Managing Alcohol-Related Liabilities in Your Real Estate Business

Do you provide hospitality to sellers, buyers, or even your own team of real estate agents? Where do you stand with alcohol? What happens, for example, if you serve alcohol at an open house, an event or function, and something goes wrong? What happens if a client has an accident on the way home after drinking too many alcoholic beverages at your event?

According to the National Institute on Alcohol Abuse and Alcoholism, 88,000 Americans die from alcohol-related causes each year, and it’s the third leading preventable cause of death in the USA. The National Highway Traffic Safety Administration (NHTSA) reported nearly 17,000 fatal car accidents in 2014 involved at least one person with a blood alcohol level of at 0.01 and over. 

To ensure you don’t find yourself facing a lawsuit, you need to be aware of the risk factors relating to alcohol. Here are our top 6 tips to minimize your risk and liability with serving alcohol in your real estate business.

1. Check with Your Broker (if you have one)

If you’re a real estate professional working under a broker, you’ll need to check with them before you serve alcohol at an open house. It is ultimately the broker’s decision, and they’ll need to ascertain whether their Errors & Omissions Insurance will cover liabilities relating to the serving of alcohol. 

2. Be Aware of Licensing Issues

If you plan to serve alcohol in the course of your business, you may require a license. Factors that may affect  this include:

  • If alcohol is being sold at the event 
  • If your event is open to the public or considered a “private party” with restricted access (invite-only)
  • If any fees are being paid for the event, for example, entry fees
  • Whether the venue for the event is usually a place used for the serving of alcohol

If you’re located in California, the California Association of Realtors offer a “Serving Alcohol at an Open House Quick Guide”, which is a handy resource for real estate professionals.

3. If You Decide to Serve Alcohol, Serve it Responsibly 

If you’re holding an open house or an event where alcohol will be served, minimize your liability by ensuring there is a limited number of drinks available. Consider also providing food. Another consideration is the use of trained staff, who are experienced in the responsible service of alcohol. 

These strategies can reduce the chances of attendees drinking to excess, getting behind the wheel of their car and being involved in an accident — potentially causing harm to themselves or others. 

4. Consider an Alcohol Policy for Your Employees or Agents

If you manage employees or a team of real estate agents, you should adopt and communicate an alcohol policy.  You want to be sure there’s no confusion about what’s permitted for the serving of alcohol in the course of your real estate business. 

The policy should specify:

  • If your team is permitted to drink alcohol while ‘on-the-job’ 
  • What your policy is on intoxicated employees
  • Whether you allow alcohol to be served at open houses, showings, or events in the course of business
  • Consequences for not adhering to the Alcohol Policy

You have a duty of care to your team.  When you establish a clear direction for alcohol consumption and serving alcohol to clients, you take a positive step towards protecting you and your business from liability and lawsuits in the future.

5. Consider Alcohol-Free Showings and Events

Offering non-alcoholic beverages at your open house/showings presents considerably less risk than serving alcohol. Providing hospitality and great customer service is entirely possible without alcohol. Most clients will be happy with a non-alcoholic drink, and you won’t need to worry about a client or potential buyer ending up in a car accident on the way home. 

6. Ensure You Have Adequate Insurance

Adequate insurance coverage is an essential step toward protecting your real estate business. Review your current policy to check if you’re covered for alcohol-related incidents, such as:

  • A client drinks at your open house or event and then potentially is involved in a car accident — fatal or non-fatal
  • An employee is impaired by alcohol and makes an error in terms of contracts or purchase agreements, which has serious consequences for your business
  • Someone is injured at an open house by an intoxicated guest

There are many more possible situations you may face if serving alcohol at events. It’s important to speak to a professional about coverage for all possible scenarios.

Contact CRES, your real estate insurance experts, at 800.880.2747 to find a fully customizable E&O policy to suit your real estate business. 

This blog/website is made available by CRES Insurance Services for educational purposes to give you general information and understanding of legal risks and insurance options, not to provide specific legal advice. This blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. Claims examples are for illustrative purposes only. Read your policy for a complete description of what is covered and excluded.

Originally Published September 11, 2019

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