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Donald Trump's Latest Folly: Toronto

Trump Tower developer suing 7 disgruntled investors to close deals they now regret - thestar.com

Quote:

Developers of Toronto’s Trump International Hotel & Tower have launched lawsuits against seven investors in an effort to force them to close on deals for condo-hotel suites some claim haven’t turned out to be the Hollywood gold buyers were expecting.

The legal move by Talon International Inc. comes at the same time that a London, Ont. doctor is seeking $750,000 in damages for “misrepresentation,” unless he can get back deposits on the hotel suite he bought in the ill-fated project back in 2009.

The court wrangling is just the latest round of problems to curse the celebrity hotel and condo project at Bay and Adelaide Sts.

Dozens of purchasers of suites in the 65-storey luxury hotel are now trying to get deposits back and renege on final payments averaging over $500,000.

Other buyers, some too frightened of the legal ramifications to walk away from deals penned up to seven years ago, say they are finding themselves in a crippling Catch-22 — unable to sell the units or secure mortgages on balances due to Talon Nov. 29.

“One mortgage company asked me, ‘How could I give you a mortgage on a property that is losing money every single day?” said one devastated buyer, a blue-collar worker who borrowed the $175,000 down payment from his immigrant parents and owes $750,000 at month’s end.

“It’s very scary,” says the GTA resident, one of about a dozen investors who spoke to The Star on condition their names not be used.

Most were caught up in the get-rich-quick mentality of Toronto’s booming condo market and intended to flip the units or use them to generate retirement income.

Talon has been facing an escalating buyer revolt since last February as the glitzy Trump Hotel set to open and buyers found out that maintenance fees, property taxes and other incidentals on the project’s 276 hotel-condo units had skyrocketed from Talon’s earlier projections.

Emergency doctor Ganesh Ram alleges in his lawsuit that his costs jumped 40 per cent, with property taxes alone (the hotel-condos are considered commercial rather than residential units) now at $30,000 a year. While revenues from the hotel were meant to more than offset those kind of costs, buyers say they’ve been told hotel occupancy is running anywhere from 10 to 50 per cent and room rates are averaging about $300 per night instead of the $600 and up Talon had originally touted.

Based on the startling new numbers, buyers have alerted Talon they plan to rescind their deals, citing the fee hikes as a “material change” under the Condominium Act.

Talon’s lawsuits, filed in Newmarket’s Ontario Superior Court of Justice in the summer, are seeking a declaration from the court that they aren’t a material change and that deals must stand.

Talon refused to discuss details of the lawsuits. None of the buyers named in the suits would speak publicly.

“Purchasers that entered into agreements of purchase and sale with Talon are not amateurs. The purchasers made these commercial investments in the light of day and presumably on the advice of their legal counsel,” Talon told The Star in an email through its public relations firm.

“We have full confidence in the court’s wisdom to interpret and enforce the terms and conditions of the agreements that were entered into by those few purchasers which have chosen to resile from their binding obligations to Talon.”

While domestic and international investors have largely fuelled the condo boom since 2007 — buying up units and renting them out — the Talon/Trump project is very different. It has 379 suites, some 118 of them residential condos, the other 261 being hotel-condos that go into a rental pool.

Owners of those hotel suites pay commercial, rather than residential taxes, “common element” and other fees, including $87 every night there is someone sleeping in their bed. According to financial estimates in online promotional material, graced by The Donald’s smiling face, those costs would be more than offset by Trump Tower’s revenues.

Toronto lawyer Javad Heydary has been advising eight Korean purchasers and has been contacted by representatives of more than 40 other buyers seeking to rescind offers. He’s had a team of eight lawyers examining the deals.

What Heydary found came as a shock, especially to some buyers who readily admit they were so blinded by the flash and cash of Donald Trump that they didn’t do proper due diligence: Buyers weren’t purchasing so much a condo as a share in a high-end hotel that, so far at least, is losing money.

Some buyers are sophisticated investors. But many others are hard-working immigrants who just want their life savings back — 20 per cent deposits now sitting in trust and due to be released to Talon on closing.

“Everybody on their own or through advisors — financial advisors, real estate brokers or pension administrators — heard about this opportunity and was attracted because of the name Trump,” says Heydary.

“They were not only buying into what they thought was a good investment, they were buying a piece of Hollywood.”

My favorite part: “One mortgage company asked me, ‘How could I give you a mortgage on a property that is losing money every single day?” said one devastated buyer, a blue-collar worker who borrowed the $175,000 down payment from his immigrant parents and owes $750,000 at month’s end."

Maybe you shouldn't be going high risk with someone else's nest egg? People are retarded.

Happening in Vancouver too, condo market has been stagnet/slumped and looking like it will continue to, especially now with the over supply of condos and even more developments going up.

Quote:

Legal battles have erupted in a handful of developments around the Lower Mainland since the global recession hit in 2008. Prices sank far below what buyers initially committed to pay during the city's hot pre-sales period before June 2008.

At the village, the gap between pre-sale and completion was longer than usual because of the six-month period where the village was being used for the Olympic Games. But, worse than that, the village was subjected to a barrage of intense media coverage as its financing collapsed, its construction costs soared and its pioneering green-design elements were debated. As a result, it got far more negative scrutiny than any other development in the region.

In one of the lawsuits just filed, Port Coquitlam resident Cordelia Lins and her husband had put down $50,090 in May of 2008 for a unit they originally agreed to buy for $500,900. Problems with records make it difficult to determine the assessed value. Ms. Lin said she couldn't say anything about the lawsuit because she was "in negotiations."

