Legal: Alcohol Liabilities

By Isham Jones, NAR Legal Dept.

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Picture this: Your association hosts its annual holiday party for members and affiliates. An attendee drinks too much alcohol, gets behind the wheel of her car, and causes a fatal accident. The association faces legal action.

It’s a dreadful scenario to imagine, but for one Realtor® association, this was reality.

So what is your association’s potential liability when it comes to injuries caused by an intoxicated guest at a social function? The answer depends on how your state assigns liability for such injuries.

Approximately 32 states have enacted some form of “social host” law to curb the irresponsible serving of alcohol. These laws impose potential liability on a social host who serves alcohol to a minor or to a guest who is obviously intoxicated, and who subsequently injures another person. There must be a causal relationship between the serving of alcohol and the injury to the third party. A Realtor® association, like any other private business or person, could be held liable under such laws. In fact, Realtors® serving alcohol at open houses also may be subject to liability under your state’s laws.

With this kind of potential for liability, what can a Realtor® association do to reduce its risk?

The following tips should be considered when planning any function where alcohol will be served:

• Know the law. The first step is to review your state’s liquor law so you know the circumstances under which your association may be held liable. For example, the potential for liability may be reduced if only trained bartenders serve alcoholic beverages.

• Consider an alcohol-free event. The possibility of alcohol-related liability is greatly reduced (if not totally eliminated) if no alcohol is served.

• Ensure adequate insurance coverage. Review your insurance policies to determine your coverage for alcohol-related liability. If there is no coverage, consider adding to the policy or purchasing coverage for specific events. The liability insurance that NAR provides to all associations (that meet coverage requirements) does not cover liquor liability.

• Get it in writing. The establishment where the event will take place should have its own adequate alcohol-related insurance coverage if it is providing alcohol service with bartenders, but always ask. In addition, the establishment should indemnify your association for injuries arising out of the serving of alcohol. Both of these issues should be covered clearly in the contract between your association and the establishment—whether it’s a bar, restaurant, hotel, or convention center.

• Keep a professional bartender between the alcohol and the guests. You do not want your employees or leadership serving alcohol. Hire a trained bartender for events at your association offices or any occasion where alcohol is served. Bartenders should be able to determine when a guest has had too much to drink and cut them off. They should also be trained at spotting fake IDs to prevent serving alcohol to minors. The risks to your association far outweigh the expense of hiring a professional bartender.

• Take steps to curb alcohol consumption. Make guests pay at a cash bar. People tend to drink less when they have to pay for each drink. Alternatively, offer one or two free drink tickets. Regardless of whether the event is on your association premises or at a restaurant or convention center, never have a self-service bar, such as a punch bowl or freestanding keg of beer, where intoxicated guests (and minors) can help themselves to as much as they want.
nLimit the time during which alcohol is served. Stop serving alcohol at least one hour before the end of the event so guests are not guzzling drinks right before they leave. However, don’t make a “last call” announcement. Telling guests that alcohol service will stop only encourages people to drink more in a shorter period of time.

• Make sure to provide plenty of food and nonalcoholic drinks. Food and nonalcoholic drinks may help cut the effects of alcohol. Give guests the choice.

• Make alternate transportation available. To keep intoxicated guests out of the driver’s seat, encourage the use of designated drivers. Alternatively, host the event at the hotel where most of the guests are staying, which will keep people off the road. If possible, hire a shuttle or taxi service and make sure guests are aware of these options.

• Keep employees in check. In addition to social host laws, your association may be held vicariously liable for injuries caused by an intoxicated employee who was acting within the scope of employment. Set the tone of moderation in advance through e-mails, interoffice memos, meetings, or other communications, and stress that excessive alcohol consumption by staff will not be tolerated.

Considering these tips before you plan your association’s next event will help limit your liability should the unthinkable happen.

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