Many people ask me whether or not they actually need an attorney who specializes in liquor law to represent them in the purchase or the selling of a liquor licensed business.  Many times, a business owner will list his business for sale using a broker or real estate agent who will have him sign a real estate commission agreement or a brokerage agreement, providing that the agent or broker will receive a commission or a percentage of the sale price upon completion of the sale.  There is nothing wrong with that.  Brokers and real estate agents are very good at finding buyers.  However, the problem comes where the agent or broker attempts to draft the agreement of sale, or even represent the seller in the sale process.  Often, the agent or broker does not tell the seller that he needs a liquor lawyer to represent him in the PLCB approval process.  The agent might even tell the seller that he does not need a lawyer, yet alone a liquor lawyer.  In even worse cases, the agent will attempt to represent the buyer as well as the seller, and not advise the buyer that he should hire his own liquor lawyer to represent him in the license transfer process.  This is an accident waiting to happen.

 

     First, let me say that I do not have anything against real estate agents or business brokers in general; they serve a valuable function, and I have a great respect for, and a long-standing business relationship with many of them.  However, in any sale involving the sale of a liquor license, both the seller and the buyer need to be represented by a qualified liquor lawyer.    

 

     Real estate agents and brokers are not licensed attorneys.  While they may have skills in finding buyers and sellers, they are not lawyers.  More importantly, they are not trained or educated in the intricacies of the laws, rules and regulations of the Pennsylvania Liquor Control Board and the Pennsylvania Liquor Code as they relate to the sale and transfer of a Pennsylvania liquor license.

 

     I have been personally aware of situations where a real estate agent or broker will tell a seller or a buyer that they do not need an attorney.  This is very bad advice.   It is extremely important that when you are planning to sell your licensed business, or if you are looking to purchase a liquor licensed establishment, you need to seek the advice of an attorney who knows the ins and outs of the PLCB transfer process.  A standard, form real estate agreement or business sales agreement is not sufficient.  There are many contingencies that must be included in the agreement of sale, both for the buyer and for the seller, to ensure that both parties are protected.  For example, what happens if the PLCB does not approve the transfer within a certain period of time, or denies the application outright?  What happens if a neighborhood objection or protest, or a “Petition to Intervene” is filed?  What happens if there are zoning issues?  What happens if the new owner has a criminal record, or his finances cannot be verified?  What happens if there is a Conditional Licensing Agreement (CLA) imposed on the liquor license?   What happens if a citation is issued against the license while the transfer is pending?  What happens if the seller or the buyer cannot obtain tax clearance?  What happens if there are liens against the liquor license?  What happens if the buyer does not get financing?  What happens if the buyer does not get a lease? 

 

     All of these contingencies, and many more, must be addressed.  A transfer application to a new entity or buyer is not guaranteed.  There are many conditions, and a myriad of rules and regulations, that must be addressed before the transaction will be approved.  The sale is not legal unless and until the Pennsylvania Liquor Control Board approves the sale.  This approval process takes several months and involves a great deal of paperwork, financial documentation, an interview with a PLCB analyst, criminal record checks, and a wide array of other requirements.  Only a Pennsylvania liquor lawyer can advise you as to what you need to do in order to legally transfer a liquor license in the Commonwealth of Pennsylvania.

 

     It should also be pointed out that attorneys are subject to specific ethical requirements to represent you in a zealous and competent fashion.  We are required to undergo extensive annual Continuing Legal Education (CLE) to make sure that we are up to date with all of the current laws, regulations and procedures.  We are also subject to discipline by the Pennsylvania Supreme Court Disciplinary Board in the event that we fail in this endeavor.  Real estate agents and brokers, although they can be very helpful in advising you with regard to the sale of a business or real estate, are not subject to these same stringent requirements.

 

     Buying or selling a liquor licensed establishment is a complicated and serious endeavor.  It is fraught with pitfalls and risks.  It should never be taken lightly, and it should never be done cheaply.  As the axiom says:  “You get what you pay for.”  You can do it on the cheap, and pray that nothing goes wrong, or you can do it right, and sleep at night. 

 

     Another matter is worth mentioning.   Never be rushed into signing any legal document.  Whether it be a listing agreement, a letter of intent, or an agreement of sale, you should always seek the advice of a qualified attorney to advise you.  The more pressure you have to sign a document, the more trepidation you should have.  Whenever someone tells you that you don’t need a lawyer, a red flag should go up automatically!