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

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

    What do you do when you sell a horse (with a contract in writing) stating that you have first right of refusal if the horse is ever put up for sale, but the person you sold him to is actively trying to sell him (ads online with photos, craigslist postings, etc) without giving you the buy-back option?

    Its been confirmed through an e-mail response to the craigslist ad that its the same horse (thru a friend's e-mail address), and another ad has been found online for the horse. But the owner has not made any contact from the previous owner, the one listed as the person having the first right of refusal.

    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. Otherwise, why wouldn't she have just contacted him to begin with???

    What to do?
    "If you think nobody cares about you, try missing a couple payments..."

  • #2
    Just have someone else go and buy the horse. Simple. The truth is that when a horse is sold, regardless of agreements made at the time, all bets are off.
    "The captive bolt is not a proper tool for slaughter of equids they regain consciousness 30 seconds after being struck fully aware they are being vivisected." Dr Friedlander DVM & frmr Chief USDA Insp

    Comment


    • #3
      "First right of refusal" is basically an Honor Clause. People of deep integrity will honor it. Others won't. Can't truly be Enforced.
      <>< Sorrow Looks Back. Worry Looks Around. Faith Looks Up! -- Being negative only makes a difficult journey more difficult. You may be given a cactus, but you don't have to sit on it.

      Comment


      • #4
        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. Otherwise, why wouldn't she have just contacted him to begin with???

        What to do?

        Why is does the previous owner think that the current owner won't sell the horse back to them?
        Auventera Two:Some women would eat their own offspring if they had some dipping sauce.
        Serious Leigh: it sounds like her drama llama should be an old schoolmaster by now.

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        • #5
          I'm not a lawyer, but my understanding is that the new owner is under no legal obligation to honour a "right of first refusal". The legal owner has full rights to sell the horse to whomever they choose. The "right of first refusal" ends up just being an indication of potential interest in hearing about the horse if it comes up for sale down the line; it is not legally binding. The only way to ensure the horse comes back to you is to lease it, not sell it. Someone with real legal expertise will probably chime in soon to confirm or refute this.

          I'm sorry; it sucks. But unless there is bad blood between the former seller and the current owner, why not try to contact the owner? It's possible that they have forgotten about that clause, or are assuming that the former owner would no longer be interested. Is there a back story that makes you suspect that the current owner would go underground? If so, the former owner could always get a friend to act as his agent in the sale.
          I don't mind if you call me a snowflake, 'cause baby, I know a blizzard is coming.

          Comment


          • #6
            Well, I think that one could go to court to get an injunction to prevent the sale.

            Sending someone to buy the horse on your behalf might be quicker, and cheaper, depending on the sales price. I assume that your written contract has a guaranteed price (such as original sales price) in it? That might motivate the now owner of the horse to want to try to sell the horse at a higher price particularly if she has a lot of money into the horse in training.

            You should talk to an attorney. Price out getting an injunction, and see which will be more cost effective for you.
            "Against stupidity the gods themselves contend in vain" ~Friedrich Schiller

            Comment

            • Original Poster

              #7
              Originally posted by RockinHorse View Post
              Why is does the previous owner think that the current owner won't sell the horse back to them?
              The thinking is that if the current owner were open to doing that, she would've contacted him already, instead of trying to sell the horse elsewhere...
              "If you think nobody cares about you, try missing a couple payments..."

              Comment

              • Original Poster

                #8
                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 you think nobody cares about you, try missing a couple payments..."

                Comment


                • #9
                  An injunction is an option but that will require a lawyer to seek it and it may not be granted. For the money the original owner is probably better off just sending a straw person to buy the horse back. Even if the current owner is asking more than the horse is worth; it may still be cheaper than attorney fees.

                  Comment

                  • Original Poster

                    #10
                    The horse is advertised at $1000 more than the original sale price less than a year ago (with no additional training). I think he'll see if he can just get someone to buy the horse back for him and avoid the "what if" question of approaching her to ask about the first right of refusal agreement.
                    "If you think nobody cares about you, try missing a couple payments..."

                    Comment


                    • #11
                      A contract is a contract, and written terms certainly can be enforced. However, a right of first refusal doesn't necessarily mean that the original owner can buy the horse back BEFORE it's put up for sale...it may mean that the original owner has the right to match any other purchase offer that comes in. So the current owner COULD still comply with the agreement. They would have to contact the original owner and say "hey, John Doe, I have a buyer for Dobbin, and they're willing to pay me $2000. Will you match that?" and if John Doe says no, Dobbin goes off to the new owner. That's the refusal...you can refuse to match the offer.

                      Comment

                      • Original Poster

                        #12
                        Great point, Hinderella!
                        "If you think nobody cares about you, try missing a couple payments..."

