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First Right of Refusal (in writing), Owner trying to sell without honoring

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  • #21
    Originally posted by Eclectic Horseman View Post
    But isn't it problematic to advertise something for sale that may not actually be for sale? If new buyer makes a full price offer, don't you have offer and acceptance and, thus, a contract with the new buyer? Isn't that why real estate brokers use the disclaimer "Under agreement. Back up offers accepted?"
    That is why outside of the horse world right of first refusal is something you pay for. Because the buyer can't accept new buyer's offer until they run it by original seller, and that can slow down a sale. So the original seller would have to pay for that privilege, and yes the buyer would have to tell the new buyer that they cannot accept the offer until they run it by their right of first refusal holder.

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    • #22
      Originally posted by Beam Me Up View Post
      That is why outside of the horse world right of first refusal is something you pay for. Because the buyer can't accept new buyer's offer until they run it by original seller, and that can slow down a sale. So the original seller would have to pay for that privilege, and yes the buyer would have to tell the new buyer that they cannot accept the offer until they run it by their right of first refusal holder.
      Well, I think that even in the horse world the seller may be paying for the right of first refusal through a reduced sales price. It is different than buying an "option to purchase" for a certain time which is usually paid for since it stops the seller from selling to someone else until the option is relinquished or expires.

      My question about a contract with the subsquent buyer was really about the right of the first buyer to advertise the horse for sale without any disclaimer. I am a long way from my law school education but my recollection is that if you offer something for sale and a buyer takes that offer at the full asking price, in theory you now have a valid contract for which the buyer could sue you for breach.
      "Against stupidity the gods themselves contend in vain" ~Friedrich Schiller

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      • #23
        There needs to be a penalty for violation of the right of first refusal clause written into the original contract at time of signing or it is a waste of time in my opinion. Obviously you run the risk that the buyer won't sign a contract with a penalty and therefore lose the sale but that is another discussion.
        McDowell Racing Stables

        Home Away From Home

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        • #24
          What Laurie said... next time I do one (I am only interested in doing it if I gave them the horse, otherwise I sold it and it is theirs) I will make the penalty the full value of the horse should the agreement be violated.

          But I agree with the others if he is okay with a third party then fine. And sadly you may well be right they don't want him to have it, otherwise if it were me I would have called right away when I decided to sell the horse. I wouldn't sign a buy back clause if I didn't want them to get the horse back.

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          • #25
            Originally posted by Eclectic Horseman View Post
            My question about a contract with the subsquent buyer was really about the right of the first buyer to advertise the horse for sale without any disclaimer. I am a long way from my law school education but my recollection is that if you offer something for sale and a buyer takes that offer at the full asking price, in theory you now have a valid contract for which the buyer could sue you for breach.
            My understanding is that the buyer would have to tell prospective new buyers that the horse has a right of first refusal on it (not sure if they have to post it in the online ad, but would have to tell them this before accepting their offer which as you say is a contract).


            In this situation, I can't tell if the original seller feels that their right of first refusal includes buying the horse back at the original price they sold for? Or if they are willing to pay the extra 1K? I'm guessing that the current seller didn't contact the original seller because they are hoping to get more $ than the original seller would find reasonable. If they are willing to pay the extra I'm sure the current seller would be thrilled to take them up on it.

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            • #26
              Originally posted by Guilherme View Post
              A contractual "Right of First Refusal" is enforceable in any U.S. jurisdiction that I'm aware of. The place you do that is in civil court. Your lawyer can explain how.

              Unless otherwise determined by contract a Right of First Refusal works like this:

              Buyer purchases goods from Seller and the contract says that if Buyer decides to sell in the future they must give Seller an opportunity to repurchase them by matching an offer from a third party purchaser for value. The contract should set out a notice requirement for Buyer and a performance time for the Seller. Failing in that, notice by regular or certified U.S. mail will suffice and Seller will have a reasonable time to act. The right does not arise until Buyer has an offer in hand from New Buyer to purchase the goods for a price certain. When that happens Buyer must notify Seller and Seller has a time to match the price offered by New Buyer. If Seller fails to do so Buyer may sell to New Buyer without restriction.

              Note that just advertising the goods for sale does not give any specific rights to Seller or obligations to Buyer. Only when New Buyer puts a valid offer on the table do these rights and obligations arise.

              If Buyer fails to honor their obligations under the Right of First Refusal then Seller may sue for damages.

