At Equine Legal Solutions, we receive a lot of calls from buyers, sellers and agents about commissions in horse sales. In most of these calls, the caller has been asked to pay a commission and is seeking advice about whether they have to pay, and if so, how much. In this article, we discuss horse industry standards as well as legal duties.

Why Pay Commissions?

Trainers and other professionals providing assistance in buying and selling horses deserve to be compensated for their expertise and their time. For sale horses, trainers often create and place ads, arrange for photos and video, manage email and phone calls, and show the horse to prospective buyers. They also use their professional network to help sell the horse. The mere fact that a particular trainer represents the horse often increases the horse’s perceived market value (and perception can turn into real dollars!).

To help clients purchase horses, trainers spend a lot of time viewing videos, reaching out to their industry contacts, and trying horses for sale. They also use their expertise and knowledge of the client’s needs to help the client select a horse that is suitable for the client. All of that time and expertise is worth money.

How Much is Fair?

In a typical horse sale transaction where a trainer represents a horse for sale, the trainer earns a commission of 10-20% of the sale price. Sometimes, a client will tell a trainer that the client wants X dollars for the horse and that the trainer can keep anything above X. That is also a sale commission.

In horse purchase transactions, clients represented by trainers also typically pay their trainers 10-20% of the purchase price. While all of this is industry standard, it’s far from straightforward in most trainer/client relationships, especially when the client is a relative newcomer to the horse world. The client might feel like they “did most of the work,” or otherwise question whether the trainer earned a commission.

A smart trainer will have a written agreement with their clients, clearly spelling out when they expect to be paid a commission on a sale or purchase, how much the commission is, and when the client has to pay it.

Trainers and Agency Law

When a trainer agrees to help a client market and sell a horse, the trainer is the client’s agent. Likewise, when a trainer agrees to help a client find a horse to buy, the trainer is the client’s agent. Being the client’s agent means the trainer owes certain legal duties to the client. Note that this is true regardless of whether the agreement was written or oral.

First and foremost, the trainer must act in each client’s best interests (even when it’s not in the trainer’s best interest). This duty may seem obvious, but often, it’s not. For example, a trainer may represent several horses for sale owned by different clients. The trainer can’t promote the highest-priced horse over the other sale horses just because the trainer will earn a bigger commission when it sells. Instead, the trainer must promote each horse diligently for each client. Likewise, a trainer can’t steer a client toward buying a horse just because the trainer also represents the sale horse’s owner (and would collect a commission from both buyer and seller).

The trainer must also provide a fair and accurate accounting to the client. That means telling clients exactly what the real sale price is and to whom it was paid, including any commissions that the trainer knows about. For sale horses, the trainer is obligated to provide an accounting to the client, even if the horse sold for more than the client was asking for it.

The trainer can’t lawfully represent more than one client in a sale transaction unless both clients are aware of the dual representation and agree to it. For example, trainers often have clients selling horses at the same time they have clients looking to buy horses. If the horse sells inside the trainer’s barn, the trainer usually collects a commission from both buyer and seller. While this is common practice, it isn’t lawful unless both clients know about the dual representation and agree to it.

What about Everyone Else?

When a horse sells, it seems like everyone has their hand out, wanting to be paid a commission for their role in the sale. Payment of multiple commissions on the same transaction artificially inflates horse prices, which is counterproductive for our industry. And in today’s soft horse sale market, horse sellers can’t afford to cross everyone’s palm with silver (or even copper!). Still, there are situations where someone has been helpful to the sale, perhaps by helping to spread the word that the horse was available, and the owner or trainer wants to reward that person. Rewarding helpful friends is fine, but it should come out of the rewarder’s share of the sale proceeds. The bottom line is that a seller isn’t legally obligated to pay any commissions unless they’ve agreed to do so in advance of the sale.

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The fine print: This article is merely for informational purposes and does not constitute legal advice. The author highly recommends that anyone with a horse sale commission issue or question seek the advice of an equine attorney licensed to practice in their state.

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Rachel Kosmal McCart is the founder and principal attorney of Equine Legal Solutions, Inc., an equine law firm based in the Portland, Oregon metro area. Rachel is licensed to practice in Oregon, Washington, New York and California, and also associates with attorneys in other states on equine law matters.

ELS offers free telephone consultations on any equine legal matter. More information is available on ELS’ website at www.equinelegalsolutions.com or by calling 866-385-2972.