Equine Escrow Accounts

Nowhere do we see more issues arise in the horse world than those surrounding the sale/purchase of a horse.? Who among us doesn’t know of a horror story either by direct experience, or through a friend’

Pre-purchase exams have traditionally been handled on a hand shake and taking the seller at his or her word about the horse’s history. From the veterinary standpoint, we find it extraordinary that when we inquire about medical or lameness history during a pre-purchase exam, nearly every horse that we examine has ?no reported problems.?? (Of course, with some sellers it may be true, especially if they’ve only owned the horse for one year.)

If the proverbial ?no reported problems? is passed on from sale to sale, then the horse’s identity is virtually wiped clean each time.? That torn suspensory that took a year to heal’? Vanished!? Colic surgery? a thing of the past.

Common ?gone wrong? scenarios that we tend to hear about when horse sales go awry are:

1) The buyer notices that two or three days after they purchase the horse, it starts acting crazy.? Of course, the buyer often suspects that the horse was drugged during the pre-purchase and/or during test rides, but one never really knows unless they ran a pre-purchase drug screening by blood test at the time of the exam.

2) The horse gets to the new home and is lame.? Again, the new owner ponders whether or not the horse had any NSAIDS or pain killers on board during the test ride(s) or whether this is just a fluke coincidence and stroke of bad luck.

3) The horse delivered was a different horse than the one tried. Yes, this happens. The typical case is one in which the buyer goes Internet shopping for a horse overseas.? They never actually go to look at the horse. They just see a pretty picture and CLICK ? there goes the tax return.? This unfortunate occurrence is more prevalent with certain breeds, such as those in which all of the horses are the same color.? All black, or all gray, for instance.? Once the horse gets here and the money has been wired, tHere’s no effective way to send the horse back.? Plus, the buyer can’t easily sue the seller, because the seller is halfway around the world in a country that likely speaks a different language.

4) The ?Agent? is actually a ?Double Agent? for both the buyer and the seller and marks the horse up without either party knowing, just to make out like a bandit with, in some cases, thousands of extra dollars.

To avoid such nightmares, buyers are turning to the practice of equine escrow accounts. Quite simply, escrow agents act as impartial arbitrators in sale transactions.? They collect necessary documentation such as horse title and pedigree, owner and trainer information, veterinary records, prepurchase exam results, show records, etc.

An escrow account is one in which an independent?third party is responsible for disbursing the necessary documents from the transaction between participants and then disbursing the monies when all conditions to the transaction are met.? With escrow, the buyer will deposit money into an escrow account if both the buyer and seller agree to enter into a purchase agreement.? This deposit secures the horse by the seller?s agreement.? If the horse makes it through the sale process (the conditions of which can be decided by both parties with the escrow agent acting as a mediator and advisor), the money will be delivered to the seller when the horse is delivered to the buyer.

Escrow accounts aren?t expensive, which makes them plausible for even the lowest of purchase prices.? Some escrow accounts cost as little as $250.? For horses that are for sale for $25,000 or more, escrow accounts will generally cost 1% of the purchase price.

From the veterinarian?s point of view, escrow accounts make sense.? They secure the money (a relief for both parties), and they set a timeline to enforce a set of mutually agreed upon criteria that must be met before the sale can be complete.? This removes that sense of pressure (that many sellers and agents place on buyers and veterinarians) to complete due diligence.? All parties need time to think during the sale of a horse.

If an escrow account maps out ?what needs to be done when,? it can be of tremendous benefit.? Furthermore, it gives the buyer a chance to makes sure that the horse being delivered is the same horse, with no new lameness or behavioral issues.? It gives the seller a chance to see that the buyer is the right person to own the horse and that the home is the right environment.? Finally, it gives the veterinarian a way to comprehensively review all of the documents needed to make an accurate assessment of the horse.

Small escrow firms are popping up all over the United States.? When shopping for your next horse, consider using an escrow firm to complete the transaction. You can find one online or your attorney may suggest one for you. See related article?on pre-purchase contracts.

Grant Miller, DVM, Contributing Veterinary Editor

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