Donald Trump Name Sells Condos, But Is He Liable for Failed Project?
Donald Trump’s famous name helped developers of a high-rise condominium project along the Pacific Ocean in Baja Mexico collect some $32 million in deposits from prospective buyers, including a number of Southern California residents.
But when the project failed, many were stunned to find out that Trump only licensed his name to the developers and contends he has no liability to return their deposits, reports the Los Angeles Times. The developers abandoned the project in February, saying that they had spent the money and couldn’t get financing to build the planned 525 units due to the dismal economy.
Attorney Daniel King, who represents buyers suing both the real estate mogul and the project’s builders in Los Angeles County Superior Court, say they weren’t told about the licensing deal and wouldn’t have bought but for Trump’s seeming involvement in the project. There is United States jurisdiction for the suit, which was filed in March, because the builders are based in Los Angeles and the condominium units reportedly were marketed in the U.S., even though they were to be built in Mexico.
Under the contracts buyers signed, however, it appears that Trump could have a winning defense, one expert says:
“He doesn’t promise unconditionally that if anything goes wrong, he’ll give you the money back,” law professor George Lefcoe of the University of Southern California tells the newspaper. “What this controversy shows is you need to be sure your money is held by a third party, not controlled by the seller.”
