Association party

It’s Time to Party – Responsibly

Everyone, generally speaking, loves a good party – who doesn’t?  What defines a “good” party may differ, however, depending on whether you are the Association or the party-goer.

Some associations choose to sponsor or allow social gatherings in the common areas of the association, which may involve food, entertainment, and perhaps the consumption of alcoholic beverages. In deciding whether or not to serve or allow the consumption of alcoholic beverages on association property an association should consider, at a minimum, state and local liquor license requirements, association liability, and insurance.  Before allowing alcohol to be sold, served, or consumed on association property, at a minimum, an association should take steps to insure it is compliant with alcoholic beverage laws, is protected from liability to the greatest extent possible by using waivers and by consulting with your insurance agent for proper coverage. 

A common question posed to our firm was whether or not an association is required to obtain a liquor license to serve wine and beer at social events sponsored by the association.  Sometimes the question includes charging a ticket price for admission to such events, at which alcoholic beverages would be available to attendees at no additional cost, i.e., the cost of the alcohol would be covered by the payment for the ticket. 

The main factor which determines if a liquor license is required is whether or not the alcohol is being “sold,” or provided for free, courtesy of a “social host.” Paying or trading something of value for alcohol, whether directly or indirectly, can trigger state and local liquor laws, and such transaction may be considered a “sale.” If alcohol is being “sold,” the applicable laws are different than if the alcohol is being provided free (without “consideration,” i.e., payment or something of value exchanged) to social guests by a social host.

Florida Statutes, Title XXXIV, Alcoholic Beverages and Tobacco, Chapter 561, Beverage Law: Administration, Section 561.01(9), Florida Statutes, states:

(9) “Sale” and “sell” mean any transfer of an alcoholic beverage for a consideration, any gift of an alcoholic beverage in connection with, or as a part of, a transfer of property other than an alcoholic beverage for a consideration, or the serving of an alcoholic beverage by a club licensed under the Beverage Law.

Chapter 562, Beverage Law: Enforcement, Section 562.12(1), Florida Statutes, states that selling alcohol without a license is prohibited, and any person who sells alcoholic beverages without proper licensure is violating the law, which is a misdemeanor of the second degree:

(1)It is unlawful for any person to sell alcoholic beverages without a license, and it is unlawful for any licensee to sell alcoholic beverages except as permitted by her or his license, or to sell such beverages in any manner except that permitted by her or his license; and any licensee or other person who keeps or possesses alcoholic beverages not permitted to be sold by her or his license, or not permitted to be sold without a license, with intent to sell or dispose of same unlawfully, or who keeps and maintains a place where alcoholic beverages are sold unlawfully, is guilty of a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083.

Applying the above law we conclude that selling tickets to or requiring donations from attendees of association functions at which alcohol will be served would likely be considered the sale of alcohol, subjecting the association to the risk of violating Section 562.12, if it did so without the appropriate license.  If the provider of the alcoholic beverage is receiving any type of consideration or payment for the provision of alcohol, such provider must be properly licensed.  

However, if the association is committed to the concept of selling tickets and offering alcoholic beverages to attendees, the association may be able to obtain a permit for a time period not to exceed three days; however, there are requirements the association must meet, and there is no guarantee that it would qualify, pursuant to Section 561.422, Florida Statutes, which states: 

561.422Nonprofit civic organizations, charitable organizations, municipalities, and counties; temporary permits.—Upon the filing of an application, presentation of a local building and zoning permit, and payment of a fee of $25 per permit, the director of the division may issue a permit authorizing a bona fide nonprofit civic organization, charitable organization, municipality, or county to sell alcoholic beverages for consumption on the premises only, for a period not to exceed 3 days, subject to any state law or municipal or county ordinance regulating the time for selling such beverages. All net profits from sales of alcoholic beverages collected during the permit period by a nonprofit or civic organization must be retained by such organizations. All net profits from sales of alcoholic beverages collected during the permit period by a municipality or county must be donated to a nonprofit civic or charitable organization within 90 days after the permitted event. A municipality or county may only be issued such a temporary permit if it has attempted to solicit a qualified nonprofit civic or charitable organization to conduct such sales but has been unable to find such a qualifying organization in a reasonably practicable manner and timeframe. A nonprofit civic organization, charitable organization, municipality, or county may be issued no more than 12 permits per calendar year. Notwithstanding other provisions of the Beverage Law, a nonprofit civic organization, charitable organization, municipality, or county licensed under this section may purchase alcoholic beverages from a distributor or vendor licensed under the Beverage Law. The division may adopt rules and conduct audits to ensure compliance with this section.

