Preconstruction Condo Deals “Null And Void”
A report from the Chicago Tribune. “Back in 2003, when Trump was planning his downtown residential tower, he gave about 40 insiders an attractive deal: They could sign contracts to buy condominiums in the Trump International Hotel & Tower at a discount. In some cases they agreed to pay about $500 a square foot. But units in the building, still under construction, are on the market for as much as $1,343 a square foot.”
“Trump has notified them that their agreements are ‘null and void.’ Some real estate experts strained to cite a precedent for a developer offering contracts at a preconstruction discount to get the ball rolling on a project and then canceling the deals later as selling prices rose. ‘I never heard of this before,’ said Richard Peiser, a professor of real estate development at the Harvard Graduate School of Design.”
“If a developer asks firms they work with to buy units ‘to help a project appear successful and achieve certain hurdles,’ Peiser said, ‘it would seem the buyer should enjoy the upside.’”
“One of Trump’s unhappy ‘friends’ is Judi Diamond-Falk, an Evanston architect who designed an early sales office for him here. ‘Anyone who buys preconstruction gets a financial benefit for the risk they take,’ Diamond-Falk said.”
“Trump also benefited from the early sales, she added, because he ‘could say that a certain percentage of units are presold to get his financing and tell the public a certain percentage was presold. People didn’t know they were friends and family sales.’”
“Trump said in an interview Monday that the sales contract included wording that allows him to raise the prices for the friends and family units. In June, Trump attorney Jason Greenblatt wrote to the Diamond-Falks to notify them that the sale was ‘null and void,’ citing ‘Paragraph 12 (b)’ of the contract. That clause refers very generally to ‘matters beyond [the] seller’s reasonable control’ as a reason for the developer to default on the contract.”
“The friends and family sales ‘were a gift’ to a small group, said Greenblatt. ‘From Day One, they understood that if the project was successful, the windfall would go to Mr. Trump,’ he said.”
“In the past two years the slowdown in the residential market has affected the approximately $775 million tower, Trump acknowledged. About 21 percent of the residential units remain unsold, said Tere Proctor, Trump’s sales director here. At the same time, construction costs have skyrocketed.”
“Trump said one reason for canceling the friends and families contracts is to ‘have more income to handle potentially higher construction costs.’”
Here is a link to another Chicago tower article:
‘Making his first public appearance, the developer of a proposed 2,000-foot tower for Chicago’s lakefront said Monday night that he is so confident the project will succeed that he is ready to order foundations, even though the skyscraper has yet to receive city approval.’
‘ Taking a swipe at developer Donald Trump, who has called Calatrava’s tower ‘financial suicide,’ Kelleher said of Trump’s 92-story hotel-condominium skyscraper on the former Chicago Sun-Times site: ‘In my view, the Sun-Times site is neither residential nor office.’
‘The project would be 150 stories tall, not 160, as his team previously disclosed, Kelleher said. It would have anywhere from 1,000 to 1,350 units, a possible reduction from the number of units announced last month.’
May his tower stand as a bankrupt symbol of the housing bubble just as the empty Enron tower stood as the last round of fraud and greed
Honestly, what is the appeal of living 150 stories up? Don’t most people get vertigo at that height? Wouldn’t the building sway in the wind? Wouldn’t you go to sleep worrying about another WTC or fire?
Don’t get me wrong - I used to borrow a pal’s 40th floor UN Plaza coop all the time and the views were amazingly gorgeous. But at 150 stories high, it just seems unpleasant. (Not to mention all the time spent with your ears popping in an elevator).
I can hardly stand to be on the third floor of a building (having experienced too many CA earthquakes makes me nervous around tall buildings).
While Chicago might not have earthquakes, so far as we know, they do have wind there, no?
Agree that 150 stories sounds VERY unpleasant, indeed!
If it’s an east view, Lake Michigan looks the same no matter how high up you are. If it’s a west view… who the hell in this town wants a west view. Ooooh, look, it’s Cicero! The South Side! And over there, Cabrini-Green!
It is an incredible east view across the lake. That is one of the issues here. This particular site has such great access and views that it makes sense to seek very high densities in order to get the best value. That might not mean this building, but it probably does mean tall and maybe even super tall.
Another thing to keep in mind is that some of the buildings going up now such as most Calatrava works on and also the Rincon Hill Towers in San Francisco are using extremely advanced construction techniques which allow faster construction and have extremely robust structure. New construction methods could change the cost structure quite a bit.
Last I saw, the Trump building in Chicago was at about 25 stories framing completed. It’s not going up very fast.
