Prepurchase Examinations–
Best Practices to Avoid Concerns
Whether you are a prospective owner, trainer, agent or veterinarian, the prepurchase examination process
is where a lot of things can go wrong which can cause a multitude of problems, and accusations,
later. This exposure is true whether the examination is for a purchase, a lease with a purchase option
or only for lease. In this article, we will briefly summarize some best practices from the various perspectives
of whomever you might be or represent in the purchase or lease transaction.
1.CONCERNS OF THE PROSPECTIVE BUYERS
OR LESSEE.
If you are examining a horse as the person
planning to own or lease a horse, there are key
considerations to keep in mind. Below are concerns
that frequently arise during the prepurchase
examination or prelease examination process:
• What disclosures as to the health and soundness
history have you and your veterinarian
received from the seller or lessor or their agent?
• What disclosures as to the health and soundness
history have you and your veterinarian
received from your own agent?
• What disclosures have been made from the
seller or lessor or their agent to your agent
or veterinarian as to the regular course of
treatment, maintenance, medication, medicine,
training and shoeing for the horse?
• Have you retained the services of a veterinarian
with little or no financial or business relationship
to the seller or lessor or their agent?
• Who recommended the veterinarian you are
employing for the examination?
• Have you informed the seller, their agent,
your agent and your veterinarian of the purpose
for which you are purchasing the horse
(i.e.: not just the discipline or classes, but
whether it is for investment, resale, use and
retirement by you, etc.)?
• Who is determining the scope of the prepurchase
examination? (i.e.: number and location
of radiographs x-rays)?
• Who is making the disclosures of the prior health
and soundness conditions of the horse to your
examining veterinarian?
• Did you receive a copy of the written prepurchase
Showing
examination before approving the
purchase or lease and closing the transaction?
• Once you purchase or lease the horse, what
disclosures will you be required to make to your
&insurance company? (to wit: the veterinarian’s
TRAINING certificate often poses questions as to past
history or conditions of the horse).
• Upon what information and upon whom will
you rely in making your disclosures to your
insurance company? (to wit: providing false
information to an insurance company could
40 www.EliteEquestrianMagazine.com the accuracy or level of detail that flows to you as
you make decisions. You should also save your
texts, emails, scans, photos and attachments.
You should document, by whatever written means
you can preserve, what people are telling you
about the history of the horse and about the prepurchase
examination or prelease examination.
That documentation may come in useful later.
2. CONCERNS OF AGENTS.
Agents in equine transactions are those who
represent a principal, usually for commission or
other compensation. If you are being compensated
by anyone in an equine purchase or lease
transaction, it is likely you are an agent. Often,
whether you were an agent, and for which party
or parties, becomes an issue. If you are working
for, or being compensated by, multiple parties to
a transaction, then you are a dual agent. Some
states, for example Florida, require disclosure
of your agency, dual agency, commission and
require consent of the buyer and seller or lessor
and lessee.
Because these general principals apply
to agents, as an agent, you have your own
perspective on the above set of bullet-point
concerns, which you should consider during the
prepurchase examination or prelease examination
process. As an agent, you should be mindful
and take care to note where information is coming
from, how it gets to you, and how you disclose
it to your principal. It is not infrequent that in a
purchase or lease dispute, someone says “I told
the agent” or “the agent did not tell me.”
If you are the prospective buyer’s agent, you
should insist on copies of all of the seller’s or lessor’s
veterinary records, or the contacts to obtain
them. You should then obtain those records and
make sure they get to your prepurchase veterinarian.
You must obtain a written prepurchase
examination from the veterinarian and send that,
along with the records, to the prospective buyer,
your principal.
If you are the seller or lessor’s agent, you
should be sure to disclose what you know about
the horse and make it clear, and document the
he
transmission of your information and provide e or
negate coverage or form the basis for a claim
against you).
• What form of purchase and sale contract, bill of
sale or lease have you used, where did that document
come from and who drafted it? (would
it be penny wise-pound foolish it you did not to
contact competent legal counsel to obtain ore
review the documents?)
• Do the documents memorializing the transaction
actually state what you believe the transaction
to be and accurately state all representations,
disclosures and disclaimers? (for example, what
disclaimers of warranties will you accept or are
being made? Read your documents).
• Do the transaction documents comply with the
law of the state here or foreign jurisdiction (E.U.,
etc.) where the transaction is occurring?
• Can you tell where the transaction is occurring
(for example: U.S. buyer, E.U. Seller,
purchase money paid to South America,
contract signed elsewhere)?
Without proper disclosure of the prior health
and soundness, a purchaser or lessee cannot
make an informed decision whether at all to
purchase, lease with an option or lease, and if so,
at what price point and with what disclaimers, exceptions
or conditions. You really are traveling in
the dark without guidance if you are not told what
has been going on with the horse and what the
program is to keep the horse healthy and sound.
Further, you may not appreciate the complex
business and financial relationships amongst all
of the parties to your transaction that might affect
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