Conflicts related to co-ownership of a horse – Joint ownership and disputes in the horse industry

Joint ownership of a horse is common practice in the racing and sports industries. However, when the rules of joint ownership are not clearly defined, conflicts can arise; disagreements over management, financial disputes, inability to sell, etc. Inscio Avocats assists you with the legal framework for joint ownership and dispute resolution, in accordance with the Civil Code and the horse racing regulations.

Understanding equine joint ownership – Shared property that needs to be regulated

Joint ownership refers to a situation where several people jointly own a horse.

Each joint owner owns a share of the horse, often referred to as a ‘stake’.

Although flexible, this form of ownership requires rigorous organisation to avoid disputes.

Joint ownership agreement – An essential tool for preventing conflicts

To secure joint ownership, it is essential to draw up a joint ownership agreement.

This contract specifies:

  • Co-owner shares;
  • The terms and conditions for managing the horse (trainer, transport, commitment)
  • The distribution of costs and earnings
  • The rules for exiting and transferring shares

A well-drafted agreement helps to avoid deadlocks and lengthy and costly legal proceedings.

Frequent disputes – Registration card and proof of ownership

The horse’s registration card, issued by the French horse industry regulator (the “IFCE”), constitutes a simple presumption of ownership and co-ownership.

It can be contested by any means.

Example: a person registered as owning 20% on the card may have their co-ownership status challenged if they do not provide proof (contract, invoice, exchanges) of the transfer of ownership.
Conversely, a person who is not registered may prove their status as joint owner by providing material evidence.

The burden of proof lies with the person contesting the presumption established by the SIRE.

Leaving joint ownership – Amicable or judicial liquidation

Leaving joint ownership can be:

  • Amicable: repurchase of shares, liquidation, right of pre-emption
  • Judicial: application of Article 815 of the Civil Code – forced division
  • Judicial auction is not particularly compatible with the living nature of horses. A well-drafted agreement can avoid this outcome.

Risks of reclassification and tax audit

The contract must be carefully drafted to avoid the risk of reclassification and tax audit.

When joint ownership has characteristics similar to those of a company (pooling of resources, sharing of profits and losses), it may be reclassified as a joint venture.

Consequences: registration fees on the transfer of shares, accounting obligations, increased taxation.

Our support

Inscio Avocats can help you:

  • Draft a clear and enforceable joint ownership agreement
  • Prevent conflicts between co-owners
  • Manage procedures for exiting joint ownership or liquidation
  • Anticipate tax and legal risks