Agreed. There is such a thing as too high. I’m up 150 feet and the lake is nice during moonrise in the summer, and it is nice to get tons of sun whenever you want it, otherwise there’s just no need to see the steelworks in Gary. (which you can easily see even from my height and seven miles north of Calatrava’s site.)
I bet even money the architect who designed the sales office did it pro-bono in exchange for the insider deal.
Did she ever get screwed.
Last I heard nobody would finance the damn thing. I know the idea is cool, but seriously, who in their right mind would actually put their money on the line?
Please, build, build, build, build yourself into bankruptcy.
They’re leaving Floriduh now. More people moved out of Florida than moved there in 2006. Man, they are so screwed
http://tinyurl.com/2auhlw
Donald, you are fired.
He is a piece of human guano, but that’s not news.
–
But, he is also a good reflection of Corporate Crooks of America who do run this country. And there isn’t a damn thing that American People can do to change that. You mean vote for someone else?!
Jas
I dunno. My small way of fighting it is to avoid paying one penny more in taxes than I have (am forced) to. And I make ‘em work for their money!
He is just another “legacy” heir that wants the sheeple to treat him as royalty…Give me a break….take away the money and the little toad could not do any better than the “Line Up” in Winnemucca but he runs around with a new set of sugar britches every five or six years to make it appear as if he is some big friggen stud…
He is scum of the earth and should be in prison.Please, can we find someone to give his ugly mug a makeover.
Trump is worse than corporate scum. Even Enron wouldn’t give that clown a job or do a deal with him.
Cant stand Trumps TV show. In the real world no one behaves like that and holds a job. LOL! they often become realtors. Overall a horrible depiction of what goes on in corporate world. I hate to think some young person will actually believe this is the norm and pick business as their major in college. Very sucessfull corporations focus on collaberation and team work. Many sucessfull people have a high degree of honesty and respect. I been there and know the difference. Jack Welch is right.
Jack is a little pig also albeit a very intelligent one…..
Ron Paul for President in 2008. There is still hope.
Hugo Chavez for El Presidente
Vertical walls… empty space, with a wintry view:
As of November, residential asking prices ranged from $998 to $1,343 a square foot, compared with $400 to $750 in September 2003, according to Appraisal Research Counselors.
What does Donald suck on to make his lips pucker like that when he speaks?
I could venture a guess, but it’s probably not appropriate for the blog! I hope the Donald takes it deep and hard on this project by the time this is over. Can’t stand that slimy ba$tard!
Has Mr. Trump ever hear of a arms length transaction ? A lawyer could make a case that Trump used his friends and family to get a project financed ,which is fraud to the lender .His shills are bogus contracts that he already cancelled apparently . Also its questionable that he used his friends and family to advertise that units were sold . Some people won’t buy in project that don’t have a certain amount of sales and some lenders won’t lend in projects that don’t have a certain amount of sales ,( but they have to be arms length transactions ). TRUMP is a slimeball cheat . Lenders should boycott his stupid projects. If a man cheats in one way the man cheats in another way, so I wonder what the construction is really like in his hyped up projects.
I have no respect for this brat boy Trump who bragged about how he backed the lenders in a corner the last time he went down the tubes .
Ahh…now it makes sense. He’s not cornholeing his friends, he’s defrauding his investors. Why do people keep handing him money? It’s a good way to go broke.
posted “What does Donald suck on to make his lips pucker like that when he speaks? ”
I think we can rule out door- nobs.
So many crooks.
This came up last thread. Buydowns on this link a mortgage broker is pushing them.
http://blogs.ocregister.com/lansner/archives/2007/01/insider_qa_with_local_lender_1.html#more
Watch for mortgage brokers trying to get buyers to get buydowns everwhere now that its a buyers market.
This is a well known racket. Instead of lower price by 25k, seller pays 25k to the lender who cuts off 1k a month for 2 years.
So the catch: if you sell or refinance you lose the difference. The profits are astronomical considering its FREE MONEY to the brokers/lender. Why prepay interest - just take the CASH !! Then prepay principal if you must.
What do you expect from a “Snake Oil Salesman”?
He is pure slime. The worst of the worst. I hope they all sue his ass.
I can understand Donald’s confusion - his lawyers need to remind him that you declare bankruptcy FIRST, then you get to reject the unfavorable contracts. I hope these folks sue him while he still has the appearance of some assets, but if they are smart they should probably run away and be glad they are not involved in the inevitable fiasco.
In his case somebody should take a contract on him.
Will he sue me too if I comment how he has once again screwed over people who are close to him to save his own slimey hide.
Perhaps the comment that he should hardly be a moral compass was more on the mark than we thought.
Perhaps the comment that he should hardly be a moral compass was more on the mark than we thought.
