Lien on Florida Quota License: How it Works
Florida has its own unique rules and regulations when it comes to selling alcoholic beverages. One of the most intriguing aspects of Florida’s alcohol industry is the concept of quota licenses. In this post, we’ll explore the valuable property rights associated with these licenses and what happens when creditors get involved.
Three Categories of Florida Alcoholic Beverage Vendor Licenses
Before delving into the world of quota licenses, it’s essential to understand that alcoholic beverage vendor licenses in Florida fall into three distinct categories:
- Limited Vendor Licenses – These licenses permit the sale of beer only or beer and wine, excluding distilled spirit products.
- Special Vendor Licenses – Reserved for specific kinds of businesses, such as restaurants, hotels, golf courses, and non-profit organizations.
- Quota Vendor Licenses – These licenses are limited in number and vary depending on the population of each county in Florida.
The Value of Quota Licenses
Quota licenses are often considered valuable property rights due to their limited availability. Because there are only a set number of these licenses in each county, they are frequently bought and sold among interested parties. However, it’s important to note that a quota license buyer must still meet the requirements set by the Florida Beverage Law, including holding a vendor license and complying with annual license renewal fees and compliance requirements.
Depending on the county, quota licenses can fetch prices in the several hundred thousand dollars range, making them significant assets for businesses.
Creditors and Quota Licenses
It’s common for quota license buyers to seek financial assistance from commercial or private lenders to acquire these licenses. Sellers of quota licenses may even accept promissory notes as part of the purchase price. To secure their interest and ensure repayment, creditors can take a lien interest in the quota license.
a. Perfecting a Lien in a Quota License
- To perfect a lien, creditors must file an application with the Florida Division of Alcoholic Beverages and Tobacco (ABT), accompanied by a recording fee.
- The lien application must be filed within 90 days after the creation of the lien.
- All liens expire five years after recordation unless renewed by the lienholder within six months before expiration.
b. Qualifications to Hold a Quota License
- Lienholders must be qualified to hold the quota license, as per Florida Statutes.
- Certain individuals, such as those under 21, with recent felony convictions, or badge-carrying law enforcement employees, are prohibited from having an interest in an alcohol license.
Foreclosing on a Perfected Lien
a. Legal Action and Venue
- The foreclosure action must be filed in the circuit court of the county where the quota license is issued.
- The ABT must be included as an indispensable party in the foreclosure action.
b. Auctioning the License
- After a judgment of foreclosure and written notice to distributors, the license is sold at public auction to the highest bidder.
- The proceeds are used to pay the lienholder, creditors who paid or owe excise taxes, and other parties as directed in the judgment.
c. License Operation and Transfer
- The purchaser at the foreclosure sale can operate under the license if they are qualified and authorized to do so.
- They may also have a reasonable time to transfer the license to another qualified individual.
ABT’s Role in Quota License Enforcement
The ABT plays a crucial role in quota license matters:
a. Notification of Pending Revocation or Suspension
- The ABT is required to notify the holder of a perfected lien if a revocation or suspension order is pending.
b. Enforcing a Lien
- The right to enforce a lien against a quota license continues for up to 180 days after any order of revocation or suspension by the ABT, provided the lienholder had no knowledge or involvement in the cause.
c. Reissuing Revoked Licenses
- Revoked quota licenses with perfected liens cannot be re-issued until the 180-day period has elapsed or until the enforcement proceeding is final.
Florida’s quota licenses are a fascinating aspect of the state’s alcohol industry. These valuable property rights are bought, sold, and secured by creditors, making them a unique commodity in the business world. Understanding the ins and outs of quota licenses and how they can be liened and foreclosed upon is essential for those involved in Florida’s alcohol business landscape.
Do you have questions about quota licenses or liens on quota licenses? Contact us to schedule a consultation with a beverage attorney.
Because we’re attorneys: Disclaimer. Posted October 8, 2023.