              As a practical matter, these clauses are not worth much for fungible goods. For real estate or personal property with unique value they can be quite valuable but still must be enforced in civil court. That means hiring lawyers for $250/hr. and up.

              G.
              Professor Miles Foy (WFU Law) couldn't have said it any better!

              Bottom Line: either call the current owner and offer to buy back or have someone else do it. $1000 is not worth the legal fees!

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              • #27
                Good info on ROFR from an equine lawyer. Might be worth contacting her:

                http://www.equinechronicle.com/ridin...t-refusal.html

                What if the Agreement is Not Honored?

                What happens if a horse was sold subject to a contract with a right of first refusal, but the horse buyer failed years later to honor it and, instead, sold the horse without giving the former owner an opportunity to buy it back? Surprisingly, the law generally allows few options.

                As one option, the holder of the right of first refusal can sue for damages (money). The claim would be based on the argument that the person who was wrongly deprived of the horse and, as a result, he or she has lost a sum of money. Proving a claim of this type could be very difficult.

                Another option, if the problem is caught before the horse is sold to someone else, would allow the holder of the right to bring a lawsuit to halt that sale from taking place. This would be a lawsuit seeking an injunction and/or temporary restraining order so that the one with a right of first refusal can exercise his or her rights. This author has written about injunctions in the past.

                -
                Proud owner of a Slaughter-Bound TB from a feedlot, and her surprise baby...!
                http://i42.photobucket.com/albums/e350/Jen4USC/fave.jpg
                http://i42.photobucket.com/albums/e3...SC/running.jpg

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                • #28
                  My question: If you are selling your horse why even put in a "right of first refusal"? You're selling it, it's no longer yours......lease it if you don't want to loose it forever. I just don't get it? Also, as a buyer, I personally will never sign a bill of sale that has this clause in. I'd rather walk away. Once I buy a horse, it's mine.........not the sellers....mine!

                  ok, rant over!
                  Go Ahead: This is a dare, not permission. Don't Do It!

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                  • #29
                    Originally posted by SuckerForHorses View Post
                    She just bought the horse last year, and has not put any training into him. The ad even states that the horse has been out of work since summer. I'm not sure if there was a set price as a buyback price in the agreement.
                    If the previous owner wants the horse back then offer the full amount of the sale price. Or is the sale price the real problem?

                    I had a verbal agreement with the lady I bought my daughters horse from. we had to move a couple of years later and I let her know he was being put up for sale. She did in fact buy him back. As long as it was an honest sale on the part of your friend why is she reluctant to approach the seller?

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                    • #30
                      Originally posted by eclipse View Post
                      My question: If you are selling your horse why even put in a "right of first refusal"? You're selling it, it's no longer yours......lease it if you don't want to loose it forever. I just don't get it? Also, as a buyer, I personally will never sign a bill of sale that has this clause in. I'd rather walk away. Once I buy a horse, it's mine.........not the sellers....mine!

                      ok, rant over!
                      See my post #17 above. I agree that it is not a usual situation, but it can be a good solution in unique situations.
                      "Against stupidity the gods themselves contend in vain" ~Friedrich Schiller

                      Comment


                      • #31
                        Agreements are for the honest and therefore not really needed) - they tend to go south with the horse traders that are less than honest.

                        Actually, it is very common to have all sorts of side arrangements in the racehorse world, and, it seems, in the show world.
                        Proud member of People Who Hate to Kill Wildlife clique

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                        • #32
                          Originally posted by Eclectic Horseman View Post
                          But isn't it problematic to advertise something for sale that may not actually be for sale? If new buyer makes a full price offer, don't you have offer and acceptance and, thus, a contract with the new buyer? Isn't that why real estate brokers use the disclaimer "Under agreement. Back up offers accepted?"
                          No problems at all. The goods are for sale. An ethical seller will advise a buyer if there is a Right of First Refusal.

                          There is no contract until there is a meeting of the minds between two parties. There can be no meeting of the minds under a Right of First Refusal until the person with that right either exercises it (that is a "meeting of the minds") or relinquishes their right (either directly or by forfeiture for not acting within the time allotted).

                          When an offer has been accepted then we can say the real or personal property is "under contract." Backup offers may be accepted at this point. I suspect, however, that they are more common in real estate than horse sales.

                          G.
                          Mangalarga Marchador: Uma Raça, Uma Paixão

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                          • #33
                            Originally posted by SuckerForHorses View Post

                            The previous owner DOES want to buy the horse back, but is afraid if he contacts the person currently trying to sell (the current owner, the one with the contract), that she'll "disappear" while trying to sell the horse.
                            The current owner/seller won't disappear. She wants the money from the sale.