——————————–
Rosie was right!!!
would love to see he and his companies go BK again, but that would mean him screwing his creditors again as well–not a good thing
I don’t know - you would think that as many times as he has screwed his creditors through BK, that no one would want to lend money to him again. Seems like the creditors should have known the risk (it’s no secret that his business model always includes the BK option), so I don’t really have any sympathy for the creditors in this case since they chose to deal with him despite the risks.
“Shanna, they bought their tickets, they knew what they were getting into. I say, let ‘em crash.”
“First the earth cooled. And, then the dinosaurs came, but they got too big and fat, so they all died, and they turned into oil. And, then the Arabs came and they bought Mercedes Benzes.”
All the condo flippers are stuck with the downside, but if they deal with Trump, they don’t even get the upside.
Yeah, loss - they keep, gain - Trump gets? Why would anyone - even family and friends - get in on that deal? Where is the “what’s in it for me?” factor? I wanna say they must be idiots but can’t help think there has got to be another element to it. I just don’t get it.
It’s called using family and friends to beef up pre-construction sales to get a construction lender to finance a project based on the fact that x amount of condos are already pre-sold .And than Trump gets the construction loan and than he cancels the contracts and raises the prices of the units after he can see that people will pay more on the hype .
HW posts “It’s called using family and friends”
And that is called shitting were you sleep.
HW posts “It’s called using family and friends”
And that is called shitting were you sleep.
This would be good conversation for Rosie…lol
I was watching wrestling last week and they had a mock fight of rosie and donald, funny as hell. Donald won the match but I thought rosie should have won.
I honestly NEVER watch wrestling (or much TV at all), but somehow managed to catch that one. Too funny!!
combover logic
“…citing Paragraph 12 (b) of the contract. That clause refers very generally to ‘matters beyond [the] seller’s reasonable control’ as a reason for the developer to default on the contract.”
I’m not a lawyer. Can someone explain “default on the contract?” If Trump defaults the lower price contract, wouldn’t he have to refund the deposits to close the old obligation. Then if he wanted a higher price, he would have to draw up a brand NEW contract… If the contract is new, then his Friends and Family technically didn’t sign it, and they would be able to refuse it, right? From the sound of it, Trump is using 12(b) to FORCE them into a new higher price contract. I don’t see that holding up legally.
“..From Day One, they understood that if the project was successful, the windfall would go to Mr. Trump.”
Then why bother investing? Does Trump have some blackmail on them or something?
Oh and I need to ask: If the construction loan is contingent on those presales, and Trump rescinds the presales, then can the bank can pull the entire loan? Trump would lose any costs he’d already incurred.
The only reason he’s still around is because his fake hair waves so nice in that super-slo-mo on TV.
In a proper world, the answer to your questions would be “yes”. In the real world where money talks louder than ethics, the answers will probably be “no”.
My hope is that Trump one day screws over a Sicilian friend, and finds himself swimmin’ wi’ da fishes.
I wouldn’t mind seeing him in a pair of cement shoes. Can’t you just imagine that hair waving around in the current as he sits on river bottom?
LOL - that’s a funny image.
CA Guy posts “I wouldn’t mind seeing him in a pair of cement shoes. Can’t you just imagine that hair waving around in the current as he sits on river bottom? ”
Just like Bruce Wills got in Billy Bathgate…. Donald is a rat!
If the Friends and Family were used as shills for Trump to obtain pre-sale figures for financing and they never sue, the banks would never be the wiser.
It’s hard to say without actually seeing the contract, but it sounds like 12(b) is a standard clause that would allow a developer to cancel a contract if the project does not go forward due to causes beyond his control. But, if that is the case, then that clause would not appear to give him a reason to cancel the sale, as the costs of the project are, actually, within his reasonable control (he is contracting for these costs, after all). This clause is usually relied upon to cancel contracts is the developer is, for example, unable to get construction financing. I’ve never heard of a developer trying to use it to get out of a contract because the market value increased and he wants to take the extra profit.
“The friends and family sales ‘were a gift’ to a small group, said Greenblatt. ‘From Day One, they understood that if the project was successful, the windfall would go to Mr. Trump,’ he said.”
OK, Mr. Greenblatt, explain exactly what the “gift” was, if you’re now claiming that The Donald could void a contract if the project was successful. Sounds more like a gift “to” The Donald, not from him, as this is the classic heads I win (project is successful, I get all of the upside), tails you lose (project is unsuccessful, you folks get to go through with purchasing your underwater condos). Just one more reason to never do a deal with The Donald.
Isn’t this like Hillary’s cattle futures trade? One party, only, both gets the gain and avoids the loss.
