Trump's business portfolio boasts of hotels in New York City, Las Vegas, Chicago and Miami.
Attorneys General Racine and Frosh argued that Trump have injured and threaten to cause continuing injury to the State of Maryland and District of Columbia and their respective residents. The suit seeks an injunction to put a stop to the president's constitutional violations.
"We do not sue the president of the United States casually", Frosh said. The President's critics argue that foreign actors have an incentive to schedule stays there, and that the hotel may be drawing business away from other event spaces including the taxpayer-owned DC convention centre, and another taxpayer subsidised convention centre in Maryland. The Constitution typically explicitly names the president and vice president when parts of the Constitution refer to them, with clauses generally referring to government officials not always applying.
Trump said in January he would turn over the day-to-day operation of his real estate empire to his family and place its assets in a trust, but the administration has not disclosed the details of that arrangement.
A White House spokesman did not immediately respond to a request for comment Monday.
The lawsuit also asserts that since Trump chose to maintain his financial interests in his global business empire, he is committing "unprecedented constitutional violations" by accepting those payments.
The Republican National Committee has called the new lawsuit "absurd", and they accused the attorney generals of being "partisan".More news: Official London Grenfell fire toll at 79, say police
Attorneys General Racine and Frosh expressed their thanks to their staffs and to several partners who provided assistance in assembling the lawsuit. "The American people elected President Trump to lead this country, and it is time Democrats end their efforts to delegitimize his presidency".
If a federal judge allows the case to proceed, the two attorney generals say, one of the first steps will be to demand through the discovery process copies of Trump's personal tax returns to gauge the extent of his foreign business dealings.
Much of the complaint stems from a lawsuit filed by liberal watchdog group Citizens for Responsibility and Ethics in Washington earlier this year, but supporters of the Maryland-D.C. lawsuit hope that Racine and Frosh can push further ahead than their predecessors due to their positions in the USA government. In April, two other plaintiffs joined the suit: an association of restaurants and restaurant workers, and a woman who books banquet halls for two D.C. hotels, the Carlyle Hotel near Dupont Circle and the Glover Park Hotel on Wisconsin Avenue NW.
He told the company in a letter last month that Trump should either divest his ownership or get permission from Congress to accept all sources of foreign money if it's too hard to identify those payments.
"That is the indispensable foundation of a democracy", said Attorney General Frosh.
According to the report, Racine and Frosh also say the Trump hotel's location close to the White House may be negatively impacting local businesses in D.C. and Maryland.
In the month of March, an interview is taken by Reuters of the attorney general Racine and he said in his interview that the District of Columbia has suffered special harm because it sponsored the construction of the hotels that are now wedged by foreign payments to Trump properties.