                        Comment


                        • #13
                          Originally posted by Hinderella View Post
                          A contract is a contract, and written terms certainly can be enforced. However, a right of first refusal doesn't necessarily mean that the original owner can buy the horse back BEFORE it's put up for sale...it may mean that the original owner has the right to match any other purchase offer that comes in. So the current owner COULD still comply with the agreement. They would have to contact the original owner and say "hey, John Doe, I have a buyer for Dobbin, and they're willing to pay me $2000. Will you match that?" and if John Doe says no, Dobbin goes off to the new owner. That's the refusal...you can refuse to match the offer.
                          Correct, but it depends on the contact language. I have drafted some that state that if the original buyer intends to put the horse up for sale then the buyer must contact the original seller at the contact information provided, and inform the seller that she has the right to buy the horse back at the original sales price, if the horse is in its original condition, and if the horse's value has increased because of training/showing or because it is in foal, or if the horse's value has decreased because of increased age or soundness, and a price cannot be agreed on, then either party can ask for an appraisal to be paid for by the party asking for the appraisal. The orginal seller may then opt to buy the horse at the appraisal price or not.
                          "Against stupidity the gods themselves contend in vain" ~Friedrich Schiller

                          Comment


                          • #14
                            Originally posted by Eclectic Horseman View Post
                            I have drafted some that state that if the original buyer intends to put the horse up for sale then the buyer must contact the original seller at the contact information provided, and inform the seller that she has the right to buy the horse back at the original sales price, if the horse is in its original condition, and if the horse's value has increased because of training/showing or because it is in foal, or if the horse's value has decreased because of increased age or soundness, and a price cannot be agreed on, then either party can ask for an appraisal to be paid for by the party asking for the appraisal. The orginal seller may then opt to buy the horse at the appraisal price or not.
                            Hmmmm interesting.....
                            Draumr Hesta Farm
                            "Wenn Du denkst es geht nicht mehr, kommt von irgendwo ein kleines Licht daher"
                            Member of the COTH Ignorant Disrepectful F-bombs!*- 2Dogs Farm

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                            • #15
                              Interesting! Good to know.

                              Still seems the easiest would be to get a friend to buy the horse then sell it to you for a dollar
                              I don't mind if you call me a snowflake, 'cause baby, I know a blizzard is coming.

                              Comment


                              • #16
                                Originally posted by Eclectic Horseman View Post
                                Correct, but it depends on the contact language. I have drafted some that state that if the original buyer intends to put the horse up for sale then the buyer must contact the original seller at the contact information provided, and inform the seller that she has the right to buy the horse back at the original sales price, if the horse is in its original condition, and if the horse's value has increased because of training/showing or because it is in foal, or if the horse's value has decreased because of increased age or soundness, and a price cannot be agreed on, then either party can ask for an appraisal to be paid for by the party asking for the appraisal. The orginal seller may then opt to buy the horse at the appraisal price or not.
                                Each to his own, but there is no way I would ever sign a contract agreeing to sell a horse back to an original owner at the original sale price. I'd give a prior owner first choice at the price I intended to ask but nothing more.

                                The whole "change in value, let's get an appraisal" concept is just too dicey for me. You sell me a horse, it's mine. If someone wants to maintain that level of control they should keep it themselves or lease it out.
                                "Some people are born on third base and go through life thinking they hit a triple” – Barry Switzer

                                Comment


                                • #17
                                  Originally posted by mswillie View Post
                                  Each to his own, but there is no way I would ever sign a contract agreeing to sell a horse back to an original owner at the original sale price. I'd give a prior owner first choice at the price I intended to ask but nothing more.

                                  The whole "change in value, let's get an appraisal" concept is just too dicey for me. You sell me a horse, it's mine. If someone wants to maintain that level of control they should keep it themselves or lease it out.
                                  Depends on the circumstances. One of the ones that I used this type of language for was a thought to be unsound, unproven stud. Owner had lots of emotional attachment, but no way to stand him as a stallion herself. The buyer/breeder got a very discounted price for the stallion's bloodlines--but obviously, if he turned out to be impotent, she would want to unload him. What she couldn't do under the contract is send him down the road. Owner probably would not have bought him back if he was a successful stallion or his value otherwise increased.
                                  "Against stupidity the gods themselves contend in vain" ~Friedrich Schiller

                                  Comment


                                  • #18
                                    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.
                                    Mangalarga Marchador: Uma Raça, Uma Paixão

                                    Comment


                                    • #19
                                      Originally posted by Guilherme View Post
                                      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.
                                      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?"
                                      "Against stupidity the gods themselves contend in vain" ~Friedrich Schiller

                                      Comment


                                      • #20
                                        ^ Outside of the horse world that is what a right of first refusal is. It is something that the seller "purchases" at the time of sale and requires the buyer to present to them a 3rd party offer for them to match before accepting it. It costs money because it complicates the sale (jeopardizes situation with 3rd party).

                                        In the horse world is more often something like "notify if you plan to sell and give me first crack." I think this is often ignored for the reasons stated in the thread--the buyer wants to sell for more than they paid, and knows that won't fly with the initial seller.

                                        ETA: ^ was toward Guilherme

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