BAR HARBOR – The town and hotelier Thomas Walsh have not yet settled their land use dispute over the Walsh House despite a tentative agreement reached Oct. 22, according to officials.

Town Manager Dana Reed declined to comment on the matter Thursday before going into another closed-door session with town councilors late in the afternoon, except to say that he has not yet signed the agreement on behalf of the Town Council.

But Lee Bragg, the town’s lead attorney, said Thursday both sides are trying to agree on final language.

“The devil is in the details,” Bragg said from his Augusta office, “and the parties are trying to clarify a couple of points so there is no misunderstanding.”

He added, “The parties are still optimistic. Both sides are acting in good faith and we’re trying to get to the finish line.”

Eben Salvatore, a spokesman for Walsh, did not return phone messages Thursday.

Both parties want to settle the matter without a protracted process before the appeals board and potential litigation.

Reed said the council did not take any action after the executive session Thursday afternoon, partly because only three of the seven councilors were present.

Council Chairman Joseph Cough and Councilor Jeff Dobbs have recused themselves from resolving the matter. Cough, whose family owns Atlantic Oakes by the Sea, is a major competitor to Walsh; and Dobbs, who owns a video production company, has been hired by Walsh in the past.

The town issued a notice of violation against Walsh on May 13, alleging he was using the Walsh House, located behind his Regency Hotel on Eden Street, as a commercial building without a permit.

The Walsh House was constructed on the foundation of the former Carpenter Estate, located within the shoreland zone. Walsh had used the foundation itself as a place to host wedding receptions and other events as part of the Regency before seeking a permit to build a single-family home on the foundation in 1994.

The town alleged that Walsh was using the first floor for commercial events and renting out five bedrooms on the second level.

The house apparently was never used as a single-family residence, according to public testimony and documentation in the case.

Under the agreement approved by the Town Council on Oct. 22, Walsh would agree to use the second floor for his personal residence and the town would give him a permit to continue using the first floor for hotel functions.

Walsh also would admit, under the agreement, that he was using the property without a legal permit and pay the town $60,000 to cover its legal expenses.

The agreement also states that Walsh acted in good faith in using the first floor of the house commercially because previous code enforcement officers, who later went to work for Walsh, mistakenly allowed him to use the premises for commercial uses without getting a permit.