable fashion, providing a reasonable and safe level of care. If the owner is having financial difficulties, which is usually the case, consider moving the horse to some less expensive but still safe and reasonable level of care (such as moving it from a barn to corral or pasture care) in order to show your good faith to the owner in working toward a solution to the problem.
What if the horse owner cannot or will not pay the bill, which keeps getting larger and larger as each month passes? First, try negotiating a resolution of the dispute. Unless you and the horse owner can work out an agreement, such as you get the horse in payment of the bill or the owner pays a reduced board bill, you are stuck. Depending upon your state, you can initiate proceedings to free the horse for sale at public auction, permitting you to apply the sale proceeds to the board bill. These proceedings can become complicated, although they do not necessarily require you to hire an attorney. If you can avoid the formal auction process, such as by agreement with the horse owner, that is a beneficial step, even if the board bill is only partially paid.
You are not permitted to simply sell the horse and apply the proceeds to the board bill. You have to go through legal proceedings under the laws of your state.
(2) Veterinarian's Lien. Statutes in many states give a possessory lien to veterinarians who have treated animals, including horses. These statutes permit vets to keep possession of the animal until the bill is paid in full. Like the agister's lien, enforcement by sale and application of the proceeds to the bill is governed by state law and the specific requirements of law, such as time restrictions, must be consulted.
(3) Farrier's Lien. In some states, statutes specifically give farriers, horse shoers, or blacksmiths liens on horses they have shod. These liens are possessory but also permit the farrier to seize the property later to assist in being paid for the service. Once again, the laws of the particular state must be consulted before action is taken.
(4) Horse Breeder's Lien. In some states, the owners of stallions have a lien on the foal that was conceived with semen from the stallion to secure payment of the breeding and related fees. In some of these states, the liens also include the mare that was bred. There are time limits, often a year, on enforcement of these liens. Sometimes, these liens are related to registration in state-wide breeding registries. Often the lien must be registered in a county clerk's office in order to be enforced.
Breeder's liens, unlike the others, are not possessory liens, since it is assumed that the pregnant mare is no longer in the possession of the stallion owner at the relevant times.
Importance of Following the Law in Your State. No particular procedure is required to exercise a possessory lien other than to notify the animal's owner that possession will not be relinquished until the bill is paid. That gives the agister or other service provider some leverage in collecting the debt. But if that doesn't result in an agreement for relinquishment of the horse for payment of the bill, the next step--selling the horse and applying the sale proceeds to the debt--can become tricky.
The laws that govern this matter differ from state to state. They require that the debt be unpaid for different lengths to time, ranging from 10 to 60 days, and after that specify different procedures for advertising and conducting the sale and applying the proceeds to the debt.
You can't just sell the horse by private treaty or public auction sale and pocket as much of the proceeds as needed to pay the debt. Harlan v. Lovett, a case from the Tennessee Court of Appeals in 1996, is an example of what can happen when a pasture owner just sells the property to pay the debt. Ms. Harlan leased 83 acres from Mr. Lovett for pasturing her horses. She paid rent for several months, but then failed to pay any rent for several more months. She would not respond to Mr. Lovett's telephone calls. Finally, Mr. Lovett sold the horses to a hauler who sold them at a sale. Mr. Lovett subtracted the rent due to him and remitted the balance of the sale proceeds to Ms. Harlan.
Ms. Harlan sued Mr. Lovett for the tort of conversion--exercising control over property contrary to the interest of the owner. She won and was awarded over $10,000 from Mr. Lovett and recovered possession of some of her horses in addition. Mr. Lovett said he had a right to sell the horses under the Tennessee agister's lien statute. However, the Court of Appeals held that the Tennessee statute applied only to a property owner who permits horses to be pastured on his/her property and not to a pasture owner who leases the entire pasture to another for that person to pasture horses. As a result, Mr. Lovett ended up learning a very expensive lesson about his state's agister's lien law.
For More Information. To find the liens in your state, you can consult the American Association for Horsemanship Safety Web Site. There you will find two collections of state laws dealing with liens on horses. The first--titled Liens for the Care of Horses--deals with agister's liens; the second--titled Liens for Services to Horses-- deals with the three other liens (veterinarian, farrier and breeder). The address of the web site is http://www.law.utexas.edu/dawson/. Near the bottom of the home page, you can find the route to these laws and then to the specific laws that apply to your state.