Lease commissions

[charlietoo]

Just wondering what is the standard lease commission for a trainer for an upper end lease. Trainer would be handling both sides. Thanks in advance.

[toomanyponies]

It will vary depending on trainer, but should be standard for everyone in barn. Lease commissions will be 10% to 15% of lease price. Some trainers charge both the lessor and lessee, some will split between the two.

If you have a buyout at the end,you will pay commission on your buyout too, should you choose to exercise it.

[findeight]

10 to 15% and, I dunno, trainer ought to only charge the leassor or it's kind of double agency.
Whatever...get it IN WRITING. BEFORE you decide on that horse.

[charlietoo]

Thanks for your input. I am told I need to do a 22% commission and a substantial tip to the barn personel. One more thing, who sets the insurance value of the horse. I was told that the insurance company would come up with a value. How does that work?

[InstigatorKate]

Thanks for your input. I am told I need to do a 22% commission and a substantial tip to the barn personel. One more thing, who sets the insurance value of the horse. I was told that the insurance company would come up with a value. How does that work?

Generally, the owner comes up with a value, and the insurance company asks them to substantiate it via previous purchase price, training prices, and show record. Using the standard lease price of 1/3 horse's value/year would also help substantiate value.

How much $$ are we talking here? 22% seems awfully high. There was a thread awhile back that advised NO commission for a lease if horse was staying in the barn. Idea being trainer was already benefitting from having a student paying board, lessons, showing, etc.

[charlietoo]

The horse would stay with trainer and do big shows. Trainer wants the leesee in the barn so is using this horse to lure her in. Trainer and I had agreed on a value for the horse, then trainer backtracks and says insurance fees may turn leesee off. Leesee wants to use a particular insurance company to insure. They say the insurance company will come up with a value they will insure horse for.It has been almost three weeks and stlill no value from insurance company ( this horse has been winning on A circuit) I thought they acted quicker than that.:confused:

[Long Spot]

The insurance companies I've dealt with have wanted an appraisal to come up with the value.

22% does sound high to me, especially since trainer is on both sides. And a tip to the barn personel? Why?

[InstigatorKate]

Sounds a bit suspicious to me. Trainer is getting what they want by getting new client into the barn. Sounds like 22% is also a good chunk of $$, not just a couple hundred bucks.

FWIW, when leasing out, I as the owner, insist on handling ALL the insurance requirements. That way, there is no doubt on who gets reimbursed if the policy kicks into effect, and no "lapsed" coverage because lessee "forgot" to send payment.

Only YOU can decide whether this is fishy enough to cut bait and walk away.

[toomanyponies]

To be clear - reputable professionals charge 10 - 12 or 15% of the lease value - to the owner of the horse or to the buyer of the horse, depending upon who they represent. I know a very BNT who has successfully justified for years, charging both the owner and the lessee a commission when the horse stayed in the barn - I know the rival BNT splits it between the two parties. Either way, I cannot believe trainer has the guts to ask for %22 !!!!! If she wants to charge each party, she can have at it. But you should only pay 10 - 15% of the lease price in the contract.

Regarding insurance, customarily the lessee pays it - in fairness, they should insure the horse for whatever you had it insured for previously. To ease things along sometimes I ask for the lessee to reimburse the owner for just the major medical & surgical portion - the owner maintains the mortality part - then the owner can insure the horse for however much they want, without imposing an undue burden on the lessee.

[charlietoo]

Thanks to all for your thoughts. When i questioned trainer about the commission he went off saying he would have to go to more shows that he normally would not do and that it would require much more work and that he deserved it and basically it was a deal breaker if i would not agree.:confused:

[Donna from IA]

Your trainer wants the lessee in the barn, and obviously wants to keep the horse in the barn - not the least because it's winning A circuit. He/she stands to benefit tremendously. He gets the lessee AND the horse stays. 22% is a rip off, and why the bonus bucks to the barn personnel? Also, I would set the value of the horse (I own it after all) and expect the lessee to pay all the insurance (incorporate into the monthly lease fee) as they are getting full use of the horse. If they balk, then maybe the trainer wants to cut his or her percentage. On the other thread, the general consensus was that the lease commission was payable if the trainer found the lessee at the owner's request. I started that thread and what I was really asking was what I should pay the trainer since without his effort and committment, the horse never would have been showable and leasable for beginner-intermediates.

[InstigatorKate]

Just to clarify. I meant that I (owner) handle all the paperwork regarding the insurance, and I like to keep payments in my name to ensure timeliness and discourage any confusion as to who the insurance pays out to. The lessee pays me back for the insurance.

Also, I believe horses valued over $50k are required to have a vet exam and appraisal before being insured.

[M. O'Connor]

The horse would stay with trainer and do big shows. Trainer wants the leesee in the barn so is using this horse to lure her in. Trainer and I had agreed on a value for the horse, then trainer backtracks and says insurance fees may turn leesee off. Leesee wants to use a particular insurance company to insure. They say the insurance company will come up with a value they will insure horse for.It has been almost three weeks and stlill no value from insurance company ( this horse has been winning on A circuit) I thought they acted quicker than that.:confused:

The way I handled insurance for the pony I used to lease is that I maintained the policy myself, prorating the charges for the premium and incorporating those into the lease contract as an one of the expenses that was the lessee's responsibility for the duration of the lease.

