Alberta has introduced new regulations to protect livestock buyers from
lawsuits when disputes over cattle ownership occur.
Among the changes is a new livestock sales manifest that will be
available June 15.
It provides a voluntary declaration of security interests on cattle
that should provide more protection to those buying livestock.
The new manifest indicates whether the full payment is to go to the
seller or if it is to be divided into two cheques – one for the seller
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and one for the lender. Wire transfers are also possible, said Sherry
Morthaller, chair of the Alberta Cattle Title
Committee.
“Many groups would like some legislative changes on this,” she said.
“This may happen through the regulatory review of Livestock Inspection
Services that is coming up.”
Morthaller said the cattle business’s volatile nature, with high levels
of financing and debt, continues to be a problem for the industry.
However, a growing awareness of the problem has forced many buyers to
be more diligent in checking for liens.
The Alberta cattle industry formed the title committee last year after
several lawsuits resulted from a situation known as conversion.
Most cattle are financed and are used as security for loans. When the
seller does not inform the buyer that the stock was used as collateral,
the lender can sue the buyer for money it is owed on transactions
conducted in the last two years.
The new manifest disclosure is confidential and should reduce risk by
providing producers and lien holders more confidence that they will
receive proper payment at the time of the sale, allowing clear transfer
of title to buyers.
Lenders are required to register their security agreements in a
government-administered registry.
Livestock Identification Services will administer the program and if
requested, may conduct personal property registry searches for a small
fee.
LIS will then inform the buyer if there is a lien. If the buyer is
sued, LIS will cover the claim. If the buyer does not ask LIS to search
for liens or if the buyer ignores the information, LIS will not cover
the cost of any claims.
LIS has set aside $1 million over two years to pay claims brought
against dealers or agents.