|By Ameet Sachdev, Chicago
TribuneMcClatchy-Tribune Regional News
Feb. 12, 2008 - More condo buyers in the new Trump tower are griping about promises the flamboyant developer allegedly has failed to keep, according to lawsuits.
Four buyers of hotel-condo units in the still-under-construction Chicago skyscraper developed by Donald Trump charge in one suit that just before closing on their properties the developer took away their ownership stake in the meeting rooms and other common areas of the hotel and reneged on contract terms related to usage of their units. At the end of January, a Cook County judge granted their request to postpone their closings.
They are not the only ones unhappy with the Trump project. At least two other would-be condo purchasers, including former Chicago Sun-Times Publisher F. David Radler, have sued the Trump-related entity developing the 92-story hotel and residential tower claiming it rescinded on pre-construction deals.
Officials and representatives of the Trump organization said all three suits are without merit.
"It's a few people trying to get out of contracts that they had," Donald Trump Jr. said, referring to the suit brought by the four buyers. "Everything we did is within the parameters of what we were allowed to change."
Still, the lawsuits are bad publicity for Trump as he moves to close on many of the hotel-condo units in the coming weeks. The tower has sold about 70 percent of the 339 hotel rooms, or about 237, according to Trump Jr. In the first two weeks since the hotel opened, Trump has closed on 45 units, he said, and it plans to close on 30 deals this week.
He said the disputes should not affect future closings.
Shelly Kulwin, attorney for the four hotel-condo buyers -- each an investment group -- could not be reached for comment. Trump is not named as a defendant in the suit, but related entities involved in the Chicago project are listed.
Earn rental revenue
Part of the motivation for buying hotel-condo units is the ability to earn rental revenue from the property as a hotel room when it is not occupied by the owner. Hotel promotional materials, the plaintiffs claim, allowed them to use the unit as much or as little as they desired without affecting the unit's standing in the reservation system.
But last fall, Trump changed the terms, the suit said. Owner occupancy will have an "adverse impact" on the unit's priority in the hotel reservation system, the suit said citing the rental agreement.
Another change Trump made is that common elements being sold to hotel-condo owners would no longer include meeting rooms and ballrooms, the suit said. Prior project documents had indicated the association of hotel-condo owners would be paid its proportional share of revenues generated by the meeting space, estimated to be about $5 million a year.
This is not the first time investors in the Trump project have sued.
Back in 2003, when Trump was planning his residential tower, he gave about 40 insiders an attractive deal: They could sign contracts to buy condominiums in the Trump International Hotel & Tower at a 10 percent discount. In addition, the "friends and family" program allowed the special class of buyers to put down a smaller deposit than other purchasers and to sell their units before the tower opened.
Last summer, as other Trump condos sold for higher prices, the developer began notifying the special class of buyers that their deals had been canceled.
Radler was considered an insider because the condo project had originally been conceived as a joint venture between Trump and the Sun-Times parent company, then known as Hollinger International Inc. The tower sits on the former site of the headquarters of the Sun-Times at 401 N. Wabash Ave.
In 2003, Radler agreed to pay $1.7 million for a condo and two parking spaces, according to his suit, which includes his two daughters who also jointly bought a condo valued at $688,000. The Cook County suit was first reported by Crain's Chicago Business.
Radler is asking the court to uphold his contract.
Radler is scheduled to report to federal prison Feb. 25 to serve a 29-month sentence for his role in stealing millions from Hollinger International, now known as Sun-Times Media Group Inc.
To see more of the Chicago Tribune, or to subscribe to the newspaper, go to http://www.chicagotribune.com.
Copyright (c) 2008, Chicago Tribune
Distributed by McClatchy-Tribune Information Services. For reprints, email email@example.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. NYSE:SVN,