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A Multi-Jurisdictional Comparison of Equine Liens. Alison Rowe Bryan, Texas . “Possession is 9/10 of the law”. What is a Lien?. A right to take hold or sell property of a debtor to secure the payment of a debt. Creating a Lien. Statute Contract
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A Multi-Jurisdictional Comparison of Equine Liens Alison Rowe Bryan, Texas
What is a Lien? A right to take hold or sell property of a debtor to secure the payment of a debt
Creating a Lien • Statute • Contract • Vested by the Constitution of certain states
Stableman’s/Agister’s Lien Attaches to horses when one party leaves her horse(s) in the care of another for boarding or grazing. Lien holder may hold horses and sell horses to collect amount owed. Only applies to horse, not applicable to other personal property belonging to debtor
Texas Stableman/Agister’s Lien
Kentucky Stableman/Agister’s Lien
Florida Stableman/Agister’s Lien
Stock Breeder’s Lien Statutory Lien available to owners or managers of stallions to secure unpaid stud fees. Alternative- Most breeders hold the breeder’s certificate necessary to register foal until all stallion service fees are paid.
Texas Breeder’s Lien
Kentucky Breeder’s Lien
Florida Breeder’s Lien
Veterinarian’s Lien Statutory Lien available to vets to secure unpaid veterinary services
States with a Veterinarian’s Lien State with Veterinarian’s Lien
Texas Veterinarian’s Lien
Kentucky Veterinarian’s Lien
Florida Veterinarian’s Lien
Are holders of statutory liens secured creditors under the UCC? YES, IF… • The debtor was engaged in the horse business • Statutory lien does not require possession • Services provided in creditors “ordinary course of business”
“Agricultural Lien” The 2001 “Agricultural Lien” Amendment to the UCC gives rise to the argument that: Holders of statutory stableman’s, breeder’s and veterinarian’s liens hold UCC agricultural liens and thus are: Permitted to foreclose said liens according to UCC self-help provisions
What’s so Great About UCC Self-Help Provisions? Allow for private sale of horses 2) Are a known-entity to most judges
Under UCC adopted in Texasand Florida It is clear that… For UCC agricultural lien to apply, debtor must be engaged in “Farming Operation”
UCC adopted in Kentucky includes a special “Equine Interests” provision in its definition of “Farm Products” 1) Livestock, born and unborn 2) Equine interests (interests in horses, mares, yearlings, foals, weanlings, stallions), whether or not debtor is engaged in farming operations
Texas Stableman’s Lien Cannot be an agricultural lien under the UCC because the statute requires possession
Conclusions: UCC self-help remedies are best not enforced against hobbyists who are not clearly in the horse business of raising, breeding, boarding, or grazing horses, absent a written agreement that the UCC enforcement provisions will apply.
Contractual Liens • Most commonly associated with a bank’s security interest in the horses • Bank obtains promissory note and security agreement with debtor and files a UCC-1 financing statement
Contractual Liens • Another context is in the written contract of a boarding stable, a veterinarian, or a breeder • Can contract with horse owners to create a lien by agreement on terms different than those provided by statutes
Judgment Liens • Judgment creditors may attempt to execute on horses as assets of a debtor • State personal property exemption statutes determine whether a horse is exempt from execution.
Judgment Liens Texas and Florida are notorious for being “debtors’ havens” Texas law provides that a debtor may potentially hold as exempt up to $60,000 worth of horses.
Auctioneer’s Liens • Florida, Texas and Kentucky do not provide auctioneers a statutory lien on horses put through public auction • HOWEVER… Most auction companies provide a security agreement in their conditions of sale covering each horse put through sale.
Registration Transfer Holds • A lien holder may request a “transfer hold” with the breed registry with whom the horse is registered to strengthen their lien. Very effective- many potential buyers do not do a lien search, but will not finalize sale if cannot transfer the registration with the breed registry.
Questions? Alison Rowe Equine Legal Services 1716 Briarcrest Drive, Suite 300 Bryan, Texas 77802 Phone: (979) 691-7333 Email: alison@alisonrowe.com