CLO Lawyers: Your Trusted Local Partner in Hotel and Motel Transactions

Are you thinking of buying or selling a hotel or motel? These transactions are often complex, costly, and time-consuming. Whether you are a vendor or purchaser, having a lawyer and a team of professionals with extensive experience in similar transactions is essential. Our team of expert commercial lawyers can save you time and reduce the complexities and costs of your transaction.

CLO Lawyers‘ commercial and business law team excels in providing support to purchasers and sellers of accommodation and hospitality assets.
Let our Toowoomba-based team proactively manage all the intricate details to ensure your transaction reaches a satisfactory conclusion.
Contact us today to schedule a consultation with one of our experienced business lawyers.

Critical Considerations in Hotel and Motel Transactions

1. Structuring: Assets or Shares?

When buying or selling a hotel or motel business, it is essential to consider whether it should be a sale of specific assets and liabilities of a business or whether it should be a sale of the entity that owns the business.

A business sale transaction or asset sale involves the buyer purchasing the assets of a business, such as lease, equipment, inventory, business name and intellectual property (IP).

The asset sale is usually documented in a sale of business agreement.

A share sale is when a company sells the ownership of the company to the buyer, so they buy both the assets and the entity. A share sale transaction involves taking over the company in its entirety (in the case of the sale of 100% shareholding), including all associated risks, liabilities, obligations and claims in connection with that company.

Usually, a share sale transaction is documented in a share sale agreement and requires the transfer of shares from the seller to the buyer.

2. Freehold or Leasehold?

You can buy a hotel or motel as a freehold asset (comprising the land and buildings) or a leasehold asset (a lease over land and buildings with the business).

Each option has different implications and operational considerations.

3. Who is the Seller, and Who is the Purchasing Entity?

It is essential to ensure that all assets are owned or registered in the correct entity’s name. Inconsistencies in the ownership of assets need to be remedied or addressed either before or in the sale agreement.

Buyers should obtain legal advice to establish the most appropriate entity structure to acquire and operate the business before committing to a purchase transaction.

4. Business Names

Ensure the business name is registered and current, as it can be significant component of the goodwill associated with the business.

Hotels & Motels – Sales and Purchases | CLO Lawyers, Toowoomba

5. Leases

Most accommodation businesses operate from leased premises. The lease is transferred as part of the sale, or a new lease is issued to start from settlement of the business sale. Understanding the terms of the lease before purchasing is crucial as there can be significant capital risks associated with renewal or at the end of the lease.

6. Licensing

Ensure that all necessary licenses are current or transferable. Various licenses will be required depending on the services provided in the hotel or motel. The most common licenses for hotels are liquor and gaming.

Usually, contracts for sale of a business that involves the use of a liquor license require the grant or transfer of that license as a pre-condition to settlement.

Most local governments will also require a premises to hold several other accreditations, including food hygiene, trade waste and signage. Some local governments have a requirement for accommodation licences.

7. Due Diligence

Ultimately the extent, adequacy, and availability of due diligence information will determine the success or otherwise of a hotel or motel transaction.

The buyer’s accountant will verify the business’s finances by conducting a thorough investigation its trading figures.

After verification of the business finances, the buyer’s solicitor will check that the business is legally sound.

Comprehensive Legal Services for Accommodation and Hospitality Businesses

CLO Lawyers offers tailored legal services to navigate the complexities of buying or selling an accommodation or hospitality business:

  • Due Diligence comprising comprehensive reviews of financials, operations, contracts, licences, permits and potential liabilities.

  • Contract negotiation and drafting, ensuring favourable terms and conditions.

  • Risk assessment and management, identifying and mitigating potential risks.

  • Regulatory compliance.

  • Lease negotiations and agreements, comprising lease transfers and negotiating new agreements on favourable terms.

  • Post-acquisition support, including staffing and licensing matters.

Why Choose CLO Lawyers for your Motel or Hotel Purchase or Sale?

Our dynamic and experienced commercial and business law team understands your unique needs and provides creative solutions tailored to the accommodation and hospitality industries. We approach each transaction with a commercial mindset, working collaboratively and communicating effectively with stakeholders to ensure successful outcomes.
Contact CLO Lawyers today to make an appointment with one of our experienced commercial and business lawyers.
Hotels & Motels – Sales and Purchases | CLO Lawyers, Toowoomba