Escrowing A Liquor License
A business that is closed or will be closed for more than 30 days, must escrow its liquor license. A liquor license may remain in escrow for up to five years as long as the annual renewal is paid by April 30 each year.
Related Forms
Return of Licenses and Permits - R 436.1047
A licensee who ceases active operation of the licensed business for a period of more than 30 days shall return all current licenses and permits to the commission to be placed into escrow. The license or licenses that the licensee returns under this rule shall be the actual license printed and issued by the commission and not a copy of the actual license printed and issued by the commission. For purposes of this rule, “ceases active operation” does not include seasonal businesses that are both of the following:
(a) In compliance with the requirements of section 535 of the act, MCL 436.1535.
(b) Considered seasonal employers under section 27(o)(9)(d) of 1936 PA 1, MCL 421.27(o)(9)(d).
Renewal of License - R 436.1107
(1) A license that is not in active operation shall be placed in escrow with the Commission.
(2) A licensee shall have only 5 licensing years after the expiration date of the escrowed license to put the license into active operation. If the licensee fails to put the license into active operation within 5 years after its expiration, then all rights to the license shall terminate 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.
(3) If the Commission extends the length of time for which a licensee may renew the license during the pendency of litigation or estate or bankruptcy proceedings or as a result of damage to the licensed premises for the reasons as stated in subrule (2) of this rule, then the licensee shall pay the required license fee for each elapsed licensing year before placing the license in active operation.
(4) The Commission may extend the length of time for which a licensee may renew the license upon written order of the Commission after a showing of good cause.
(5) Except as provided in subrule (3) of this rule, a license held in escrow with the Commission shall be renewed in the same manner as an active license, including payment of all required license fees, each year by April 30.
(6) A licensee who places a license in escrow with the Commission shall be responsible for providing the Commission with current contact information, in writing, for all correspondence, which includes the name, mailing address, and telephone number.
(7) The Commission shall provide or attempt to provide each licensee whose license is in escrow with a copy of this rule.
(8) A license that is held in escrow with the Commission on the effective date of this rule begins the 5-year period allowed by subrule (2) of this rule on March 24, 2004.
Good Cause Requirements for Extension of Escrow Beyond 5 Years
Commission consideration is required when a licensee needs an extension of time beyond the 5-year renewal/expiration period pursuant to R 436.1107(2). A request for extension of time beyond the 5 year limit requires a written showing of good cause by the license holder. Failure by the licensee to provide this documentation may result in the denial of an extension beyond 5 years for lack of good cause shown, or could result in the cancellation of the license.
A request for good cause for an escrow extension beyond 5 years should be submitted in writing to our office and include:
- A detailed description of the future plans for activation of the license.
- If the business will reopen under the current licensee, a business plan which details the time line, steps being taken for reopening and any renovation plans.
- If the license is for sale, a copy of the current sales listing or other marketing documentation that includes the list price of the license.
- A copy of the signed agreement to be used if you have found a buyer for your license.
- Current escrow contact information must be on file pursuant to R 436.1107(6). As the holder of a liquor license it is your responsibility to maintain current contact information on file with our office which includes a contact name, mailing address, and telephone number. Failure to provide this information may result in the cancellation of the license.
Frequently Asked Questions
My business is currently closed. What do I need to do with my license?
If your business is closed or will be closed for more than 30 days you need to submit your license document (along with the form LCC-108) to the Lansing offices of the Commission for escrow. As long as you continue to renew your license by April 30 every year, your license will remain on file. If you fail to renew the license it will expire and be cancelled - and cannot be reinstated.
If I place my license in escrow what am I required to do with my alcoholic beverage inventory?
You have a couple of different options available, depending on the type of license you hold. If you are selling your business, you can include the alcoholic beverage inventory in the sale of the business assets. Your beer and wine inventory can either be taken home for personal consumption or you can contact your wholesaler to see if they would be willing to take it back. You can also put in a request for your spirit inventory to be picked up by your Authorized Distribution Agent (ADA) and returned to the State for a refund, less 10%. If you are only closing temporarily or are requesting to move, you can either secure your alcoholic beverage inventory on the premises or make a written request to the Commission for permission to temporarily store your alcoholic beverage inventory in a secure, off site location.
How long can I hold my license in escrow?
Your license can be held in escrow for up to 5 years as long as you pay the license fee by April 30 annually. If the license is not renewed it will expire and be cancelled.
I am remodeling; do I have to place my license in escrow?
If you are not actively operating your business for more than 30 days you are required to submit your license document for escrow, with a completed Request to Place License in Escrow (LCC-108) form in order to comply with R 436.1107(1).
How do I get my license out of escrow? How long does it take?
You may submit a completed Request to Release License from Escrow (LCC-108a) form to have your license released from escrow. The time frame will vary, depending on how long your license has been in escrow. In some cases, the MLCC Enforcement Division may have to come out to your establishment and conduct an inspection prior the to the license release; our office would notify you of that requirement if that is the case. Plan to request a release of license from escrow several weeks in advance to avoid any potential interruptions in your business preparations.
My license was cancelled for non-renewal; can I get it back or request a hearing?
If your license is cancelled for non-renewal you would have to reapply for a different license. There is not a provision in the liquor control code that allows for a hearing to be conducted to reinstate a liquor license that was cancelled for non-renewal. To avoid this from happening, make sure that all of your mailing information stays current on file with our office to avoid unnecessary delays. All license renewals are due by April 30 every year, regardless of whether or not your business is closed or you are operating.
My license is issued under the provisions of MCL 436.1521a(1)(a) (RDA license) or MCL 436.1521a(1)(b) (DDA license). Can I place this license in escrow?
If you go out of business the license must be surrendered to the Commission for cancellation. If you are closing temporarily to remodel or have a special circumstance that requires you to close for a specific period of time, you can submit a written request to the Commission for its consideration. There are cases where you will be able to temporarily escrow your license, subject to renewal requirements and regular communication with the Commission on the status of your license.
My license has been in escrow for 5 years already. Will I be able to renew?
You will need to submit a written request to the Commission for an extension beyond 5 years under R 436.1107(4). The written request must demonstrate good cause for the Commission to consider the request. For what "good cause" constitutes see the escrow rules and good cause requirements attachment. After the fifth year of license renewal you will not receive any further renewal applications, unless you are approved for further extension beyond 5 years. To avoid cancellation of the license you must provide this written request with good cause in order to be considered for an extension of the escrow period.