Vancouver resident Gee Lim, who paid the largest deposit for a unit he originally agreed to buy for $1.4-million, did not answer his phone. He originally agreed to buy his unit in April 2008. Last July, the province's land-assessment authority valued that unit at only $1.172-million.

The third buyer, who also put down his deposit in April 2008, has no phone listing at the Richmond address provided in the suit. Tian Qi had agreed to pay $516,000 for his unit in the Kayak building that is now being marketed. It was assessed at $504,000 by B.C. Assessment Authority last July.

A spokesperson for the receivers Ernst & Young, which took over management of the project last November after the private developer bowed to pressure from the city of Vancouver to go that route, said the lawsuits were started by the sales companies - the legal entities that deal with purchase agreements.

"When these actions were filed, the lawyers had either no contact with the purchasers, or could not get a position from the purchaser on what they were prepared to do to close the purchase," said a spokesperson for the receiver. "The sales contracts have therefore been terminated by the salescos, and in the case of the parcel 10 units, these are back available for sale."

It's not clear whether the lawsuits are intended to force the reluctant buyers to finish their purchase at the original price, kick-start them into a negotiation to buy at the new, lowered price, or simply retain the deposits, as the suits claim the sales companies can do now.

Besides the legal action against the buyers, the sales companies have also been busy settling previous lawsuits. Six other buyers had sued last year to get out of their purchases, claiming everything from deficiencies to views that weren't what had been.

All of those suits but one have been settled or discontinued in the past couple of months The last one is close to settlement, said the spokesperson. The buyers who filed them refused to give information on whether they got their full deposits back.

Condo marketer Bob Rennie acknowledged when he kicked off the new sales campaign last Thursday that, although prices for the 230 units he was offering for sale had been discounted by 30 per cent on average, he and the receivers did not want to have a fire sale because they worried about the impact on previous buyers' equity.

There were indications last summer that the staff of the sales companies were having to put substantial effort into getting buyers from both 2008, when the village's sales were first launched, and May 2010, the second launch, to complete their purchases.

It's unclear whether the sales companies lowered prices in some cases to get reluctant buyers to complete or simply held them to the original terms of the agreement, threatening legal action.

Those who did buy may have been comforted somewhat that assessments throughout the village rose substantially between 2009 and 2010.

However, an analysis of units whose purchases were completed in 2010 indicate that there are some significant disparities between the prices people paid and the assessed value of those units. Of 40 units listed as sold in 2010, nine of them are assessed at more than what the buyer paid. In one case, it was $33,000 more than the $493,000 the buyer paid.

But 31 paid more than what B.C. Assessment Authority later valued those properties at. At the low end, the difference is only $1,000. But one unit, bought for $3.75-million in June 2010 was assessed at only $3.2-million, while another, bought for $1.99-million, is assessed at $1.59-million

Reluctant condo buyers sued for backing out of village purchases - The Globe and Mail

Aside from the Olympic Village also heard a few presale buyers trying to back out of presale deals in Burnaby/DT Van were they'd basically be upside down on the mortgage right away.

Everytime I see a Trump project run into problems, I get a chuckle about this article:

10 Stories About Donald Trump You Won't Believe Are True | Cracked.com

Didn't Trump have some issues with management at his Trump towers in NYC about a few weeks ago? I think they wanted to drop him from the board or something.

trumps been facing a lot of issues but i think those issues may be magnified for the public because of his television personality persona

the issues dont seem that far out compared with other developers around the world and with the scale of Trumps business its no doubt he'll run into these same problems more often

On Trump: He just gets special attention because he's such a douche lately that he kind of deserves it. Hell, I'll chip in $50 just to have him put his OWN balls in his mouth to shut him up.

The Trump Tampa property was auctioned off and he sued to have his name removed from it. This isn't the first time he's been in the shits. Or the second time. Or the fifth. He just works it so now he's not personally on the hook. So maybe he is smart afterall.

On Toronto/Pre-sales:

You know these are the same people that would sue when developers refused to close because the units were worth more than what they were sold for at pre-sale.

We closed on a at water, soon to go underwater pre-sale. You know what? It sucks. You sit in that office and just say "fuck". But what are you going to do? I didn't think of suing, and I didn't go around and say " this isn't like the brochure, I'm out." You suck it up and realize that you took a risk. Re-inforced that I would always want to buy something that is built and existing, that's for sure.

This guy that borrowed money to put down in this place is a tool, and made the mistake LONG before he even signed the papers. It's no one's fault but his own.

Well that's the thing with pre-sales apartments they can't garuntee what the fees, property tax, value of the spartment as time goes by. The contract these ppl sign most like said these are the estimate price only. That's why is pre-sale. If the vale goes up bam you make money, if value drop you lose money. That's it.

I bough a pre-sale apartment and is a valueable lesson. Never buy into hype.

this quote from cracked sums Trump up brilliantly:

"If Trump was flushed out of an airliner and you tried to sell him a parachute on the way down, he'd sue you for implying he could fly."

dude is such a moron.

Quote:

Originally Posted by JizzMasterZero (Post 8085749)

Everytime I see a Trump project run into problems, I get a chuckle about this article:

10 Stories About Donald Trump You Won't Believe Are True | Cracked.com

was just going to post this,guy is a big laugh.
day 1 with his tv show i always knew he was a fucking chump playing mr. millionaire I'm better then You all down below me in a lower class,all those ass kisses on the show are pretty funny too.....remember,when your jack of all trades you have to kiss ass to nobody,you can hop on any job you want.