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Buying (or Investing in) A Brewery in Washington State? A Few Things To Keep In Mind

You love beer.  You’ve been making it at home for a few years, or are working in a brewery, and want to take the leap into running a microbrewery in the Seattle area.  How do you go about doing this? This article looks at a few important steps.

While you are dreaming about how you’ll open best brewery in the region, a good friend asks if you want to invest in his or her own microbrewery. A chance to get in to an existing operation!  It sounds like a great opportunity.  But even though you are friends, don’t forget to do your due diligence. It’s no insult to a solid business relationship to find out as much as possible about what, exactly, you are getting into – if there is resistance to you asking appropriate questions, it may not be the right fit. That said, it’s not uncommon for potential investors or buyers to be asked to sign a non-disclosure agreement (NDA) in order to keep confidential the financial and other proprietary information you want the company to share with you. The conditions can vary from one NDA to the next, so if you haven’t already hired a lawyer to help you navigate things, this is a good time to get one, not least because a properly drafted NDA is a contract.

Due diligence involves looking at a number of items, some of which don’t even relate to whether the beer is any good or how great the potential sales are or even how good or bad the company’s finances are.  For example, is the company’s own corporate paperwork in order?  Is the company complying with local rules regarding employees? Are its licenses up to date with both the state and federal authorities? Are there any outstanding tax or other liens?  What does the lease say about change in ownership of the tenant? Often change in ownership or control of the tenant company is considered a change in the tenant; is the landlord’s permission required for change in the tenant’s ownership? Is failure to get the landlord’s permission deemed a breach of the lease? These are just a few of the issues to consider before thinking about how great the beer will be.

But hold on. Before you can buy (or buy into) a brewery, remember that the state and federal licensing authorities must be notified of and approve the change in ownership.  A change in ownership by as little as 10% means the new investor (you), and the transfer to you, must be approved (see, e.g., Revised Code of Washington 66.24.025). A new owner is subject to background checks; both Washington’s Liquor and Cannabis Board (LCB) and the U.S. Department of the Treasury’s Alcohol and Tobacco Tax and Trade Bureau (TTB) have forms and procedures for this, and the process can take between several weeks and a few months. Even with no criminal background, an investor who is certified to be violating a child support order can be denied approval (or will have an existing license suspended. RCW 66.24.010). In short, without approval from the LCB and TTB, this path ends. Investing as a corporation or an LLC will not get around the requirements; not surprisingly, the LCB and TTB focus on the people who are involved, not just the entities.

Curious?  Stay tuned. But if you are seriously considering investing in or opening your own brewery, don’t wait for more blog posts – consult with a lawyer.  Law Office of Susan K. Fuller, PLLC, susanf@fullerpllc.com

© 2018 Law Office of Susan K. Fuller, PLLC

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Architect or Designer — What are the Rules?

Homeowners and owners of commercial properties alike are concerned about the costs of building and/or renovating their properties, and are keen to make sure they stay within the rules and comply.  After all, nobody wants to build or repair a building and find out later that compliance issues are holding up the sale, remodel, or other transaction regarding the property.  This article is for those in the design and construction trades who want to know when an architect’s stamp is required, and likewise for owners to be similarly informed.  Nobody likes surprises, especially if they result in scuttling a project.

On June 14, 2011, the Design Professionals Council of the Master Builders Association of King and Snohomish Counties hosted a panel from the Washington State Department of Labor & Industries and the Washington State Board for Architects to discuss recent changes to the rules for licensing architects (RCW 18.08).  There are a number of changes which were discussed by the panel, but this article instead focuses on changes the panel emphasized were intended to clarify the point at which a licensed architect’s stamp on a set of plans is required on a project. The changes took effect on July 1, 2011.

A Bit of Background

The relevant rules are at Revised Code of Washington (RCW) 18.08.410 (5), (6) and (7).  Before July 1, 2011, the rules governing architect licensing generally did not apply to or prevent “any person from doing design work…for the erection, enlargement, repair or alteration of a structure or any appurtenance to a structure, if the structure [was] to be used for a residential building of up to and including four dwelling units or a farm building or is a structure used in connection with…such residential building…such as a garage, barn, shed, or shelter for animals or machinery…[nor did the rules prevent] any person from doing design work…for construction, erection, enlargement, alteration, or repairs of or to a building of any occupancy up to four thousand square feet [4000sf] of construction.”

Given the occasional ambiguities of the English language and the realities of how things play out in the field, this version of the statute resulted in some confusion over the years, particularly on two issues: (1) whether residential projects of 4 units or less had to involve an architect if the project would be more than 4000sf, and  (2) whether sub-projects on commercial buildings  (such as tenant improvements) needed an architect if each individual project was under 4000sf, even if the total square footage of the area being worked on exceeded 4000sf.

The amended version of RCW 18.08.410 basically answers thusly:  (1) no, and (2) yes.

What Are the Changes and What Do They Mean?

RCW 18.08.410(5), (6) and (7), effective July 1, 2011, now say the rules governing architects do not apply to or prevent “any person from doing design work …for the erection, enlargement, repair or alteration of a structure or any appurtenance to a structure regardless of size if the structure is to be used for a residential building of up to and including four dwelling units…

As to non-residential projects, the architect licensing rules do not affect or prevent “any person from doing design work ….for construction, erection, enlargement, alteration, or repairs of or to a building of any occupancy up to a total building size of four thousand square feet; or…where the project size is not more than four thousand square feet in a building of greater than four thousand square feet and when the work contemplated by the design does not affect the life safety or structural systems of the building.  The combined square footage of simultaneous projects allowed…may not exceed four thousand square feet.”

So What Does This Mean For Me?

Here are the practical effects:

(1)   If you are a homeowner, or are hired by a homeowner, to design the construction or remodel of any size (so long as it is 4 units or less), you are not required to have the plans stamped by an architect;

(2)  If you own a non-residential (commercial) building and plan to renovate it, you will not need an architect if the total square footage will be less than 4000sf; however, beware that this comes with a caveat: if the life safety or structural systems will be affected by the work, you will need an architect even if the total area at issue is less than 4000sf;

(3)  Non-residential projects larger than 4000sf require an architect’s stamp.

The upshot is to eliminate some confusion that has bedeviled the industry, and to more clearly express the intent of the legislature.  Regardless of whether one agrees or disagrees with where the line is drawn as to when an architect’s stamp is required, it is important to know where the boundaries are. Local building officials will be better able to enforce what the law requires be submitted to them, contractors working with customers can give sound advice, designers will know what limitations they must work within, and property owners can plan accordingly.

Of course, individual situations vary, so it is important to consult with your design professionals, construction team, and permitting authorities; this article is intended as a general overview only, and is not to be construed as legal advice.

© 2011 Law Office of Susan K. Fuller, PLLC