Posted Nov 20, 2012, 3:45 PM
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Join Date: Aug 2002
Location: Toronto
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Trump Tower developer suing 7 disgruntled investors to close deals they now regret
Read More: http://www.thestar.com/business/arti...hey-now-regret
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.
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Javad Heydary, centre, leads an eight-lawyer team including Min Kim, left, and Mitch Wine, right, who have been looking at the Trump deals on behalf of some investors.
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