Condo Hotel Lawyer: Not so fast! Locking Down the Condo Hotel Structure
By Jim Butler, Hotel Lawyer | Author of www.HotelLawBlog.com
22 September 2006
We have been called in after-the-fact many times by developers who have been given unworkable condo documents drafted by expert condo lawyers. The problem is that they were experts in condos, but had scant experience with hotels, and no experience with condo hotels. Unfortunately, the best way to fix bad documents at the outset is to throw them away and begin again from scratch. Condo hotel deals are far too complex to try and bandage bad documents. But once they are in place, you may have to live with them for a long time, even if they are terrible.
For better or worse, most of the elements critical to the success of the condo hotels structure get "baked in" or locked down in documents that are difficult or impossible to change once implemented. This includes crucial factors like cost and revenue allocations, mechanisms for maintaining uniform product standards and high quality of maintenance and service, obtaining and managing the necessary room inventory, and providing adequate revenues and means of enforcement to meet condo unit owners' obligations.
Before locking down the structure, you need to be sure that all these documents are right -- the CC&Rs, HOA articles and bylaws, HOA management agreement, and Shared Facilities Agreement, as well as the rental program agreement and the hotel management agreement with the hotel operator. Good documents that adequately cover all the issues particular to condo hotels will help developers minimize problems and maximize profitability.
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Our Perspective. We represent developers, owners and lenders. We have helped our clients as business and legal advisors on more than $50 billion of hotel transactions, involving more than 1,000 properties all over the world. For more information, please contact Jim Butler at jbutler@jmbm.com or 310.201.3526.
Jim Butler is one of the top hotel lawyers in the world. GOOGLE "hotel lawyer" or "hotel mixed-use" or "condo hotel lawyer" and you will see why.
Jim devotes 100% of his practice to hospitality, representing hotel owners, developers and lenders. Jim leads JMBM's Global Hospitality Group® - a team of 50 seasoned professionals with more than $50 billion of hotel transactional experience, involving more than 1,000 properties located around the globe.
Jim and his team are more than "just" great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them. They are a major gateway of hotel finance, facilitating the flow of capital with their legal skill, hospitality industry knowledge and ability to find the right "fit" for all parts of the capital stack. Because they are part of the very fabric of the hotel industry, they are able to help clients identify key business goals, assemble the right team, strategize the approach to optimize value and then get the deal done.
Jim is frequently quoted as an expert on hotel issues by national and industry publications such as The New York Times, The Wall Street Journal, Los Angeles Times, Forbes, BusinessWeek, and Hotel Business. A frequent author and speaker, Jim's books, articles and many expert panel presentations cover topics reflecting his practice, including hotel and hotel-mixed use investment and development, negotiating, re-negotiating or terminating hotel management agreements, acquisition and sale of hospitality properties, hotel finance, complex joint venture and entity structure matters, workouts, as well as many operating and strategic issues.
Jim Butler is a Founding Partner of Jeffer, Mangels, Butler & Marmaro LLP and he is Chairman of the firm's Global Hospitality Group®. If you would like to discuss any hospitality or condo hotel matters, Jim would like to hear from you. Contact him at jbutler@jmbm.com or 310.201.3526. For his views on current industry issues, visit www.HotelLawBlog.com.
