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January 22, 2007

Trump Uses Mouse Print to Weasel Out of Condo Discounts

Filed under: Business,Finance — Edgar (aka MrConsumer) @ 6:13 am

Donald TrumpAs the feud between Rosie and the Donald cools, the Chicago Tribune reports a new brouhaha involving the billionaire. This time, it seems that Mr. Trump is trying to renege on preconstruction discounts he offered to get friends and family to buy in early at the forthcoming Trump International Hotel and Tower project in Chicago. This is the project that 2004 Apprentice winner Bill Rancic was overseeing.

At the time of these early sales, some insiders paid as little as $500 a square foot for their units. Now that units are selling as high as $1300 a square foot, Mr. Trump apparently feels he offered too great a discount to the early buyers. So, starting a few months ago, Trump’s lawyer began notifying the buyers that their deals are null and void “in accordance with our rights under the contract, including, without limitation, paragraph 12 (b)” (cited below):

*MOUSE PRINT:

Paragraph 12 (b): If seller defaults on any of seller’s covenants or obligations hereunder, and such default is caused by matters beyond seller’s reasonable control, then purchaser’s sole and exclusive remedy … shall be a refund of purchase’s earnest money deposit and interest which may have accrued thereon to which purchaser is entitled pursuant to Paragraph 2 hereof and all payments theretofore made by purchaser. Upon refund to purchaser of said earnest money and payment of interest thereon, if any, and refund to purchaser of other amounts paid by purchaser, this purchase agreement shall be thereupon null and void with no further liabilities of either party hereto.

One would normally think that clauses like this would be used in cases of unforeseen events, such as natural disasters, the city denying Trump’s building plans, etc., rather than a predictable real estate reality such as increasing or decreasing property values. It certainly doesn’t appear that the buyers could weasel out of the deal if real estate prices crashed.

One can only hope that some of the early buyers in the “Friends and Family Sales Program” will stand their ground and fight. Some way to treat friends.

[Alternate link to Trump story. Trump photo copyright AdWeek.]

• • •

9 Comments

  1. I doubt that selling something for too low of a price would be considered being beyond the seller’s control. And changing your mind is entirely within your control.

    What would be a comparable argument? Hey, we flipped a coin 10,000 times, and it wasn’t heads for every flip, so we can’t sell you the condo…

    Comment by Anon — January 18, 2007 @ 4:24 pm
  2. This guy clearly knows no shame. A pocket full of filthy dirty cash must have replaced his conscience.

    Comment by Indiana — January 19, 2007 @ 10:37 am
  3. Very nice the Don. First sell to ‘friends’ for a good price, then advertice that the units are going crazy, up the price, rake in insane amounts of money, and then boot out the ‘friends’ because of the insane prices. Seems there must be a scam in this circle. Hope someone goes after the Don. Secretly, I hope even more that Bill Rancic is responsable for this tric, just to proove he is THE APPRENTICE and not just some reality show winner :-D

    Comment by Jasper — January 22, 2007 @ 8:47 am
  4. Donald has never had a conscious when it comes to “his money”. He feels he is “brighter and smarter” than everyone else and no matter how wrong he treats people, he is “entitled” to their money for his pocket!
    I just do not understand why he is revered, displayed and included as a great person at events throughtout the USA when all he does it try to obtain more money and wealth.
    He states to the public and Rosie that “he hasn’t declared bankruptcy”
    but neglects to add that “some of the companies he managed and formed has”, to the tune of many many millions of dollars. Trusted investors who lost their money know this but Donald always acts as if he is always successful. If it sounds too good to be true, it probably isn’t true!

    What has Donald done for society? Has he helped create jobs for the poor or food for needy families or helped with the growing AIDs problem? He is not a Warren Buffett or Bill Gates, he is a “promoter” who keeps lining his pockets at the expense of others!

    With his loop holed “contracts” I wouldn’t buy a used car from him.

    Comment by Jim — January 22, 2007 @ 11:31 am
  5. Bet he owns lots of stock in Walmart…

    Comment by Robert — January 22, 2007 @ 11:12 pm
  6. The logic behind Trump Internationals reasoning is faulty. The clause states: “If seller defaults on any of seller’s covenants or obligations hereunder, and such default is caused by matters beyond seller’s reasonable control,. . .”

    The actual cause of the default is Trump International’s decision to default, very much under their control. The increase in real estate prices does not in and of itself force the Company to default.

    If this is challenged by the early buyers I’d be shocked if an honest Judiciary were to uphold the cancellations. Yes, I’ve grown a bit cynical in my old age. Because of the political power the company probably carries (given the amount of development it’s doing in Chicago) it wouldn’t shock me if a local court were to uphold Trump Internationals’ interpretation. Let’s hope if that’s the case the early buyers appeal until it reaches the Federal Court System.

    Comment by Dan — January 23, 2007 @ 5:10 pm
  7. While I can certainly see a business wanting to limit it’s liability in case of future problems I think this is a really underhanded move to make. I don’t see Trump putting up with this if it was him that got in on the ground floor of a friend’s real estate deal. Just shows how rich people get rich I guess. I wonder if Rosie’s heard about this.

    Comment by hatrack — January 24, 2007 @ 2:35 pm
  8. How does an old man with the world’s worst hair piece get taken seriously about anything. He’s a f**king game show host people. The fact that he’s also a black hearted back stabbing money grubbing landlord doesn’t surprise me in the least. And to top it all off with some true humor, he thinks he’s some kind of moral authority.

    Comment by Required — February 18, 2007 @ 12:02 pm
  9. Trump is investing in Romania now. He has a partnership with a romanian real estate investor.

    Comment by Imobiliare — October 2, 2007 @ 2:31 am

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