No it is more like W investing $606,302 (most of which he borrowed from a bank he sat on the board of) in the texas rangers and have it magically turn into $14.9 million.
http://www.publicintegrity.org/about/release.aspx?aid=21
The clause appears to be the standard “force majeure” (i.e., “Acts of God”) clause. It is meant, as indicated above, for things that really are unusual — hurricanes, earthquakes, long-term labor strikes or material shortages — things that are absolutely out of the seller’s control. You’ll all be gratified to know, that unless there is something really odd about IL law (assuming that is what the contracts are under), Donald doesn’t have a leg to stand on. normal fluctuations in market conditions have never been considered cognizable under that clause. As for “there was an [unwritten] expectation that the purchasers would forego any windfall in favor of the developer,” that assertion is as ludicrous as it is ludicrous. Perhaps Trumps attorneys feel like they can possibly bully a couple of contract holders into giving up without a lawsuit, but I doubt it.
Oops. What I meant was that I doubt that Trump’s strategy is going to work, at least with respect to its purported purpose of voiding (i.e., breaching) the contracts. On the other hand, it may be a cynical (but not at all ineffective) ploy to get some free publicity for the development.
posted “The clause appears to be the standard “force majeure” (i.e., “Acts of God”) clause.”
More like “force manure” (i.e. Acts of Buttholes)
At least with manure you can grow nice flowers with it. Trump is toxic waste of American culture.
I pretty much stop watching that Turkey tv show years ago. I still got an episode or two on CNBC. Now that he has he’s “brilliant daughter” on the show, I plan to watch not a one, anywhere. I was curious, however ,so I got the website to see how many real estate geniuses he had on this years’ show. There are probably half or more that are lawyers and and mostly the rest marketing guys and gals. Figures. Now that you have to actually work and think to make any money in real estate, the young, good looking real estate geniuses are far and few between. I did notice one girl who has accomplishments as follows “1 million dollar portfolio in properties” Haha. Once (years ago) I thought that was quite a success. Now I hear about a couple who make 56K a year and 24 year old punks who make 3K a month that have over $ 2 million in their property portfolios. Of course, they are going broke…..
Is that the best the real estate side of the apprintice can find?
Geez
All you need to know about “the Donald” is that he lost money running a casino…..
They don’t call gambling “a license to steal” for nothing.
Yeah, it always amuses to point out that this self-proclaimed genius managed to lose money in the only business where a profit is statistically guaranteed.
I probably read it on this blog, but as I hear it, when Trump was in deep do-do in the 80s after the real estate crash (yes it does go down, but I believe it was more on the commercial side then) Trump leveraged his only business that had cash flow; his casino business. After shifting as much debt as possible to the casinos, he took them public. Thus, joe blow investor shares in the debt and 5 years later the casino’s file for bankruptcy. Meanwhile the casinos have become a dump since no money has been put back into them because the debt maintenance was overbearing. Consequently, the invetor’s stock has taken a major dive. Trump on the other hand, still controls the casinos, got rid of a ton of debt and merely makes a statement to the effect, “this is just a small part of my vast business holdings….doesn’t mean anything.” Lesson: Don’t do business with The Donald, he will screw you.
Shares of Trump Resort (TRMP) has been declining in value.
I quit watching the show awhile back and could care less who is the next apprentice who services donald.
the Apprentice should have Casey Serin as a contestant
apprentice….., oops, there went a glimpse of my genius, haha
Good idea. The show could be called “Busted young brainless moron.” or “Floundering F–cked up flipper.” Hey this would be great to show on MTV.
‘Fewer Snowbirds Seeking Florida Refuge’ - article in the Lakeland Ledger. I just saw this - sorry I missed the FL post earlier today. Looks like the rich boomers are not coming to the spring sale - how can this be?? Now who will read our ‘Time2Buy’ pins?
http://www.theledger.com/apps/pbcs.dll/article?AID=/20070116/NEWS/701160359/1004/RSS&source=RSS
From on the ground, that article seems pretty accurate — possibly even a bit optimistic. Number of snowbirds to date seems a lot less than normal. Which means traffic has been a lot better than normal. It is a very noticeable change, whether on the road or in restaurants.
I’m noticing the same thing in Tucson.
He had friends??????
Used to, but they all fired him…
Has nobody noticed we’re talking about towers ninety-two and one-hundred fifty stories tall here? Taller than the World Trade Center buildings or the Sears Towers. Of the two, Trump’s would be the shorter (no wonder he’s pissed), but still about equal in floors to the Empire State Building.
Are these developers nuts? Has nobody learned anything? Talk about sitting targets for jetliners.