One way to possibly avoid the requirement of obtaining a license is to hold the event in such a manner that the ability to consume alcohol is in no way dependent upon payment of consideration to attend the event.  For example, any table set up to receive “donations” must involve bona fide, voluntary donations (no “drink tickets” can be given for donations), and should not be located by the entrance to the event, or near the area where alcoholic beverages are being served, so as to avoid attendees making the assumption that a donation or payment is required or recommended in exchange for being served alcohol. 

The Florida Division of Alcoholic Beverages and Tobacco has, in the past, suggested that if an association holds functions on a limited periodic basis where alcohol is served (but not “sold”), does not hold itself out as a “bottle club,” is open to participation by all members of the association, and does not charge any consideration whatsoever, then it probably would not require a license. 

Pursuant to Section 561.01, Florida Statutes, a “bottle club” is defined as follows:

(15)“Bottle club” means a commercial establishment, operated for a profit, whether or not a profit is actually made, wherein patrons consume alcoholic beverages which are brought onto the premises and not sold or supplied to the patrons by the establishment, whether the patrons bring in and maintain custody of their own alcoholic beverages or surrender custody to the establishment for dispensing on the premises, and which is located in a building or other enclosed permanent structure. This definition does not apply to sporting facilities where events sanctioned by nationally recognized regulatory athletic or sports associations are held, bona fide restaurants licensed by the Division of Hotels and Restaurants of the Department of Business and Professional Regulation whose primary business is the service of full course meals, or hotels and motels licensed by the Division of Hotels and Restaurants of the Department of Business and Professional Regulation.

Importantly, if the association chooses to obtain a license to sell alcohol, chooses to allow its event attendees to bring alcoholic beverages to its events, or sponsor “BYOB” events, the Board should be aware of the potential liability resulting from the dangers of alcohol consumption by attendees, such as potential physical harm or death to attendees, third parties, or damage to property.  Florida Statutes Title XLV, Torts, Chapter 768, Negligence, Sub-Section 768.125, Liability for injury or damage resulting from intoxication, states:

A person who sells or furnishes alcoholic beverages to a person of lawful drinking age shall not thereby become liable for injury or damage caused by or resulting from the intoxication of such person, except that a person who willfully and unlawfully sells or furnishes alcoholic beverages to a person who is not of lawful drinking age or who knowingly serves a person habitually addicted to the use of any or all alcoholic beverages may become liable for injury or damage caused by or resulting from the intoxication of such minor or person. (Emphasis added.)

Therefore, the association should be mindful, even under the circumstances where the sale of alcohol is not necessarily at issue, to ensure that individuals who are drinking are of lawful drinking age, and the association should take care not to serve alcohol to any attendee whom they know is an alcoholic or is otherwise habitually addicted to drugs or is highly intoxicated.

If the association is functioning as a “social host,” (i.e., not selling the alcohol), courts have held that there is some protection from liability extended to such a host. [See Dowell v. Gracewood Fruit Company, 559 So.2d 217, Supreme Court of Florida, (holding that an employer was a “social host,” who served alcohol, and could not be held liable for injuries caused in drunk driving accident); and Bankston v. Brennan, 507 So.2d 1385, Supreme Court of Florida, (holding that statute limiting liability for seller of alcohol did not create cause of action against social host under same circumstances)]. 

However, given the lack of cases specifically on-point regarding community associations, we cannot say with certainty that an association would definitely avoid liability based on F.S. 768.125, in the event injury, death, or property damage resulted from intoxication by alcohol served on the premises of or by the association.

Importantly, if the association chooses to allow alcohol to be consumed on its premises, the Board should consult with the association’s insurance agent to make certain it is adequately covered in the event of a liability claim made against the association due to alcohol being served. 

Similarly, if the association allows a member to host an event on the premises, the association should consider requiring the member host to obtain his or her own insurance, naming the association as an additional insured, and require proof of coverage.  The association’s insurance carrier should be consulted regarding this option. Other possibilities to reduce liability include requiring a member host to sign a release/waiver, which may help insulate the association from liability, although full protection is not guaranteed.  Finally, the association may consider adopting rules and regulations governing the consumption of alcohol on its premises, such as ceasing serving intoxicated attendees, and requiring intoxicated persons to leave the premises, but not to drive a motor vehicle. 

The question posed herein risks the association being found to be engaging in the unlicensed sale of alcoholic beverages. Selling tickets or charging an admission fee to an association event at which alcoholic beverages are served, even if there is no additional charge for the alcoholic beverages, is likely considered the sale of alcohol, and would require a license.  In addition, an association should work in coordination with its insurance agent, and its attorney to insure it is adequately covered for such events. 

 

Steven H. Mezer

Board Certified Condominium and Planned Development Law Attorney, Becker
Tampa
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Carolyn C. Meadows

Condominium and Planned Development Law Attorney, Becker
Tampa
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