As 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):
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.]