May 1, 2012

Lease agreements for horse farms contain many of the same terms as lease agreements for other commercial properties, such as rent, expiration, insurance and indemnity.  However, due to the specialized use of the property, there are some unique considerations that must be addressed.  Having an attorney draft these provisions in a clear manner so as the memorialize the intent of the parties can reduce the risk of future disputes.

1.  Title Issues.  The title documents could restrict the use of the property.  For example, a deed restriction limiting the use of the property for a “single family home” may impact the ability of the tenant to use the property for the intended use.  To the extent that the property may be subject to a ground lease or mortgage, obtaining the consent of the superior lien holder may also be required.

2. Environmental Issues.  Horses produce waste, the storage and disposal of which is regulated by the County Department of Health as well as local municipalities.  Compliance with these laws is typically the responsibility of the tenant.

3. Zoning Issues.  In addition to private title restrictions, the use of the property may be regulated under the local municipality’s zoning code.  To the extent that a special use permit or variance is required, the lease may need to address timing, cost and responsibility for obtaining these permits, as well as the contingency if the permits are not granted.

4. Insurance Issues.  Tenants may wish to check the landlord’s insurance requirements with their agent prior to executing the lease in order to ensure that coverage, limits, subrogation clauses and other terms are acceptable.  Landlords will often require delivery of certificates prior to taking possession.

5. Security Deposit Issues.  If a security deposit is required, the circumstances under which the deposit is returned and the timing of such refund should be addressed in the lease.  Any pre-existing damage to the premises should be documented by the tenant to avoid later misunderstandings.

6. Maintenance.  Property maintenance including residence or barn maintenance, grass mowing and snow and ice removal should be addressed.

7. Sublet Agreements.  Many lease forms require landlord consent to assignment and subletting.  If a tenant has barn managers, trainers or grooms who will reside at the property, the lease should address this.

For more information about horse farm leases, please do not hesitate to contact us at (914)338-8050.  For more information about the firm, please visit our home page.