Hotel Lawyer with good news! A new federal court decision upholds condo hotel structure. No "securities" involved as structured. Disgruntled condo hotel unit purchaser lawsuit dismissed.
By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
14 April 2011
Hotel Lawyer with good news for well-structured condo hotel deals. With the experience gained as legal and business advisors on more than 100 condo hotel and hotel condo projects, we have said for many years that this type of project has earned an enduring place in the landscape of hotel and real estate development. We still believe that.
The main issues of successful hotel mixed-use development are managing consumer expectations, fulfilling those expectations, and creating a viable mixed-use regime structure. In the case of condo hotels, a viable structure must work from an operational standpoint, be economically sustainable, and avoid triggering violations of Federal and State securities laws.
In a recent lawsuit, involving the Hard Rock Hotel San Diego, a federal district court in California ruled against the condo hotel buyers, finding that no securities laws were violated -- the plaintiffs did not allege facts that would cause the condo hotel units to constitute "securities." We see the case as affirming the effectiveness in defeating plaintiffs' claims of two structural elements we have encouraged all our clients to use.
My partner, Catherine Holmes, who structures most of our condo hotel regimes, talks about these factors and the case below. Catherine advises clients in the specific business and legal aspects of condo hotel regime structuring and documentation, including securities compliance matters, documentation and training. In her article below, she talks about the case and what it means for us in the condo hotel world. It is good news!
