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Can A Liquor License Secure A Restaurant Lease?

Can a commercial lease require that a liquor license be pledged to the landlord to secure the restaurant tenant’s performance under the lease?

No, only a loan may be secured by a liquor license pledge. Under Massachusetts law, any party who seeks a security interest in a liquor license must be approved by the Alcoholic Beverages Control Commission (ABCC), and the local city or town. The ABCC will approve a secured creditor only after a public hearing, and public disclosure of the creditor’s interest in the restaurant. If the creditor is a limited liability company or partnership, then each LLC member or partner must disclose its financial interests to ABCC. Restaurant landlords, as a general rule, may not take a security interest in a liquor license to secure performance under a Lease. However, if a landlord lends money to the restaurant owner, the landlord may seek a pledge of the license to secure the loan, following review and approval by the ABCC. If such approvals have not been given, the landlord may not take a pledge of the liquor license. – Mark Bressler, Esq.

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Sassoon Cymrot Law and Grossman & Associates have joined together into one firm under the Sassoon Cymrot Law name effective May 1, 2021.