Donald Trump's Foreclosed Condo Hotel in Fort Lauderdale Leaving Buyers in Legal Hell
They may be waiting a long, long time. The still-unfinished Trump International Hotel & Tower in Fort Lauderdale is now embroiled in foreclosure, held by a lender that itself is the victim of a bank failure, and investors are now concerned that the Trump branding may be in serious jeopardy.
"People were brought to this project because the Trump name was stamped all over it," says Miami attorney Jared Beck, who represents several of the project's condo buyers. "Trump brand was said to add a premium, and there is no question it was a substantial part of the bargain."
I have stayed in a Trump International Condo Hotel, in Chicago, and it was first-class.
Condo buyers, beware of the "brand premium" developers push. Buyers tell me all the time how safe they feel buying into a property christened with a long, trusted name such as Four Seasons, Ritz or W. And for the most part, these brands are secure. The developers buy the brand name through a licensing agreement, which spells out the level of quality the developer must agree to maintain to keep the building standards high. But what happens if the developers don't comply with the contract?
When you buy into one of these deals, do be sure you take a look at that licensing agreement.
Because that's another problem with this project: Beck says the licensing agreement with Trump was not disclosed to the buyers, nor given to them in their disclosure statements. Which is why Beck, on behalf of his clients, is also filing claims against the Trump organization.
The 24-story, curved, Trump International Hotel & Tower at Fort Lauderdale was designed by Princeton, N.J., based Michael Graves & Associates to resemble a 1920s ocean liner. It boasted a 5,000-square-foot health club and spa, fitness center, restaurant, concierge, valet, room service and 24-hour security.
"We are thrilled to begin construction on this magnificent oceanfront development, which will offer the most luxurious five-star living experience anywhere," Trump said in a release in 2005, when most of the promises were made. The developers, SB Associates LLC, signed a $139 million construction loan in December of 2006, near the tip-top of the Florida real estate bubble. SB Associates have defaulted on that loan to the guys holding the mortgage, Corus Construction Venture. Corus is sort of an offshoot of Corus Bankshares of Chicago, the project's original lender, which failed last year because of its tremendous exposure in the frothy south Florida market. Bad news all around: the construction has been delayed, the Trump brand is in jeopardy and buyers who plopped down 20 percent deposits are wondering, will this building ever get built? Will they ever see their money?
Under Florida real estate law, says Beck, the first 10 percent of purchase price in deposits must be put into an escrow account. Since a 20 percent deposit is standard on most condos, that means half of the buyer's down payment is safely tucked in a bank somewhere. Which means that at the very least, those buyers will see half of their deposits -- that's the good news. Bad news: litigation, says Beck, could drag on for years.
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