August 3, 2010
Yikes. The purchasers of Trump’s New York 46-storey 391-unit SoHo Grand are trumping The Donald with a mighty big lawsuit.
Fifteen buyers are saying that the developers lied about how many units were sold, in a federal lawsuit filed in Manhattan Tuesday morning. They were told that the building was 60% sold, while the developer filed with New York authorities that it has only sold 62 of the 413 suites originally offered.
This comes at a bad timing for the developers, the Bayrock Group and the Sapir Organization, who have started offering direct financing in an attempt to boost sales.
What do the buyers want? The $175 million they put down for deposits for punitive damages and to get out of the purchase contracts.
According to the lawsuit, “The defendant’s false, deceptive and misleading statements were aimed at inducing consumers to enter into purchase agreements”.
“Had the defendants not engaged in these fraudulent and deceptive practices, the plaintiffs would not have entered into their purchase agreements, would not have made their initial deposits, and would not have made their additional deposits.”
How expensive is this condo? Bachelor units start at more than $1.2 million.
According to Trump, in a statement to Reuters, “The Trump Organization is not the developer of the project but merely the manager of the hotel, which has done exceedingly well since opening four months ago.”
According to the Wall Street Journal:
“Mr. Trump isn’t an investor in the project, but his company, the Trump Organization, has a licensing and management agreement that allows the development to use the Trump name. Mr. Trump and his children have an equity stake of about 18% in the project as part of the deal.”
And what of the Trump children? The lawsuit says that the building is “a signature project of Trump’s three children, Donald Trump Jr., Ivanka Trump and Eric Trump, who have both an equity interest in the project and have publicly used the project to try to establish some independent credibility in the real estate business beyond their mere status as Trump’s children”. Snap!