Technical legal question: just out of curiosity, does anyone know if New York state law uses a common law mortgage, or a statute-based charge mortgage?
(The difference is that in a common law mortgage, the landholder/borrower actually transfers title to the bank/lender, who is then shown on title as the owner. In a charge mortgage, the landowner/borrower remains the owner on the title, and the bank/lender is shown as having a charge on the title.)
Shouldn’t make much difference in actual practice, but sometimes the terminology gets confusing.
I agree, but in either case, it seems to me that a creditor (which New York State is now) ought to be able to slap a lien on title to Trump Tower, 40 Wall Street, and any other Trump property in NYS. I seem to recall, though I could be wrong, that there were multiple defendants named in the suit, most of which were tied back to Trump himself somehow—holding companies, and so on.
It’s like a pulp Western novel, where the hero shoots first, and asks questions later. In this case, NYS should slap a lien on Trump properties, and deal with the whos and whats and what-elses later. As long as there is a lien on title, neither Trump nor any of his holding companies can transfer the property, and NYS has a claim to it.
The walls at Mar-a-Lago are expecting to be stained with ketchup when he learns this.
Here’s an interesting article that does a run-down on properties with the Trump name on them in the New York area. I don’t think it’s paywalled.
Hint: Trump doesn’t own them all.
And, the article doesn’t get into the issue of how Trump Org has financed the buildings it does own, or the leases on buildings, which is another important issue: what is Trump’s net equity for his portfolio?
40 Wall Street, for example, that James says she has her eye on, is owned by a wealthy family in Germany. Trump just has the ground lease, a long-term lease which gives him the right to develop the property, but at the end of the lease the improvements revert to the landlord.
From Investopedia:
My bolding. But surely Trump had the assets to buy the building, right?
Sounds similar to an Emphyteutic lease in civil law.
Question for those who’d know the law on this point:
Assuming Trump doesn’t/can’t post a bond or pay up to appeal, and the NY AG slaps liens on all of his NY properties, besides attempting to force a sale of the assets, would the state be able to seize all the income from the properties?
The prospect of seizing Trump asset would seem to be a very complicated one (see above)
In the hypothetical where Trump does not pay up by the 30 day deadline, and James moves to seize assets, here are my questions:
What (if anything) does Trump (or one of the orgs named in the lawsuit) own free and clear? We’ve seen that some buildings are actually on a ground lease. Others are encumbered by mortgages. It would seem to be complicated to seize assets that are only partially owned by Trump. How do you seize 22% of a building? (see comments above about attaching a lien and working it out later, or maybe taking the income stream from the property)
Given that the case hinged on Trump’s over-valuation of his properties, how does the court decide what Trump’s assets are worth for seizure? This sounds like another opportunity for Trump’s lawyers to delay, delay, delay, aregue, argue argue.
Other than mortgage and lease holders, there are other ownership complications with Trump’s rat’s nest of companies owning companies who own other companies who own a piece of a company that owns the lease. Untangling this ball of string will take time (delay, delay, delay) which is a reason (I think) they are set up this way in the first place. If ONE of these companies goes bankrupt, does that disrupt the whole rat’s nest?
Trump is so deeply in debt that New York ends up only getting properties and businesses that are underwater and by the end the state taxpayers lose a ton of money. Trump himself is better off and sends James a sarcastic thank you card. Turns out the whole time, Trump intentionally tanked the case to trick New York into taking on all of his financial burdens.
(I’m sure that’s not at all how any of that works, and I’m sure they already know through the investigation what his financial situation is, but how bizarre would that be.)
All very good questions; I have no idea how it shakes out.
But given that New York is one of the financial capitals of the world, and has some of the best commercial lawyers in the world, I assume the AG NY has been sending out RFPs to very high-powered law firms who specialise in commercial law, real estate securities, and debt collection: “Hey, you want a piece of this action? Call me!”
Taking a contingency on how much you can collect on a half-billion dollar debt strikes me as something that major firms would find an intriguing proposition.
Here’s a fresh WaPo article about how Trump might put up the money. (Gift link.)
Highlights:
Any route Trump chooses will come with complications. Paying the entire amount in cash could rock the stability of his business. But seeking a bond — in which a third party would guarantee payment if Trump loses his appeal — could be equally costly. Difficult decisions will have to be made quickly, even as Trump’s family company undergoes a court-ordered leadership shake-up that may take some of those decisions out of the hands of Trump and his sons, who have also helped run the company.
The former president’s attorneys are trying to negotiate a bond deal that would tie up as few of his assets as possible, according to a person with knowledge of the talks who spoke on the condition of anonymity to share private business discussions. The New York state judgment is so large that Trump’s team began exploring whether multiple companies could provide portions of the bond, splitting the risk that any one of them would have to assume, the person said.
