The Tynwald Commissioner for Administration says it's not his place to say whether it would be better to demolish the Castletown Golf Links Hotel.
Advocate Paul Beckett's report into the row between a developer, local residents and Malew Commissioners will be laid before Tynwald in December.
Langness Golf Course Limited, which bought the hotel in 2011, complained that the local authority had failed in its duties because it hadn't ordered the building demolished.
However, Mr Beckett said that decision wasn't unreasonable - but said Malew Commissioners needed to be more transparent.
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