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Question - Owners & Leaseholders

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I've bred a horse, and last year leased half of it to 5 x 10% shares - or to be more exact, I leased the whole thing to 1 x 50% and 5 x 10% shares. I am the racing manager of the lease.

The lease is until 30Jul21, with no right of purchase, or any other residual rights.

The horse in question looks like having some ability, and we've had initial enquiries, nothing concrete - but it doesn't matter, he's my last horse* and I'm not selling.

My question is, what rights, if any, do the leaseholders have if a ridiculous offer does come in? What if I end up selling - what are their rights? Does the lease go with the horse?

I had been told that if the horse is sold while the lease is live, you come to an 'arrangement' with the leaseholders - that sounds a bit loose though, and if true, I assume they can't force a sale?

Any thoughts? For the record, these people are friends and I want to do the right thing by them - but it's best to have these conversations early (ok, I'm too late for 'early', but better late than never).

 

 

*unless he's a champ, in which case you'd have to go again!

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Not that this is any help...but I am of the understanding that a racing lease has no legal interpretation wrt ownership of the horse....rather it is an indication of allocation of stakemoney and /or costs.

I know I used to lease from a particular well known owner/breeder who always had his own lease agreement written up and included with the NZTR lease.

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2 minutes ago, Ohokaman said:

Cat may have been better to hold more than 50% so there is no impasse

I had a lot going on when I put this together O'man, and in hindsight, could have done a much better job.

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53 minutes ago, poundforpound said:

Remember Shez Sensational ?, the lessor was allowed ( by NZTR ) to change the terms of the lease more than once without advising the leasee because Purcell said NZTR leases are not legally binding, just a record of an arrangement.

Based on that opinion I’d suggest you can do what you like with your own horse, but you might lose a few friends along the way.

Exactly.

I would suggest,  if it is really concerning you,  that you get all the friends/lessees together,  and discuss among you  a purchase price that is mutually agreeable to all.

Then re-do the lease with the right-of-purchase written in.  Then relax and enjoy your racing.

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Conditions of leases were removed from the NZTR document some time ago as when it was challenged the document was not legally binding.   There was a lot of work to get the legal side done so NZTR opted out. 

There is an addendum that can be done to sign to bring that all into line.  It’s a hard one. Not sure what others have written into contracts - it would happen I would suggest.  Maybe a call to one of the big studs that do this type of lease may give you an answer.  

And good luck. I hope the offer comes to fruition- chain them to you and walk them to the bank 

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It’s pretty simple. You can’t sell the horse during the term of the lease UNLESS you come to commercial terms with the lessee’s.

Practically you would need to “buy” them out using part of the sale proceeds.

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7 hours ago, fitzy said:

It’s pretty simple. You can’t sell the horse during the term of the lease UNLESS you come to commercial terms with the lessee’s.

Practically you would need to “buy” them out using part of the sale proceeds.

Fitzy, what is or what are “commercial terms”?

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I think you should put in a ROP in at the start then all involved get a slice of the pie especially if your ROP is a decent amount.You can’t expect to lease a horse out for a 3 /4 year period  and have your syndicate members paying the costs then selling from underneath them.Hope you get a great offer mate and you all share in the profit as your mates have bought into the dream as well .Good luck.

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Thanks guys, that gives me a clearer picture. As I said, there's no offers, just an enquiry.

My base case is that I'm not selling - this is my last shot at the dream of owning a champion :)

From what I've read, it looks like communication is key, so I'll have a think about how to frame a discussion on the topic and (hopefully) get a consensus (no pun intended).

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15 hours ago, John Clydesdale said:

Fitzy, what is or what are “commercial terms”?

Very simply terms acceptable to all parties. In reality - how much $ will people receive in compensation for cancelling their lease on the horse.

i agree with P4P best thing is to have right of purchase at a fair value in the lease, that way if a big offer comes along all parties get to benefit and no arguments.

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