Partnerships and estates
Selling a hotel when partners or heirs are involved
With several owners, or an owner who has died, the first question is not price. It is who has the authority to sell and whether they agree.
Authority comes before price
A buyer can only buy from someone entitled to sell. Before a letter of intent means anything, both sides need to know who that is. Title may be held by individuals, a partnership, a limited liability company, a corporation, a trust or an estate, and each has its own rules about who decides and who signs.
Where the rules are written
For a company, the operating agreement, partnership agreement or bylaws. For a trust, the trust document. For an estate, the will and the court's appointment of a personal representative. Find these first.
What a buyer will ask to see
Proof of how title is held, the governing document, and evidence that the people signing are authorized, such as a resolution of the members or letters from the probate court.
When partners disagree about selling
Partners fall out over money, effort, family and plans for the future. In a hotel, where one partner often runs the property and the others do not, the strain shows sooner.
Read the agreement together
Most agreements say what vote is needed to sell, and many include buy-sell terms or a right of first refusal that lets one partner buy out another. Those terms may settle the matter without an outside buyer.
A sale to an outside buyer
When nobody wants to buy the others out, or can, selling the whole property and dividing the proceeds gives each partner cash in place of a share in a business they no longer agree on. One buyer, one price and one closing can be simpler to accept than a negotiation among yourselves.
When agreement is not possible
Courts can order the sale of co-owned property, a process that is slow, public and costly. It is a matter for your attorneys. A negotiated sale is usually better for everyone involved.
When a hotel is part of an estate
A hotel does not pause when its owner dies. Guests arrive, payroll is due and the brand still expects its standards met. Someone has to run it while the estate is settled.
Who can sell
Usually the personal representative named by the court, or the trustee if the property was held in trust. Depending on the state and the will, a sale may need court approval or notice to heirs. The estate's attorney will know.
Keeping the business steady
Value falls quickly in a hotel nobody is managing. If no heir intends to operate it, an interim manager and an early decision about selling protect what the estate is worth.
Valuation for the estate
Estates generally need a formal appraisal as of the date of death, for tax purposes and for fairness among heirs. That is an appraiser's job, not a buyer's. Our explanation of hotel valuation terms covers the concepts so that the report is easier to read.
How a direct sale can help co-owners
- One counterparty. Every owner hears the same terms from the same buyer.
- Less exposure. A dispute among owners or a death in the family does not become part of a public listing. See selling a hotel privately.
- A defined process. The steps from NDA to closing give a group of owners dates to work toward, though the dates themselves depend on diligence, financing and approvals.
- Proceeds divided at closing. The title or escrow company can pay each owner their share directly, according to written instructions.
It is not always the best route. If the owners want the comfort of having tested the market, a broker's process provides it, and our comparison of brokers, auctions and direct buyers explains the trade-offs. Co-owners weighing an offer should also know that the buyer may be our own entity, an affiliated buyer, or a purchase made with capital partners. The site terms state how and when that is disclosed.
What to prepare before talking to a buyer
- A copy of the deed or a recent title report
- The operating, partnership or trust agreement
- For an estate, the death certificate and the court's letters of appointment
- A list of every owner or heir, their share and their attorney
- Trailing-twelve-month financials and the last few annual statements
- Loan documents and the current balance
- The franchise agreement, if the hotel is branded
If the hotel has declined during a dispute or a long probate, the page on hotels that have closed or fallen into distress may apply. Where one owner-operator simply wants to stop, see selling at retirement.
Questions from co-owners and heirs
Can one partner sell without the others?
That depends on your governing agreement and state law. A buyer will require proof that whoever signs has authority to sell the whole property.
Can you talk to all the owners at once?
Yes, and we prefer it. Speaking with one owner while the others are unaware tends to end badly for everyone.
We inherited a motel and none of us wants to run it. Where do we start?
With the estate's attorney, to confirm who can act. Then gather the financials and speak with a buyer or a broker. Our FAQ for hotel sellers covers what a first call with us involves.
Start with a confidential conversation
Tell us where the property is, how many keys it has and whether it carries a brand. We read every submission ourselves and call you back at the number you give.
Nothing you send is passed to a listing service, and sending it does not commit you to anything.
Tell us about the property
Read by the buyers. Never listed, never advertised.