Two questions which are often asked about Liquor Licenses are:

1.    Can a Liquor License be sold?
2.    Can a Liquor License be leased?

The first question often arises when a liquor licensed business in existing premises is sold.  A Liquor License per se cannot be sold but a business with a Liquor License can, bearing in mind however that the Liquor License must still be transferred to the purchaser.  This is because the business is a saleable commodity whereas the license is a right which cleaves to the person (natural or juristic) and the property, i.e. it is person and place specific.

In the light of the above, provision must always be made in a sale of business agreement with a license for the transfer of the Liquor License to the purchaser. The transfer is done by way of application and the transferee of the license must be approved by the Western Cape Liquor Authority (in the Cape), which naturally means that all the criteria for the lawful holding of a license by the purchaser must be met.

It must be remembered that every application to the Authority takes up to six months to be approved, which means it is impractical to make a sale subject to a suspensive condition that the transfer is actually granted. To cater for this, provision must be made in the contract for the co-operation and assistance of the Seller to transfer the license.In order to overcome the impasse created by the slowness of the transfer process, the Authority has created a bridging procedure called an “Application for Consent to Conduct Licensed Business Pending Transfer”  in terms of Section 65(3), which is supposed to be attended to by the Authority on an urgent basis.  This was obviously intended for a “close today, open tomorrow” scenario.  The trouble is this is just not the case.  To ameliorate this break in continuity, what normally happens is that the local police officer is usually happy once the Section 65(3) is submitted to him/her, i.e. you are following due process.  The complication here is however that the appointment of a manager still has to be authorised by the Authority, with the manager being required to do a very short manager’s course put on by the Authority;  luckily this can now be done on-line.

A situation which often arises is a licensed business closes down because the premises become unavailable and the holder tries to “sell” the license only.

Do not even consider purchasing such a license because you will then be faced with the unhappy scenario where you will first have to take transfer of the license and then apply for its removal (relocation) to new premises.  A removal is just about as onerous as a new application!  The answer is simple, rather apply for a new license!Another common scenario is where a business simply closes down, but the premises are still available.  Here it is feasible to purchase the “rights” to the license and simply take transfer from the current holder.  Because you still have to take transfer of the license however, which means it is not yet a done deal, do not pay more than a token price.

As to whether a Liquor License can be leased, this question often arises when a landlord wishes to hold the licence in his/her own name for the purpose of continuity and lease the business (with license) to a lessee. While this may seem expedient from a practical point of view because lessees come and go, it is not allowed in law.  Prior to the coming into operation of the 2008 Act in 2012, it used to be common practice to appoint the lessee as manager but for him/her to actually conduct the business for his/her own account. While this actually still happens, it is unlawful.  The Act makes this quite clear in Section 32(1) which reads “A person may not……sell liquor unless authorized to do so in terms of a license issued in terms of this Act……….”.  This means any person or body selling liquor must be licensed to do so!