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HMF
Mar. 31, 2011, 07:03 PM
I know this subject has been discussed to death so please bear with me. I am familiar with the 1/3 value guideline for a lease fee but how do those familiar with leasing take into consideration the fact that the people want to lease the horse for a short period which happens to be the show season? Do you increase the monthly lease cost, if so how much?

Now let me add a twist, they would want an option to purchase at the end of the lease. I know this typically changes the fee so please tell me how you would handle both scenarios. I don't have specifics at this point on timeframe so let's assume 1-6 months.

It's always nice to hear how this works from both sides of the contract.

Thanks!

HMF
Mar. 31, 2011, 08:34 PM
Come on, I know you guys have some great thoughts on this topic!!

SnicklefritzG
Apr. 1, 2011, 01:19 AM
It might take a while to get some responses if people are busy at work and then riding, so I'd give it at least a couple of hours. (1.5 is not too much:) )

I've done leases before, but not when an option to purchase is involved so I can't comment on that aspect of your question. However, regardless of what you do, make sure you have a contract in place and that expectations are clear.

sar2008
Apr. 1, 2011, 08:22 AM
I know this subject has been discussed to death so please bear with me. I am familiar with the 1/3 value guideline for a lease fee but how do those familiar with leasing take into consideration the fact that the people want to lease the horse for a short period which happens to be the show season? Do you increase the monthly lease cost, if so how much?

Now let me add a twist, they would want an option to purchase at the end of the lease. I know this typically changes the fee so please tell me how you would handle both scenarios. I don't have specifics at this point on timeframe so let's assume 1-6 months.

It's always nice to hear how this works from both sides of the contract.

Thanks!

I don't increase the lease fee if it's during the show season.

If they wanted the option to purchase, they get the option to purchase. The lease fee remains the same and none of it goes to the purchase price.

HMF
Apr. 1, 2011, 11:02 AM
Thanks for the info guys!

SnicklefritZG, I understand things take time, I really just wanted to keep it off page 2 :)

chi.adult.hunter
Apr. 1, 2011, 01:36 PM
Question:
If you don't lease out the horse to these people, what is the horse going to do for the summer? Is the horse for sale? Are you going to 'have' show the horse if these people don't? I guess what I'm trying to get at is... how valuable is this horse's summer show season to you?

If it's a ready-to-go, everybody wants to ride it, show horse - I think you'd be warranted in charging a premium over the 1/3 value scenario. However, if this is a sale horse that is going to have to be campaigned anyway (on your own dime), then you might not have as much leeway.

Also, have you considered writing up a lease contract with a 'right of first refusal' clause? In this way, the horse could remain accessible to other buyers during the lease. If another buyer is found, the lessee would have right of first refusal to purchase. Should they pass, then they have a designated amount of time (usually 30 days) to wrap up the lease and send the horse onward to the purchaser. This might allow you to collect some real benefit of having the horse leased during show season, without actually having to charge the lessee a higher lease fee.

TheBarnRules
Apr. 1, 2011, 02:37 PM
Question:
If you don't lease out the horse to these people, what is the horse going to do for the summer? Is the horse for sale? Are you going to 'have' show the horse if these people don't? I guess what I'm trying to get at is... how valuable is this horse's summer show season to you?

If it's a ready-to-go, everybody wants to ride it, show horse - I think you'd be warranted in charging a premium over the 1/3 value scenario. However, if this is a sale horse that is going to have to be campaigned anyway (on your own dime), then you might not have as much leeway.

Also, have you considered writing up a lease contract with a 'right of first refusal' clause? In this way, the horse could remain accessible to other buyers during the lease. If another buyer is found, the lessee would have right of first refusal to purchase. Should they pass, then they have a designated amount of time (usually 30 days) to wrap up the lease and send the horse onward to the purchaser. This might allow you to collect some real benefit of having the horse leased during show season, without actually having to charge the lessee a higher lease fee.

This.

I would put the purchase price in the contract (so there is no question once the purchase comes about), specify that none of the lease fee will be put towards the purchase price, and also require the lessee to have insurance on the horse for the full length of the lease - including the time between their exercise of their right of first refusal and the horse actually being sold. You should also have something in the contract about what happens if the horse is injured during the lease term.

HMF
Apr. 1, 2011, 06:23 PM
Thanks for the info, so great idea there! To answer your questions this is a somewhat ready-to-go horse, I still consider her green but she has been showing and winning already in the local and A shows with a previous leasee. She is for sale, but she is also my only horse that I have available to show, so if she doesn't sell she will come home and I will show her through the summer.

Thanks!

xxreddxheaddxx
Apr. 4, 2011, 10:02 AM
ok for a year it is abt 1/3 of the price, so if youre doing it for 6 months they cut it in half. unless the owner still thinks the lease is worth the 1/3 for 6 months. lease to purchase is just like slowy making mayments... so over the course of your lease you would eventually have paid for the entire price.

whatnow
Apr. 4, 2011, 10:34 AM
Sometimes if it is a lease to purchase (the owner really wants the horse sold but the buyers want a sort of trial period) it is expensive.

I've known it to be 1/3 of the price of the horse for three months with only 75% going toward purchase of the horse.

Again, this was for a made horse ready to walk into the show ring in competitive divisions. The owner wanted to be compensated for essentially taking the horse off the market for those months. The buyer wanted to be absolutely sure that the horse was the right one for their family and were willing to pay for that trial.

Really, it depends on what you are trying to accomplish. It is a buyers market out there especially if the horse isn't winning on a regular basis.