Trump’s alleged tower in Tampa is another bust, but his son insists it isn’t, and the developers swear they’re going to start building it one of these days. I hope the fools who paid 5 million for condos in dead, hideous downtown Tampa pay on the filthy Hillsborough River pay attention to this article, and get out before they’re thrown out.
If Trump thinks Rosie’s girlfriend must be horrified having to kiss Rosie, imagine what Trump’s wives and girlfriends have had to go through kissing his face, or should I say ass? I can’t tell which it is.
For years and years and years, there was a billboard at the SE corner of Sand Lake Road and OBT in Orlando, proclaiming a shopping complex coming soon. Finally, it was built, but it seemed like that sign sat on vacant land for at least ten years. The developers can hardly lose with noncommittal phrases like, “One of these days…”
Are these huge towers ideal for the ‘end users’ or to maximize $ on the deal?
My guess is Trump is in trouble and that is why he is trying to screw the condo buyers. This is very ugly publiicity for a man who protrays himself as a billionaire and sucessful beyond measure. He has become the poster child for the capitalist everyone wants to hate.
He may be extremely leveraged and desparate. A second close call or actual bankruptcy? I smell fear masked by arrogance.
“They could sign contracts to buy condominiums in the Trump International Hotel & Tower at a discount. In some cases they agreed to pay about $500 a square foot.”
What a shyster. $500 a square foot will buy you a much warmer climate in nice parts of San Diego.
Not unlike San Diego, there are thousands and thousands of condo units (I believe the number is 9k) slated to be delivered in the next 2-3 years in addition to all the ones on the drawing board that may never make it. IMHO this project is marginal at best and if recession hits, it is toast.
“Uh, oh, he won’t give up the mike,” said Trump
Translated: “He won’t give up amplifying his voice”, like father, like son.
http://news.yahoo.com/s/ap/20070116/ap_en_tv/people_trump
Trump in this article mistakes courage for having money and attorneys. He can strike fear in a country where the power to sue is the power to destroy. We fought a revolution under the idea that “the power to tax is the power to destroy”. This is not courage as Trump claims or elludes that he or his kid has.
Courage is an astronaut. Courage is a soldier walking into a building with terrorists inside. Courage is a women abandoned by her husband feeding her kids by working hard in a thankless job. It makes me sick to hear so called media types using words like “courage” . They soil the word.
How about this stuck-flipper action in Portland, OR: “Current appraisal available at higher value.”
Reply to: home-vision@hotmail.com
Date: 2007-01-16, 12:50PM PST
This 2100+, 3 Story, 3 Bedroom, 1 1/2 Bath, is looking for a lot of LTC. Home have been a rental for over 13 years. Call for access.
Current Appraisal available at higher value.
Address:
7036 N Vancouver Ave
Portland Or 97217
HV Investments LLC
TechWell Homes LLC
503-317-5481
Other homes available. All homes have been rentals
Note: Price does not include agent commission.
What’s the price on that one - got a link ?
Zillow says it’s worth $245k fwiw.
Bought in ‘93 for 10/27/1993: $23,000
Yeah, they are asking $325 - plus commission. ROTFLMAO!
Looking for a bucket full of stupid from California is my bet.
I moved up from California - but thankfully am not a bucket full of stupid - I’m renting
Enjoying the snow though - weather here is a lot like my native Ireland.
WHERE IS TRUMP TAMPA????
It’s supposed to be built downtown on Ashley Street across from the Tribune and local NCB affiliate, on a tiny bit of land fronting the river. The developers keep pretending they’re doing something, pushing dirt around and sinking a piling or two, but that’s it.
Hey everyone, I have some Chicago news myself. I got NFC Championship tickets when they went on sale this morning! Now I’m gonna try to flip them for 4x what I paid.
The 150 story tower is one of the coolest buildings I’ve ever seen. It was called the “Fordham Spire” but they may have renamed it to “Chicago Spire”. I hope they build it. (however the redesign is not as nice as the old version, I hope they do the old version)
That said, it would be odd if the tallest building in the world were a condo tower.
http://en.wikipedia.org/wiki/Chicago_Spire
HIC
What is going to keep Trump from using that clause in the contract to void other contracts . I think if a lawyer wanted to go to court on that clause they would rule that the common understanding of that clause prevails .
It looks like a giant dildo and everybody buying into it is going to take it up the ass.
Like I said before, Trump is a TOTAL POS. Why does anyone celebrate such a scum-sucking slimeball like Trump?
Human sludge.
Now watch as the damn things sell for under Trump’s friends and family price … or sit around for years …
Cool.
Cow_tipping.