|By Doreen Hemlock, Sun Sentinel, Fort
Lauderdale, Fla.McClatchy-Tribune Regional News
March 16, 2010 --The unfinished Trump International Hotel & Tower on Fort Lauderdale beach is facing foreclosure, after developers defaulted on a $139 million loan on the long-awaited condo-hotel project.
The new mortgage holder filed for foreclosure against the developers, SB Associates LLC. The suit also names more than 80 people who put deposits on condos, but never received the units or refunds, and now seek liens on the high-rise that was to include 298 condos.
Attorneys involved with the case said it will take at least six months to resolve the foreclosure, because so many parties are named and courts are backlogged with foreclosure lawsuits.
After that, it's still unclear what the mortgage holder will do with the 24-story property: keep it as a condo-hotel, make it a traditional hotel or something else -- options that worry lawyers for the condo buyers.
"I've been suspecting they will make it a hotel, because the developers never recorded the condo documents," said Fort Lauderdale lawyer Joseph E. Altschul, one of the attorneys for the condo buyers.
The foreclosure action highlights the plight of developers who came late to the real estate boom and lenders who overextended themselves in heady times in South Florida.
SB Associates signed the $139 million construction loan in December 2006, near the height of the market for both condos and hotels in the area. Its lender, Corus Bankshares of Chicago, failed last year in large measure because of wide exposure in South Florida.
The federal government arranged in December for a group led by Starwood Capital to buy 40 percent of Corus' $4.5 billion portfolio. The group's Corus Construction Venture now holds the loan on the Trump International property.
Corus Construction filed its foreclosure action March 11 in Broward County Circuit Court. To prevail, it must convince a judge that it has senior rights to the site at 551 N. Fort Lauderdale Beach Blvd.
But attorneys for buyers of the condos argue that the rights of the condo buyers come first.
"Our clients signed contracts and advanced money to the developers before they could borrow from Corus," Altschul said. "The lender relied on those deposits in making the construction loan."
The woes are the latest in a series for a $200 million project that was supposed to bring cachet to Broward County and open in 2007. The much-touted venture boasted some of the county's most expensive condos, with studios and one- and two-bedroom units priced from about $500,000 to more than $3 million each.
Lawsuits also are pending from unhappy investors who want refunds of their 20 percent deposits. They allege developers used misleading advertising and breached their contract for failing to finish the project on time -- no later than December 2008.
The suits also question the role of New York City's real estate mogul Donald Trump and his Trump Organization in the Broward project. Promotional materials suggested Trump was a developer and partner. But after setbacks in construction last year, Trump has said that his group only licensed its name to the venture.
Jared Beck, a Miami attorney who filed a class action suit on behalf of condo buyers in the project, said litigation in the condo-hotel case could drag on for years. "There's a dark cloud hanging over the whole property," Beck said.
Doreen Hemlock can be reached at dhemlock@SunSentinel.com or 305-810-5009.
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Copyright (c) 2010, Sun Sentinel, Fort Lauderdale, Fla.
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