The insurance company already had the valuation of the pony, because it was a policy we just kept and renewed.

Not least of my reasoning was that to the insurance company, the client is the person paying the premium. In many lease situations, that is not necessarily the owner of the animal. Not only did I want to ensure that the payments were kept up to date, I wanted to maintain control of who the beneficiary would be (me) without adding any red tape to the process of leasing (asking the lessee to provide the owner with a certificate of insurance). If the lessee is due any funds resulting from a claim, it's easy enough to figure out percentages in advance of a crisis, and simply incorporate that into a lease.

Every deal is different, but the informal nature of so many of the transactions that take place in the horse business can lead to genuine misunderstanding at best, and outright graft/fraud/cheating at worst. So it's best to just list the stipulations covering every eventuality in a contract that can be reviewed by all parties, for instance, the owner, lessee, and agent(s). Commission(s) and who pays what can be handled as part of the contract itself, in a portion devoted to the distribution of all payable funds.

It is unnecessary to go as far as stipulating tips for the barn staff in a lease contract. Any tip, which by definition is never obligatory, is the repsonsibility of the trainer they work for, or the owner, or the lessee, but has nothing to do with the formal arrangement that exists between the directly concerned parties.

There shouldn't be anything in a contract that places one of the parties at a disadvantage--a good contract helps create a win/win/win situation for owner, lessee and trainer. Any percentage commission can be agreed to, but no party should feel they are entering into an unfair arrangement.

Based on the information you've provided, it doesn't sound like you are there yet.

[Ravencrest_Camp]

Thanks to all for your thoughts. When i questioned trainer about the commission he went off saying he would have to go to more shows that he normally would not do and that it would require much more work and that he deserved it and basically it was a deal breaker if i would not agree.:confused:

Commissions and other charges should have been agreed to before the trainer even started looking for a horse for you to lease, not after the fact. But I guess that's all water under the bridge now.

The trainer will be paid to go to any shows, he will be paid for any additional work he does with the horse, so how that has anythign to do with the commission is beyond me. The commission you pay should be for the work he has done in finding you a horse to lease, nothing else.

It all seems a little dodgy to me. IMHO you are getting screwed and will continue to get screwed in your dealings with this trainer. Run away, run away FAST.

[Long Spot]

The trainer will be paid to go to any shows, he will be paid for any additional work he does with the horse, so how that has anythign to do with the commission is beyond me. The commission you pay should be for the work he has done in finding you a horse to lease, nothing else.

It all seems a little dodgy to me. IMHO you are getting screwed and will continue to get screwed in your dealings with this trainer. Run away, run away FAST.

Exactly. Trainer will be paid well to go to the shows. We know trainer isn't going to waive the coaching fee, and all the other fees that go with a show stay.

This sounds dodgy to me too. At this point, Charlie, I'd be looking at other options. Even leases with a good contract that start of just great have the potential to go bad. This one has warning bells all over it from the get go. If you decide to go through with this, DO NOT let this person handle the insurance. Do it yourself and have it the cost payed back to you.

[BAC]

Thanks to all for your thoughts. When i questioned trainer about the commission he went off saying he would have to go to more shows that he normally would not do and that it would require much more work and that he deserved it and basically it was a deal breaker if i would not agree.:confused:

I think this trainer's demands would be the dealbreaker for me. And why is the barn staff getting tipped? The entire arrangement sounds fishy to me, I would walk away.

[JustJump]

Thanks to all for your thoughts. When i questioned trainer about the commission he went off saying he would have to go to more shows that he normally would not do and that it would require much more work and that he deserved it and basically it was a deal breaker if i would not agree.

I agree that much of what you have described has got red flags all over it.

When you say "he went off," do you mean he threw a fit? Or did he stomp off? Either way, sounds like a dealbreaker might be a good idea in the long run. I would not want to get involved with anyone that unprofessional.

[grandprixjump]

Thanks for your input. I am told I need to do a 22% commission and a substantial tip to the barn personel. One more thing, who sets the insurance value of the horse. I was told that the insurance company would come up with a value. How does that work?

One that isn't trying to make up for the 10 customers that aren't showing as much, just with your commission...

[charlietoo]

Thanks again to all for your wisdom. I will follow my gut and your sage advice.

[onelanerode]

I agree that much of what you have described has got red flags all over it.

When you say "he went off," do you mean he threw a fit? Or did he stomp off? Either way, sounds like a dealbreaker might be a good idea in the long run. I would not want to get involved with anyone that unprofessional.

My thoughts exactly. If you not paying him to act unprofessionally is a dealbreaker, then so be it. There are other trainers out there who don't need a flashlight and a search team to find some ethics and professionalism. You want to do business with one of those.

There is absolutely no reason for this person not to be able to sit down with you and explain, sans drama, why he thinks a 22% commission is justified. Not being privy to the specifics, I suppose there is a small chance that such a generous commission is warranted, but given that trainer "went off" on you for having the balls to ask, I would bet there's some shenanigans going on here. ;)

[grandprixjump]

The price is $1 for the lease, plus other considerations. I think most everyone could afford a $.22 commission...:lol::lol::lol:

I still can't believe someone would have the guts to even ask for 22%, let alone demand it!!!!!