Wednesday, February 8, 2017

If a hotel closes, gets sold, but is overtaken by squatters before the new owner has started business, what is the protocol for getting them out?

If I make an offer on a hotel, and it has been closed, I'm going to require that it be delivered at closing completely vacant; and if they cannot or will not deliver that, or the building is occupied by anyone other than people who are there for a reason that I am okay with, the deal's off. I’m also going to demand as part of the deal that it be — other than that which I might agree to in advance — unencumbered by franchise, unencumbered by management, unencumbered by any tenancy or leasehold interest, unencumbered period — free of any liens, free of any claims, nothing to get in the way of my absolute say in who’s allowed to be there, who’s allowed to set foot on the property and who isn’t; or how it is to be managed or what I can or can’t do with it, or who has the right to claim any of my return, revenue or rent from the use of it.
Image result for heart of durham hotel
If squatters have so overrun the building that they've, legally, established "residency”, then running them out of there -- if they can be driven away -- is the seller's problem. Or should be. If he's not fully in possession of it, then he can't really claim that he owns it, and therefore has no right to try and sell it to anyone. And your wisdom, intelligence, and business sense is somewhat open to question if you buy it.

I could conceivably produce a document that makes me the owner of all of midtown Manhattan. But if I can't enforce my claim to it, if I can't defend that claim against the others who have legal title, or have a leasehold interest, or who live there; if I can't clear the occupants other than those who, for a consideration, I'm content to allow to continue their occupancy; then my “ownership” of it isn't worth the paper it's written on. I may as well try and claim the moon and the stars is my own. Legal title? All that means is that the courts and the law would presumably support my claim of right to it, and assist me in enforcing it. Maybe. Up to a point. And beyond the point where they won't, we're right back to, since I have no way to enforce it, it's only paper title, it's ultimately worth no more than it's worth, so I can't really claim to own that part of it, and thus cannot sell it to you. (In the case of Midtown, any part.)
If a seller can't sell you a piece of property that is free of claims, ownership or possession by others, then all you're getting out of him is a quitclaim deed. Right now I'm having money problems and could use a few bucks: send me a couple of million, and I'll have my lawyers execute a nice, legal, quitclaim deed on my entire holdings in midtown Manhattan, and you can “own” it. (And if nothing else, you'll have just such a document! Presumably, I could even have the right to sell it to you for whatever I can persuade you to pay me for it: since a quitclaim deed contains no covenants that I actually own all — or even any — of Midtown, I can’t even be sued for or charged with fraud.) And clearing all the “squatters”: the others who have paper title to all the tall buildings, and the co-op owners, and the rent control tenants who don't want to pay you even that much to live there, and the rightful owners, and Melania Trump and her million-dollar-a-day Secret Service detail, out of Midtown. will be your problem.
One of the most fundamental responsibilities of property ownership is the responsibility to protect your title and defend it from squatters and others who might try and claim it. It’s like your first-grade teacher explained to you about hanging on to your belongings, if you leave it laying around, you give it away. Or your first-grade classmates occasionally explained to you, finders, keepers. Or like the law says, possession is nine-tenths of the law.
If you cannot or will not do that for a piece of property that you own, you should not own that piece of property, and even the law recognizes that (it’s called adverse possession, and that’s why it could even be a problem that squatters could be considered “residents”.). I strongly feel that as long as you continue to pretend to own it, under color of title or otherwise, you should be held absolutely responsible for whatever happens there regardless of fault or blame (Worcester Cold Storage and Warehouse Co. fire - Wikipedia ).
(Likewise, we could make every city in America free of crime or drugs by holding landlords absolutely responsible for any acts of their tenants. Criminals and druggies tend to not be homeowners, they’re renters. Anytime you have crime or drugs in a city, someone’s collecting the rent. Crack down on the landlords, they’ll start taking some responsibility and doing background checks, and the criminals and druggies will have to move it along, and eventually get off the planet . . .)
If you’re not in control of your property, to a degree to which your absolute ownership of it in its entirety is open to question, then your ability to convey it is highly questionable.
If I buy it, I own it; and either I own it or I don’t, and if I can’t own it and fully do as I please with it, I have no reason to buy it; and I’m just asking for trouble if I’m determined to do so anyway.
Image result for brooklyn bridge
If you doubt my word, if you feel differently, if you think my view of it is negative and a little harsh, well — this is your last chance — send me a PayPal for a few mil, and I’ll sell you the Brooklyn Bridge. I can have my lawyers draft a quitclaim deed, sign off on it, and drop it in the mail to you within a week or so.

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