Year after year clients ask us about hosting social events in the Clubhouse and whether they should either purchase and serve alcohol for a fee or allow residents to consume alcohol on a BYOB basis.  The simple answer is that the Association is not in the business of serving alcohol for commercial purposes so the Association shouldn’t serve alcohol for a fee at the Clubhouse.   This would also include taking “donations” at the door from attendees to pay for the alcohol that was purchased by the Association.  

Allowing residents to consume alcohol on a BYOB basis may be appropriate in some circumstances, but may not in others – such as near a pool or other amenity where there is inherent risk present.  It is best to have a policy for alcohol consumption at the Clubhouse and distribute it to the unit owners – and, of course, the Association must actually enforce the policy.

Even if an Association is not actively serving alcohol for a fee, if it is purchasing alcohol to “hand out” to residents at a Clubhouse event for free, or allowing BYOB consumption, this could also lead to trouble for the Association should an incident occur.

In Pennsylvania, the “social host doctrine” provides that a “social host” can be held liable for resulting personal injuries or property damage if the social host served alcohol to a person he/she knew, or should have known, was intoxicated and/or that the person would be driving afterward. To date, Pennsylvania courts have only imposed liability on social hosts who have knowingly provided alcohol to persons under the age of 21, to the point of intoxication.  The rationale is that adults are responsible for the consequences of their own actions. Moreover, the Pennsylvania legislature has made a legislative judgment that persons under twenty-one years of age are incompetent to handle alcohol.   There is therefore risk in serving or allowing minors to drink at Clubhouse events even if the Association does not actually know if minors are drinking at the event.  

If the Association allows rental of the Clubhouse by unit owners, the Association could be named as a party if an incident occurs which involves intoxication of a minor since the event hosting the event occurred at the Clubhouse – this can occur even if the Association had no hand in serving the alcohol to a minor at a resident’s private event.   Therefore, if a unit owner wishes to rent the Clubhouse and host the event, the Association should ensure that Association’s policy for Clubhouse use and the rental agreement provide for various protections for the Association, to the extent permitted by law, including language that the unit owner will not serve minors alcohol and providing for indemnity for the Association by the unit owner.  While no policy or agreement will be a failsafe against liability, the Association should nonetheless seek to protect itself from liability.  In addition to a strong policy and agreement, this would also include ensuring that the Association’s insurance policy would cover/defend the Association and making sure that the unit owner renting the facility has homeowners insurance by way of obtaining a certificate of insurance as part of the rental process.

Finally, even if an intoxicated person that attended an event at the Clubhouse were over 21 years of age, the Association would likely be named as a party in any litigation if it hosted the event or rented the facility to a unit owner.   While liability may not ultimately be found against the Association given the current status of the law and precedent, the Association will still need to defend the action so proper insurance for the Association and homeowner and/or indemnity provisions in any rental agreement will serve to protect the Association’s interests.

It is wise to have an attorney review the Association’s insurance coverage and its policy for Clubhouse use and/or the rental agreement for the Clubhouse to ensure that the Association is protected to the best extent possible.   Hoffman Law LLC is ready to assist your Association with this and more.

– Edward Hoffman, Jr., Esq., CCAL