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October 1, 2002

3 Min Read
Legal Libations

YOU'VE DONE THE RESEARCH, POURED OVER THE POPULATION DEMOGRAPHICS, AND THERE IS DEFINITELY A NEED FOR WINE STORAGE IN YOUR AREA. It would make a nice adjunct to your existing facility and entice new customers to view the premises. You have brainstormed a marketing plan and made an appointment with your contractor. Now you are ready to embark on your new venture.

However, there are legal and insurance factors associated with wine storage that must be addressed before you make the first facility change. A meeting with your own counsel can shed light on the legal issues. And you will want your insurance agent to examine your policy.

"Every state has different liquor-control laws," says Jeffrey Greenberger with Cincinnati-based Katz, Greenberger & Norton LLP. "It is important to get with your counsel to make sure you are in full compliance."

Although liquor laws vary from state to state, there are some general precautions a new owner should consider. It is illegal in most states to sell wine unless you have a permit to do so, Greenberger cautions. "You want to be careful and make sure there is no sale of wine from your premises. Make sure you don't have an unusual volume of traffic of people through your premises," he says. "People may be selling wine, either bottle by bottle or case by case." Being caught selling wine is more of a problem for the tenant, but an owner doesn't want the bad press.

He also advises prohibiting all wine consumption on the premises. "You are not a wine seller, you're in wine storage," Greenberger says. "If you are going to allow wine-tasting on the premises, you need to check with your state attorney's office to make sure you have the necessary permits."

Wine has to be kept in a climate-controlled area with very narrow margins for temperature and humidity. It is important owners to do their best to exculpate themselves from liability in case something catastrophic happens to cause climate-control systems to fail. "If you're going to get into this business, you're pretty much on the hook for some of the damages."

Redundant air-conditioning and humidity systems are necessary and should be hooked up to a generator. But that doesn't mean total security. "We had a tornado come through my area a few years ago that knocked out the gas and electricity," Greenberger says. "The generators could not run at all." Although owners can try to provide for every contingency, there are some events over which they have no control. He stressed owners check their insurance policies for coverage on major catastrophies, such as tornadoes or hurricanes.

"I am a big believer in declared values in self-storage," Greenberger says. "It's one thing to store 100 cases of a well-known wine, but it's another thing to store very rare, expensive wines. I think you need to know if someone is doing that, because there's no amount of rent that could replace a bottle of wine like that." Owners may want to put a provision in their rental agreement that says tenants agree the sum total of the value items they are storing at any time in your space will not exceed a certain figure.

"I warn owners about allowing people to store very rare bottles in self-storage; those belong in your personal wine cellar." He feels self-storage is best served by catering to customers who wish to store wines that aren't quite so rare such as restaurateurs who store their excess inventory until it is needed.

Wine storage is an exciting method for bringing in customers who may not ordinarily consider self-storage for their goods. The upscale image of wine can do nothing but increase the presence of the facility in the neighborhood and draw a new group of clients. Just ensure your own safety by taking precautions to limit liability.

For more detailed information on wine storage, see "Ripening on the Vine," October 2001, Inside Self Storage.

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