In a statement of defence and counterclaim filed with lawyers for the buyers, but which may not yet be filed with the courts, Talon said it’s seeking $750,000 in damages from disgruntled buyers who’ve launched a multi-million lawsuit against Talon and Donald Trump.
They also plan to seek court approval to seize deposits averaging more than $175,000.
“Talon intends to continue to work with the large number of purchasers of hotel units who have demonstrated that they intend to comply with their contractual obligations to Talon. We are very happy to be moving forward with bringing our excited buyers into the fold as owners of an asset they’ll be proud to own for a long time,” says a spokesperson for Talon.
As the official deadline for final payments on its pricey hotel-condo units came and went Thursday, Talon was not only denying all allegations by four buyers who claim they were “victims of an investment scheme and conspiracy,” but silent on whether other buyers can have extensions.
A number, many international investors, have asked for a delay until into the new year. Their concern isn’t the more than $5,000 a month they are now paying in maintenance fees, taxes and other charges on the pricey hotel-condo units.
Their fear is the long-term risks of taking possession of units in a project that could face lawsuits which could drag on for years and cost Talon millions.
“Because it’s so fresh, everyone is scrambling — the situation is so tenuous right now that everyone wants time to calm down a little bit so they can wrap their heads around what’s going on and get some answers to what kind of risk is involved here,” said one person involved in the request for an extension.
“Extensions are pretty common (in condo projects) based on financing issues. It’s just not to this degree and involving so many people.”
In a 27-page legal document dated Dec. 12, Talon denies all allegations made in a lawsuit file Nov. 21 by four Canadian investors who allege Talon convinced novice investors to buy units worth more than $700,000 based on “reckless and negligent misrepresentations” of the money they would make as part of the hotel’s rental pool.
Instead, hotel occupancy rates and daily rates are significantly less than projected, disgruntled buyers say.
Any representations made to buyers were not a guarantee but “based on information which was accurate at the time made,” says Talon in its statement of defence.
“A real estate investment is, by its nature, speculative,” and subject to “risks,” Talon states, especially a luxury hotel property subject to cyclical downturns based on economic conditions, competition, the health of the travel industry and unpreventable events like terrorist attacks, war and the outbreak of a contagious disease like SARs.
“Any business requires sufficient time to build its business (a ramp-up period) in order to achieve any level of success … The Plaintiffs could not have reasonably expected that the levels as allegedly represented would occur immediately following the opening of the hotel.”
Talon also points out that none of those buyers now claiming a “material change” under the Condominium Act — based on maintenance and other fees which they found out last February were some 30 to 50 per cent more than anticipated — sought to rescind their deals within the 10 day period allowed under the Act.”
“At all material times these Plaintiffs knew or ought to have known agreeing to this transaction was an investment risk for which there was no guarantee of return on their investment,” says Talon.
Source: Toronto Star