It's all fun and games … until somebody gets sued. How to avoid party fouls when renting out your clubhouse.

Birthday bashes, going away shindigs, surprise parties, dinner, cocktail and pool parties, new jobs, or college graduations, there are a million reasons to have a celebration!

Toasting

by Gina Fee
Senior Commercial Lines Marketing Specialist

Birthday bashes, going away shindigs, surprise parties, dinner, cocktail and pool parties, new jobs, or college graduations, there are a million reasons to have a celebration!  Apartment complex clubhouses can be a great place to throw a rock star style blow out or classy upscale function. As building owners, amenities such as club houses can add to your property value as well as can be an excellent selling feature for apartment complexes or condos. And if your residents are looking to host a special event, many may want to opt for renting out your clubhouse.

If renting out your common space is something you decide to do, carefully preparing, insuring and managing the risks associated with this is essential for the party to go off without a hitch - especially if alcohol will be served.

There are few things you'll first want to decide on before you make your space available for rent.  Are non-tenants allowed to rent the space?  Will you be required to host the event or can the tenant host? Is there a curfew for how long party go-ers can stay?

Once you set your rental guidelines, the next thing you'll want to consider is what the protocol is to serve alcohol.  If alcohol is featured at the party, you'll want to make sure you proactively manage your liability exposure.  Did you know that any establishment that sells or serves alcoholic beverages might be held liable for damages or injuries caused by intoxicated guests, even if no money is exchanged? That's right. Your establishment could be held liable for any damages that result from fights, reckless behavior or even car accidents.

Lucky for you, you could help protect your business with a liquor liability insurance policy. The fun doesn't have to stop if you follow these tips to help mitigate the risks:

Have tenants sign a contract/amenities rental agreement with liquor policy terms specifically outlined.  Ideas to include within the rental agreement:

  • Have tenants provide proof of renter's insurance
  • Have tenants provide a security deposit.
  • If alcohol is being served, have tenants hosting parties hire a bartender or caterer, with a signed contract agreement in place, and require the contract to transfer the legal liability to the serving company
  • List a maximum number of attendees

Other ideas outside of the rental agreement:

  • Don't allow property management staff to serve or participate
  • Have an alcohol policy in place and include rules such as guests must have proper ID and no service to minors is allowed
  • Post the liquor liability policy in the clubhouse and on your apartment or condominium community website

Liquor related laws vary by state, so it's important to know how your state views alcohol related responsibilities.  As a property owner, you could potentially be held responsible for the actions of your tenants when they utilize your clubhouse or pool area for social gatherings.  What's a property owner to do?  Be aware and help protect yourself. There are sites you can go to find out what your state's stance on Dram Shop laws and Social Host Liability.  Here's one option: Dram Shop Laws and Social Host Liability Website.  Now fair warning, Dram Shop laws are not easy to digest or understand, so speaking with your insurance agent and a lawyer to better understand what is covered, and what is not covered, is a great place to start!

No need to close down the clubhouse, and you don't have to be a party pooper because of liquor liability or social host liability concerns!  Get to know your responsibility as a property owner, and how you can help protect yourself...so your tenants can party on!  Cheers!

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