                            Comment


                            • #34
                              Some folks are not very organized - is it possibly that the current owner has lost the contact info for the origional owner? Either way, I would make a call and just offer the buyback at the original price - and if the owner says no, then tell them to call if they chage their mind. The horse market is VERY soft right now, so you might just get a call when the board bill is due again.

                              When I sold my first horse, I was interested in what happened to her after she left me. When I met with the purchaser to sign contracts and exchange money and papers we had a chat, and I mentioned that while I did NOT put a clause in the contract becuase they are so rarely honored and I didn't want to cause hard feelings - that I would definitely want to know if she was to sell her later on. We agreed to stay friends on Facebook.

                              She did send me an offer to buy the horse back about a year later, at 2x her original price. At that time I politely declined as I was not in a financial place where I could shell out the money, but I was glad to know the horse was on the market again (where she stayed for 2 more years, finally selling for the same price I sold her for years ago....).

                              In my case - I didn't REALLY want the horse back, we were a poor match - but I did (and still do) feel responcible to save her from the meat truck if it should ever come to that. I am in touch with her current owner as well, who takes excelent care of her.
                              www.felixfjord.blogspot.com

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                              • #35
                                how about this:

                                The former owner picks up the phone and calls current owner/seller

                                'uh, I saw Dobbins is up for sale, what's the poop?'

                                Instead of being sneaky and covert and such things.

                                Comment


                                • #36
                                  Originally posted by eclipse View Post
                                  My question: If you are selling your horse why even put in a "right of first refusal"? You're selling it, it's no longer yours......lease it if you don't want to loose it forever. I just don't get it? Also, as a buyer, I personally will never sign a bill of sale that has this clause in. I'd rather walk away. Once I buy a horse, it's mine.........not the sellers....mine!

                                  ok, rant over!
                                  Because as a small breeder, who loves the foals and young horses I have produced, I would certainly like the chance to get one of them back if they either just didn't work out for a new owner, or were injured and rendered unfit to ride and therefore possibly in danger. That's why.
                                  We're spending our money on horses and bourbon. The rest we're just wasting.
                                  www.dleestudio.com

                                  Comment


                                  • #37
                                    Originally posted by Far_North_Equestrian View Post
                                    Some folks are not very organized - is it possibly that the current owner has lost the contact info for the origional owner? Either way, I would make a call and just offer the buyback at the original price - and if the owner says no, then tell them to call if they chage their mind.
                                    This was my thought as well.
                                    According to the Mayan calendar, the world will not end this week. Please plan your life accordingly.

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                                    • #38
                                      I agree with the poster that said once I buy the horse, it's mine.

                                      I have raised several TB crosses as re-sale projects. A few have stayed in touch, which is great. A few I've lost track of, which is sad - but I sold them. One or two have been re-sold & I was given the first opportunity to buy them back. Which was a nice courtesy, but certainly not required.

                                      I'm currently starting to search for a new "short, fat, little pony". I.e. - probably a haflinger. I have by-passed a couple that I would otherwise have been very interested in due to the "rules" of buying it. Nope - not gonna happen.

                                      I understand the concept behind the idea - and that there are sometimes extenuating circumstances that it would be appropriate - but I am not willing to fork out $5k+ on a horse that I am tied to the previous owner to for life. Especially for the original purchase price, not when I will be putting time & training and possibly showing into it. As a courtesy, I would be happy to contact the previous owner if I wanted to sell and give them the opportunity to pay my asking price to buy it back. Heck yes - quick, uncomplicated sale .

                                      Comment


                                      • #39
                                        Find another horse ``` this seller is not someone I would care to deal with ~

                                        Too many crazy sellers ~ IMHO

                                        I simply try to avoid nut cases ~ makes life more pleasant.

                                        Would you buy a 'used' car from this seller ?
                                        Zu Zu Bailey " IT'S A WONDERFUL LIFE ! "

                                        Comment


                                        • #40
                                          My current horse I bought with a first right of refusal clause in the contract. The language is pretty loose.

                                          "Re-sale of the horse; Should the buyer decide to re-sell the horse, the Buyer agrees to first contact the Seller and offer the option to purchase the horse back. The price and all other terms of such a purchase would be at the sole discretion of the Buyer at the time. If the Seller decides not to buy the horse back, the Buyer may then sell the horse in whatever manner the Buyer chooses"

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