Tuesday, January 16, 2007

Dumped by Trump

Ouch! I haven't seen the contracts that are mentioned in the article below, but I can't imagine that the contract contains a provision that allows the developer to cancel the contract without some significant event occurring - such as the building's destruction or cancellation of the project.

In our experience, a developer contract contains a provision that allows a developer to cancel a contract if the nature of the development changes materially. We have frequently seen attorney review modifications that contain the addition "so long as the contract is not canceled in order to sell the unit at a substantially higher price."

What I can't imagine is - the buyers of these condos are experienced investors and some of Chicago's elite. These players seem to me to be the guys most likely to have attorneys who are on-the-ball enough to add a clause such as this.

Anyhow, this can't enhance "The Donald's" reputation in Chicago.

From Crains Chicago Biz:

At The Donald's tower, 'friends and family' buyers see deals nixed

The Donald wants it all.So say some buyers in Donald Trump's downtown condominium tower who are in a standoff with the celebrity developer over his plan to cancel their purchase contracts and take back their condos, along with millions of dollars in paper profits.

The move allows Mr. Trump to recapture profits he gave up by selling the units at a discount through a special "friends and family" program back in 2003.


"This guy is just jerking us around," says Nathan Diamond-Falk, who signed a contract to buy a condo with his wife, an interior designer who worked on the project's sales center. "It's just tacky. It may be the way they do business in New York, but I certainly don't think it's the way they do business in Chicago."

Mr. Trump is presenting the discount buyers with a stark choice: pay more for their condos or give them up.

He makes no apology for the hardball move."They are profits we're entitled to," says Mr. Trump, who contends that he can legally terminate the deals.