The Cook Islands High Court has decided to hold money involved in the development of the Sheraton site.
The court is being asked to rule in the dispute over the Pa Ariki title.
Whoever holds the traditional title has rights to the land the hotel is being built on.
The project was first agreed in 1987, but has been surrounded by controversy ever since - and is still not built.
A Wellington-based developer has deposited 61-thousand US dollars into a trust lawyer's account as surety towards negotiations to finish the project.
A lawyer, Tim Arnold, asked for that money to be transferred into what he called the neutral hands of the court.
The Chief Justice of the Cook Islands, Laurie Greig accepted the transfer from the lawyer's trust account, and said the whole thing had been a tragedy for the country and its reputation.