A 60-room Lawrence hotel will be sold to the highest bidder later this month because its operators defaulted on a $1.1 million loan.

The Best Western Hallmark Inn, 730 Iowa, will be auctioned by the Douglas County Sheriff’s Office.

The sale was ordered by the Douglas County District Court after it ruled the hotel’s lease holders, Ted and Melody Halstengard of Oregon, defaulted on a $1.1 million loan received from Sterling Centrecorp Inc. of Palm Beach County, Fla.

The auction, to begin at 10 a.m. Oct. 31 at the south steps of the Douglas County Judicial & Law Enforcement Center, 111 E. 11th St., will not include the real estate but rather include all the assets of the business, including the furnishings of the hotel and the lease that allows the holder to operate the hotel. The real estate, including the building and the ground it occupies, is owned by the William C. Burcham Trust, Lawrence.

Neil Eckard, the court-appointed receiver in the case and a spokesman for the hotel’s new management company, said he expected the hotel to remain open after the sale.

“Let me assure you the property is not going to close,” Eckard said. “We feel comfortable it can pay its own way now.”

Eckard said the hotel’s management recently made improvements to the property, including renovating some of the rooms and adding lighting to improve the property’s appearance.

“We wouldn’t have made those improvements if it were going to close,” Eckard said. “We like the Lawrence market.”

The auction is open to the public, but Eckard said he was confident the property would continue to be used as a hotel because that is the obvious “best and highest use” for it.

Eckard declined to say whether his firm, Summit Hotel Management Co., based in Fort Lauderdale, Fla., was interested in purchasing the property. Another possibility is the lender, Sterling Centrecorp Inc., could buy the property and continue to operate it as a hotel as a means to recoup its lost investment in the business.

Anthony Rupp, an Overland Park attorney for the lending company, declined to comment on that possibility.

Attempts to reach the Halstengards were unsuccessful.

The hotel currently employs about 20 people, Eckard said.

Individuals interested in more information about the sale can call Rupp or Amy Morgan, attorneys for the lenders, at (913) 451-3355.