Trading at the Ettamogah Pub has ceased with the hotel's locks changed while the owner was having a swim.
The dramatic action occurred on Wednesday with notices put on the front windows stating "this property is now in the possession of the mortgagee...'Trustworthy Nominees Pty Ltd'".
A security guard patrolled the site on Thursday, telling surprised tourists that the cartoon-inspired pub was shut.
Estate agent Tony Falvo travelled from Melbourne to change the locks and take possession on behalf of the mortgagee.
"As far as I know it was open for business until we physically closed it down," Mr Falvo said.
He said money was owed by the landlord and the action was in response to defaulting on payments.
However, owner Leigh O'Brien contested that, saying he owed $80,000 to the Melbourne-based mortgagee and planned to meet that through subdivision of land around the pub.
Normally residing in Melbourne, Mr O'Brien said he had been on-site at the hotel over the past 12 months and was off having a swim in Albury when a staff member called him to say the locks were being changed.
"It's really disappointing what's happened, to do this at this time is really vindicative," Mr O'Brien said.
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He disputed any suggestion the hotel could be reopened by the mortgagee due to his intellectual property and liquor licence rights.
"If they want to operate the pub, they've got to pull the thing down, which would be terrible, or change the look of it," Mr O'Brien said.
Mr O'Brien said before COVID there had been 25 to 30 caravans stopping nightly.
On Thursday Yarrawonga couple Stewart and Sarah Louchrey and their sons Michael, 7, and William, 4, stopped at the pub for a lunch break en route to Port Stephens for a family holiday.
But they were let down as was Mrs Louchrey's mother.
"I don't think I've been here for 40 odd years and I was looking forward to seeing it to see how it had changed," Joan Moore said.
Mr Falvo defended the hiring of a security guard.
"The mortgagee has a responsibility to protect the land and buildings, you can't walk away or leave it unprotected," he said.
Mr O'Brien had plans to have brown tourist signs reinstalled on the Hume Highway after they were removed because authorities told him it was inappropriate to being promoting a pub.
He said NSW Roads told him they may be approved with the inclusion of the word 'museum' after 'Ettamogah Pub' to highlight the historical aspect.