Neil Pedersen, who runs a New York bond-issuing (or “surety”) agency, said beyond the extraordinary size of the bond Trump needs, the risk of having to collect from a former and possibly future president would probably weigh heavily on bond issuers’ decision of whether to accommodate him.
As a result, bond issuers might require Trump to put up the full amount, or nearly that, in cash, to avoid having to potentially press the occupant of the White House for assets. He would also have to pay a fee to the bond issuer, beyond the judgment penalty and interest, according to Pedersen.
“In my opinion, what this is going to come down to is whether or not he can put up cash,” Pedersen said.
[Commasense: If he could put up the cash, why would he bother with a bond company?]
A surety company might accept Trump’s properties as collateral, but that carries its own risks. Experts in issuing bonds may not be equipped to do their own investigations into Trump’s property values, and they may not know what his assets are really worth, according to New York trial and appellate attorney Mark C. Zauderer.
Trump’s history of misrepresenting the value of his assets was the heart of the trial that resulted in the penalty he now faces.
If Trump loses his appeal and doesn’t pay, the company would then have to try to get him to hand over the golf course, hotel or other property he had provided as collateral.
“If the guy can give phony financial statements, he can give phony information to the bonding company,” Zauderer said, referring to Engoron’s finding in the case that the Trump Organization submitted false information to banks to obtain loans. “A bonding company who is going to put up several hundred million dollars here is not, in my opinion, going to do it easily.”
AIUI Trump does nor have an ownership stake in the new sneaker company, but he sold them the license to use his name. He may not have an ownership stake in a building that carries his name, but receives/received fees for using the Trump name. ISTR that the value of the Trump name for these licensing fees is a not-insignificant portion of the billions he claims to be worth.
How is he paid for the use of the Trump name? Is it typically a lump-sum payment or is it paid over the course of the contract? For example, if he sold the rights to put his name on a hotel for ten years for $10 million, did he typically get the full $10 million when the contract was signed? Or does he get $1 million per year for the term of the contract? Or some combo (i.e., $5 million at signing then $500k per year)?
Because if he’s paid over time, isn’t there a revenue stream to garnish? If Lou Lunchbox can have wages garnished, why can’t Trump have licensing fees garnished?
Presumably exactly because of the time element. It would take a while to pay off $550 million at $1 million a year. (Maybe one of our professional mathematicians can figure that out for us.)
Any of the above, plus possibly a payment based on sales of the licensed product (which could be either a flat rate for each sale, or a percentage of profits based on sales).
Without seeing the actual contract, it’s impossible to know (or even do more than idly speculate on) the details. There’s no one way that these contracts are structured.
Just off the top of my pointy head, it would simply not be possible to pay off $550M at $1M a year. At present, NY is applying 9% interest, and even if it was a lot less, you would be under water, because even at 0.5%, $1M a year would not even cover the interest (interest free loans are very rare).
In a way, I could see that this situation might make a lot of wealthy people nervous. If the average person sees how over-extended one ostentatious rich guy is, more attention is likely to be drawn toward other wealthy people, how m as marginal they probably are, and most importantly, how the fuck are they able to manage that.
Rich people do not want that kind of scrutiny. It could result in upsetting the current balance of the system. Therefore, it would not be all that surprising to see Individual-ONE get help from one or more other rich people.
Some key details of Trump’s current loans are not public. But the terms of several previous loans with Deutsche Bank said he would default if he failed to “maintain $50 million in unencumbered liquidity and a minimum net worth of $2.5 billion,” according to testimony in the fraud case.
Ok, so I’d expect serial defaults moving forwards.
I doubt this tbh. According to the actual author of Art of the Deal, lying was a big part of Trump’s business model during the 1980s. Sure there are grifters (some of them on GoFundMe), but I doubt whether the fattest cats don’t have things under control. Rather the lesson for them will be, “Don’t run for public office if you have skeletons in the closet.”
Also, for gifts over ~$15 million, the marginal federal gift tax rate is 40%. I doubt whether even a MAGA billionaire would want to pay that. Roughly speaking, details here: Gift Tax, Explained: 2024 and 2025 Exemptions and Rates
We don’t know whether Trump’s net worth is even positive in actuality. When dealing with uncertainty it helps to have rules of thumb. Consider Trump’s razor: “Ascertain the stupidest possible scenario that can be reconciled with the available facts”. According to that, there will be no cash payout to Carroll on March 10th, there will be no bond paid paid in the New York civil fraud case, and AG James will start the collections process late next month.
