Protecting Yourself From a Bed and Breakfast Buyer - From an Owner's Prospective

Some lucky homeowners help finance their slice of paradise by owning and operating a bed and breakfast.

The lure of owning a bed and breakfast is strong.  You get to live in a big house.  That home might be close to the beach, it may have nice features like a swimming pool and hot tub, and the best thing is tourist help pay the mortgage!

You need to protect both yourself and your agency from a potentially angry buyer that has their dream of bed and breakfast ownership go bust after the sale.  

A seller may claim he is offering a licensed bed and breakfast for sale, however, that license may only be a State GE tax license.  A fully licensed bed and breakfast almost always requires a special use permit at the County level.

Also, a seller may claim it is easy to get the license.  However, speaking from experience, the nicer the neighborhood, the more likely a neighbor will fight tooth and nail to stop the special use permit.

Further during the permitting process your buyer may find out problems with the house like we did.  We had to install a 2nd septic system to operate the number of bedrooms we were running.  They also may find out that it is impossible to get a special use permit for the home you help them buy.

Therefore, whenever, a potential buyer even hints they may want to run a bed and breakfast, make them sign a statement that says you make no representations whatsoever that the home they are buying can be used as a bed and breakfast.  Especially if it is being run as an existing one. If obtaining a license was possible, why didn't the current operator obtain one?

Avoid the trap of trying to trying to understand how to get a permit.  The buyer may ask you to do the research.  I recommend simply pointing them toward the County Planning Department. 

Summary:

A. Protect yourself whenever someone thinks of buying a house and running a bed and breakfast.

B. Make sure your clients know what problems they will be getting into if they try and get one permitted.

C. If at all possible steer your clients towards a licensed bed and breakfast in the long run they will be better off paying the premium that a fully licensed bed and breakfast owner will want.

Phil Maise

Co-Owner Absolute Paradise Gay Bed and Breakfast, Pahoa Hawaii