Further Clarification Regarding Escrowed Licenses

Posted on March 15, 2012

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To date, we have only published posts written by us (Jim Stariha & Michael Brower).  Going forward, we intend to continue primarily publishing our own posts; however, we have been considering utilizing the input of others as well.  This is a industry where we must all work together, and we would appreciate having our blog echo the same collaborative spirit, when appropriate.   If you are interested in contributing to the Michigan Liquor Law Blog, please feel free to contact Michael (michael@starihabrower.com)

On that note – The post below was sent to us by Ronalee Polad with the MLBA.  Some of this information was detailed in our earlier post on escrowed licenses; however, this post offers further insight and clarification.

Without further ado:

IS YOUR LICENSE IN ESCROW?

Is your license in Escrow?  YOU NEED TO ACT NOW!

Please be aware that the current Michigan Liquor Control Commission has a different interpretation of Rule 436.1107 than previous commissions.

If your license is in escrow because there is litigation pending or your building incurred damages that caused the business to close you were not charged for the renewal fees in the past.

This year if you are within the first 5 years of escrow, regardless of the reason, you are responsible for paying the renewal fees AND ALL back years that have not been paid are being charged.

It is critical that you send in your escrow renewal form and all of the renewal fees for your license before April 30.  Remember there is a lot of mail heading to MLCC at this time of the year, so if you are not renewing online you need to mail the paperwork and fees well in advance of the April 30 deadline.

MLCC has made it clear that they are going to take swift action against those licenses that are in escrow if the renewal fees are not paid by May 1 of every year.

This Commission is indicating that they do not have the authority to reinstate a canceled license as commissions in the past have done.

Therefore, if you have a license in escrow or have an interest in a license that is in escrow you need to make sure that it gets renewed by for May 1.

A licensee may place a license into escrow for a total of five (5) licensing years.  During these five (5) years, the Commission must receive renewal information and payment for a license held in escrow in the same manner as an active license, including payment of all required license fees, each year by April 30.

Per Rule 436.1107, if the escrowed license is not put into active operation within the five (5) years, then the Commission will terminate all rights to the license unless the Commission has received written verification of either of the following:

A. That the license or an interest in the license is the subject of litigation or estate or bankruptcy proceedings in a court of competent jurisdiction.

B. That the license was placed into escrow as a result of damage to the licensed premises by fire, flood, tornado or other natural event that makes the
licensed premises unsuitable for the operation of the business and unsafe for public accommodation.

Upon receipt of written verification of court proceedings or of damage as described above, the Commission is authorized to extend the escrow beyond the five (5) years.

If the Commission does extend the escrow beyond the five (5) years for these reasons, then the Commission must receive the license fees accruing beyond the five (5) years for each elapsed licensing year before the license can be placed in active operation.

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Ronalee Polad is a consultant with Techniques of Alcohol Management, and the MLBA’s resident expert on Michigan liquor laws. She is a retired MLCC staff member with nearly 30 years’ experience in various capacities.

This article can also be viewed via the TAM Blog.

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