New York judge’s ruling about Mar-a-Lago value rattles Palm Beach luxury real estate market
PALM BEACH, FLORIDA — Not far from Donald Trump’s Mar-a-Lago estate in Palm Beach, cosmetics heir William Lauder paid $155 million for the late conservative talk show host Rush Limbaugh’s estate.
This year, luxury auto sales mogul Michael Cantanucci purchased a mansion on North County Road for $170 million. In addition, fashion designer Tommy Hilfiger sold a 6,500-square-foot home on South Ocean Boulevard built in 1927 for $41.4 million.
So, why did a New York State judge last Tuesday assign a value to Mar-a-Lago ranging from $18 million to $27.6 million?
Those figures, based on an appraisal by the Palm Beach County Property Appraiser, emerged after New York State Attorney General Letitia James filed a lawsuit against former President Trump, his Trump Organization, and three family members, alleging they overvalued assets and exaggerated his net worth while obtaining loans and insurance to build his real estate empire.
The use of those figures by New York State Supreme Court Justice Arthur Engoron astounded real estate professionals who work with or manage some of the most expensive estates and mansions on the island haven for the rich and famous. Last Tuesday, the judge ruled that Trump had committed business fraud against banks and insurers and revoked several business licenses in the state of New York.
“The value of $18 million to me is way off the mark,” Billy Nash, founder of Nash Luxury at Illustrated Properties, a division of The Keyes Co., said.
“At the end of the day the market dictates value,” he went on to say. “If you put that property on the market for $18 million, there would be 100 people waiting in line.” It’s also a historical landmark. I would classify it as a Henry Flagler estate.”
In the early 1900s, Flagler, the railroad baron and development pioneer, extended his Florida East Coast Railway line to South Florida. Between 1924 and 1927, socialite Marjorie Merriweather Post built Mar-a-Lago. According to Smithsonian Magazine, the estate, whose name means “Sea to Lake” in Spanish due to its location between the Atlantic Ocean and Lake Worth, cost $7 million to build, or roughly $90 million in modern-day dollars.
The valuation dispute is the latest squabble involving the estate, which was the site of an FBI raid in connection with the federal government’s criminal case against Trump for allegedly illegally retaining classified documents.
“The market is screaming over this because it’s obviously incorrect,” Nash said of the judge’s decision. “Real estate professionals are perplexed: How did you arrive at this figure?” On the island, there is an ongoing supply shortage. It is a popular tourist destination for people from all over the world.”
Mendy Katz, founder of Greenwich, Conn.-based Monarch Estate Services, which helps owners manage their luxury properties in the Northeast, Florida, and elsewhere, believes the market determines value. He stated that the demand for homes in Palm Beach remains high.
“Clearly supply and demand is what drives up the price,” he went on to say. “The assessor will decide how much the taxes will be.” That has nothing to do with the property’s actual value.”
According to Ken Johnson, a real estate economist at Florida Atlantic University’s College of Business, assigning values to Palm Beach’s colossal trophy properties is a difficult task.
“If you take the name out of it and this was someone else in Palm Beach, it’s very hard to assess value there because these are very unique properties,” he went on to say. “They don’t trade very often.”
A ruling earthquake
Engoron last week ordered the cancellation of Trump’s business licenses, making it difficult for the family businesses to conduct business in New York. The ruling eliminated the need for a trial to determine whether Trump fraudulently obtained favorable loan and insurance terms.
In her lawsuit, James claimed that Trump inflated the value of his properties by up to $2.2 billion. She is requesting a $250 million fine.
The penalty phase of the case is set to begin on Monday.
According to media reports, Florida lawyer Christopher M. Kise, who is among those defending Trump in the case, said he would appeal after calling the decision “completely disconnected from the facts and governing law.”
The former president described the judge as “deranged,” and the decision as “un-American.”
“I have a Deranged, Trump Hating Judge, who RAILROADED this FAKE CASE through a NYS Court at a speed never before seen,” he declared on his Truth Social platform on Wednesday.
In reality, he claims, Mar-a-Lago “could be worth almost 100 times” the $18 million price tag. He told state prosecutors during testimony last year that the estate is worth $1.5 billion, citing local brokers. Trump, who purchased the estate in 1985, stated that he never sold it.
The judge concluded that Trump overvalued Mar-a-Lago, inflating its value by up to 2,300% on one financial statement.
Lawrence Moens of Palm Beach, who was called to testify as an expert witness for the defense via deposition, was one of the real estate professionals who suggested it was worth more than $1 billion.
The judge was dismissive of Moens’ testimony.
“In his sworn deposition, when asked “who were the dozen or so (qualified) buyers that you were referring to in your report,” Lawrence Moens responded: “(he) could conjure up anyone from Elon Musk to Bill Gates and everyone in between.” Kings, emperors, and other heads of state. “However, with net worths in the billions.”
“Obviously, this Court cannot consider a ‘expert affidavit’ that is based on unexplained and unsubstantiated dream(s),” the judge wrote.
Moens, on the other hand, is well-versed in the Palm Beach market. He has been a broker in town for decades, and he recently represented the seller in the $170 million sale of the mansion to auto dealer Michael Cantanucci.
Moens did not return a phone call left at his office on Friday.
It’s all about the deed.
According to a spokeswoman for the appraiser office, the judge’s valuation was based on a deed restriction signed by Trump in 1995.
Trump was barred from using the property as a residence in the “Deed of Conservation and Preservation Easement,” and was only permitted to use it as a social club.
Later, the provisions of the deed were tightened to prohibit development or use for anything other than a club.
Nonetheless, James claimed in her lawsuit that Trump overstated the resort’s value from 2011 to 2021, ranging from $347 million to $739 million. The figures were based, she said, “on the false premise that it was unrestricted property and could be developed for residential use.”
During the same time period, she noted, Palm Beach County assessed Mar-a-Lago based on its restricted use as a social club. The figures range from $18 million to $27.6 million.
The head of the Palm Beach Town Council told the South Florida Sun Sentinel in early 2021, after Trump left the White House, that the former president was free to live at his estate, despite concerns from neighbors who want him evicted.
Town Council President Margaret Zeidman stated that while the council did not take an official vote on Trump’s residency, she did not see any violations that would prevent Trump from living on the 17-acre estate.
Some of Trump’s neighbors claimed he broke a 1993 agreement with the town that restricted the number of days club members could stay in the estate’s guest suites.
Trump’s lawyer in Palm Beach, John Marion, said at the time that nothing in the agreement prevented Trump from living at Mar-a-Lago, and Trump could live there under the town’s zoning rules because he is a “bona fide employee” of the club.
His presence there over the last two years appears to have had no effect on how the county values the property for tax purposes.
“The deed restriction influences how we value it,” spokeswoman Becky Robinson said by phone on Thursday. “We take an income-based approach.” We investigate the property’s income potential and arrive at a valuation.”
“We are a government agency and we appraise properties for taxation,” she said. “It’s different than what a private appraiser would do for loan purposes.”
Fraud: How did it happen?
Some questioned Trump’s ability to manipulate the institutions that gave him loans and insurance in the first place.
“I don’t see how any homeowner can manipulate a bank unless you’ve sat on the board of a bank,” FAU real estate economist Johnson said. “Even the banks will have a loan committee where if they are worried about a property they will order appraisals.”
“When banks are lending in places with ultra values, before they make a loan they will go out and investigate the value of that home,” he said. They are not going to take the owner’s word for it.”
“Every purchase has checks and balances,” said Katz, the estate services manager. It is extremely difficult for someone to play this game and commit fraud.”
