Does your association like to party?

With the holiday season approaching, many associations like to host holiday parties, mixers and membership gatherings. In many associations, members may enjoy drinking their beverage of choice, often of the alcoholic variety. The question frequently arises, “can the association allow its members to consume alcohol on the association’s property?” The answer is, “it depends.”

Title 4 of the Arizona Revised Statutes addresses the sale and consumption of liquor. However, the statutes are not written with community associations in mind and can be difficult to navigate. Based on the fact that very few community associations have a liquor license or licenses, most associations must pay close attention to A.R.S. 4-244.05, which applies to all unlicensed business establishments or business premises where alcohol is consumed. A.R.S. 4-244.05 prohibits the consumption of alcohol on any business premises (which includes association clubhouses, pool areas, etc.) if any of the following activities occur: (1) food or beverages are sold, (2) entertainment is provided, (3) a membership fee or a cover charge for admission is charged, or (4) a minimum purchase or rental requirement for goods or services is charged. Read strictly, this statute could have an impact on “BYOB” events held at association facilities. However, the analysis regarding the applicability of the statute is complex and depends on the facts that apply to a particular association’s activities.

One thing is for certain – an association should never charge a “cover charge” for any party where alcohol is served on the association’s premises unless a special license is obtained. An association may be able to sell alcohol subject to certain restrictions by obtaining a Series 15 special event license pursuant to A.R.S. 4-203.02. These licenses can be obtained up to 10 times per year.

Failure to follow the requirements of Title 4 can result in severe criminal and civil penalties. Associations should be sure that they obtain competent guidance regarding the applicability of Title 4 and the options available to associations to allow the consumption and/or sale of alcohol on the association’s premises. The topic is too broad to do more than highlight issues in this article.

Whenever alcohol is sold, served or allowed on an association’s premises, there is always risk. However, that risk can be minimized by following the liquor laws, obtaining sufficient insurance, and ensuring that members do not have too much to drink!

If you would like more information about liquor laws and how they apply to your association, please contact Mark Sahl or any other attorney at our firm.