A Florida liquor license can be used as collateral by the license holder in securing a business agreement, such as financing or a lease. This is known as creating a lien on the license. The state statutes require that certain rules and procedures be followed to make such a lien legally enforceable.
Security Interest
The party wishing to create a lien against the liquor license must have a legally valid security interest against the license holder. There must be a legally valid agreement showing that the license holder agreed to specifically allow the license to be used as collateral. The law also requires a separate promissory note that specifies the terms of the parties' agreement, especially what would constitute a breach by the license holder that could allow the lien holder to foreclose against the liquor license.
Rules
For the lien to be valid and enforceable, it must be recorded by the state government within 90 days of the creation of the security interest. Liens created this way have priority based on the date of the lien recording. If there are more than one such liens, the lien with the earliest date of recording will have priority if there is a foreclosure action. A lien search can be done beforehand to ascertain the existence of any prior liens against the license in question. A recorded lien is valid for five years, but can be renewed by the lien holder within six months of the expiration date.
Procedure
Within 90 days after the security interest being created, the party wishing to create the lien must file an Application for Mortgagee's Interest in Spirituous Alcoholic Beverage License (Form DBPR ABT-6022). This must be filed with the Florida Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco. It must be an original, completely filled out and with all requisite signatures. A copy of the dated and executed security agreement (which specifically pledges the alcoholic beverage license by number) and a promissory note outlining the terms of agreement must also be attached, along with a $10 fee. A notice advising of the approval and lien recording or rejection will be sent to the applicant. There is no set time frame for this.
Enforcement
A lien holder may enforce his security interest by seeking a foreclosure judgment against the liquor license. Such action must be taken in the circuit court of the county that issued the liquor license. All lien holders in the license involved must be made a party to such a foreclosure action. Upon issuing this judgment, the court will sell at public auction the foreclosed liquor license. The proceeds will be distributed, less auction expenses, to the lien holder or lien holders in the order of date of the lien recording.
Tags: liquor license, license holder, lien holder, security interest, against liquor