Buying a Trump? Better read the fine print

J. Michael Goodson is no slouch. Remember that when you hear his claim of being duped by a Donald Trump condo project in Fort Lauderdale, Florida.

It started back in 2005 when Goodson, who lives outside Princeton, New Jersey, was looking for a part-time home to live in while doing business near Miami. He admits he was enamored with the Trump Tower in Manhattan and with the developer who built it. Trump was a brand he could buy into, both for the prestige and his belief that a Trump property, no matter where it was, was bound to return a huge financial reward.

So in 2005, when Trump announced he was building a new Trump Tower in Fort Lauderdale, Goodson put down $345,000 to secure a sixth-floor unit right near the pool.

"We were given a brochure that said this was the best property he had ever developed," Goodson told CNN.

The brochure for the Trump International Hotel and Tower was actually a glossy picture book depicting the artists' rendering of a seaside tower with astounding ocean views, magnificent amenities and the Trump name throughout.

The book even includes a personally signed letter from Trump himself, which read, "It is with great pleasure that I present my latest development, Trump International Hotel and Tower, Fort Lauderdale."

Goodson still has that glossy book, but nothing else. Trump International Hotel and Tower was a failure.

The project fell victim to the property slump that hit South Florida in 2008. Two years later, the failed tower was in foreclosure and no longer bore the signature name. Donald J. Trump, it turns out, was not the developer. He had licensed his name and signed on to manage the hotel. When the project developer ran out of money, Trump took his name and walked away.

Goodson walked away with nothing to show for his $345,000 deposit and a lesson in Trump properties: When purchasing a Trump development, you better read the fine print.

 

 

 

Donald Trump under oath: Highlights from a 2009 deposition 01:42

 

In luxury real estate, few brands compete with Trump

 

It turns out all Donald J. Trump properties are not the same. Trump has become hugely successful building a worldwide brand synonymous with the very best in luxury living. Though Trump does in fact build many of his signature properties, he and his family have made a fortune simply licensing his name.

Developers pay money to put Trump on their buildings; they use Donald Trump and his family to sell multimillion dollar units; and in some cases, the Trump Organization manages the properties. When it all works, it's a hugely profitable arrangement for the actual developers and an almost risk-free arrangement for Trump.

Daniel Lebensohn is one of those developers. He took over a separate project the Trump Organization was developing in Hollywood, Florida. He decided to keep the Trump name on the building and pay Trump a fee every time a condominium was sold.

"They (Trump) made millions of dollars on the project by having their name associated with it," Lebensohn explained from his South Florida office. "And every time there was a transaction, a condominium closed, they got paid as well."

The Trump organization would help design, market, price and even attend launch parties to potential buyers. The one thing the Trumps did not do was put up any of their own money. And they still got a huge return.

Trump Hollywood

Trump Hollywood sold out in 18 months. Two hundred luxury condos priced between $2 million and $6 million apiece. Trump got a cut of every sale just for the use of his name.

Lebensohn calls it a brilliant business model. And one very few names in the real estate business can get away with.

"In the luxury residential sector, there are very few brands that compete."

When asked whether his buyers, especially those who came to sales events and met Trump, thought they were buying an actual Trump Property, Lebensohn seemed unashamed to have created that illusion.

"I guess beauty is in the eye of the beholder," Lebensohn explained. "I don't know what each of the buyers is thinking, but I imagine there is an association tied to it that Trump is involved, and they are."

 

The lawsuit

 

J. Michael Goodson says there is no doubt in his mind. He says he was sold a Trump property no matter what the fine print of his contract said. That is why he sued.

The Trump Organization has had to fight similar lawsuits in Tampa, Waikiki, Baja Mexico and Toronto.

In all those suits, buyers claim, they were led to believe Trump was the developer until, of course, they found out he wasn't. Usually they found out from Trump's attorneys who pointed to the exact disclosure in the contracts the buyers had signed.

Trump has won or settled most of the lawsuits against him.

 

Developing doesn't mean developer

 

In 2013, Trump was deposed on his role in the Trump Fort Lauderdale project and in a humorous exchange, tried to explain to the judge the difference in his role in an owned Trump property and a licensed Trump property.

" ... the word developing." He told the judge, "It doesn't mean that we're the developers."

"The disclosure of the roles of the parties was very clear to anyone who would actually read them," says Trump attorney Alan Garten. "Unfortunately a lot of people, probably Mr. Goodson himself, got so caught up in the frenzy of the real estate market, they thought that they were, you know, too good for the contracts."

Lebensohn agrees. "Let the buyer beware," he told CNN. "Some Trump product is Trump product that his team is developing," he says. "Some (Trump) is branding and licensing. It's in the condominium documents."

When asked whether people who buy a $6 million condominium don't bother looking at the fine print, Lebensohn explains some don't. "I know that sounds asinine," he tells CNN, "but it's true."

Which brings us back to Goodson and that business about not being a slouch.

Goodson is a hugely successful businessman. He manufactures computer-cleaning products in factories across the world. He has given so much money to his alma mater, Duke University, that the law library is named after him.

Yes, he is a lawyer. Did he read the fine print in his condominium purchase contract at the Trump International Hotel and Tower in Fort Lauderdale? He says he did. He argued in court that the Trump Tower's promotional materials, magazine and newspapers articles all referred to Donald J. Trump as the developer.

Trump's attorneys showed the judge the actual prospectus that specifically detailed the licensing terms of the project and that the project developer was not Donald J. Trump, no matter what the sales pitch said.

Goodson's argument was lost in the fine print, and Goodson lost in court.

He is appealing.

News Courtesy: www.cnn.com