Dec UY Contracts

[MouseOfCards]

Whenever we see a Dec UY contract for sale, and since those contracts will expire on Jan 31 leaving only 2 months to use or lose those points, I tend to discount the value of that final year of points in determining the worth of that contract. Is this reasonable? Do others folks here think the same way?

 

[Dean]

Whenever we see a Dec UY contract for sale, and since those contracts will expire on Jan 31 leaving only 2 months to use or lose those points, I tend to discount the value of that final year of points in determining the worth of that contract. Is this reasonable? Do others folks here think the same way?

No it's not IMO. There are 3 factors affecting the value of the contract related to UY. First and foremost is that the best value by far is to pick the best UY for you personally and where there isn't one, realize one is inherently taking more risk and likely spending more money over time than someone who does travel in such a way that a good UY gives them insurance. IMO it's easily worth a years worth of points and for some, more. Second is that the sooner the UY to when you buy, the more points you're getting all else equal assuming they are points you can use. The third relates to this in that the timing of UY can aid in getting and using extra points that may come along esp if there are banked points in the contract. IMO you're giving value to something that is more than 25 years into the future. Even a full years worth of points in 2041 has relatively little value today and almost certainly no more than the dues that they will cost. That's one of the reasons the OKW extension was such a poor value and that the price of those contracts hasn't held up the difference. It's also part of the reason it's not a good choice to just take the price and divide by the years remaining to determine the real cost.

Now one should certainly consider the points in the contract they can use. If one is buying resale in Nov and are buying a Feb contract with points sitting there currently, I would give no value to them whatsoever unless one can work out a deal with the seller to use the points before closing. Even then it's just an incentive and not something to put significant value into in terms of $$$. Now if it does bother someone enough it's important, just make the fees for the resale contract conform calendar year dues accounting. Put another way, don't overpay on the dues which almost everyone does with resale.

 

[CarolMN]

I don't, but am unlikely to still own DVC by the time this becomes an issue.

Even if I were likely to own at that time, I wouldn't worry about it. My ASSUMPTION is that DVC will institute some type of lottery / allocation process to minimize the use year differences for the last few years. Even if they do not, the difference in value at end of contract seems far less important to me than the value of having the "insurance" a good use year (for me) would provide.

 

[kniquy]

You always have the option of borrowing those points to use the year before so that you are not forced to use them in Jan. So those points are not lost. Many people sell their contract so to be worrying or planning 20-30 years out isn't reasonable. What you should factor when buying a contract is the expiration. Quite a few are expiring in 2042 vs others that have another 15+ years on them. When you are paying the same or more price per point for a 2042 contract vs a later contract there is where you do lose some value. No one knows what will happen because as the expiration approaches DVC could offer and extension of the contracts or they could just choose to end them. Seems to me they have great benefit in keeping it a timeshare with being able to pass on operating and refurbishment costs on to the members.

 

[Granny]

Whenever we see a Dec UY contract for sale, and since those contracts will expire on Jan 31 leaving only 2 months to use or lose those points, I tend to discount the value of that final year of points in determining the worth of that contract. Is this reasonable? Do others folks here think the same way?

I don't it makes much difference what the UY is for 2041 or 2042 usage. I believe it is going to be a challenge for Disney for all UYs...if people have a significant number of banked points from 2040 it is going to make 2041 a challenge and there may be some DVC owners left holding the bag on some points. For my own purposes, I always have 2041 in my mind as far as expiration since the contracts end so early in 2042.

 

[Dean]

I don't it makes much difference what the UY is for 2041 or 2042 usage. I believe it is going to be a challenge for Disney for all UYs...if people have a significant number of banked points from 2040 it is going to make 2041 a challenge and there may be some DVC owners left holding the bag on some points. For my own purposes, I always have 2041 in my mind as far as expiration since the contracts end so early in 2042.

As Carol mentioned, there will have to be some type of system that limits total points used the last couple of years and likely dues as well tied to the points used.

 

[wdrl]

Keep in mind that the declarations for all DVC condo associations state that DVC can restrict or eliminate the banking or borrowing of points. It would not surprise me if in the last five years of a condo association's life DVC institutes some restrictions on banking and borrowing.

What will be interesting is to see how DVC handles maintenance fees for January 2042. Currently, the budgets are tied to a 12-month calendar year and annual dues are not delinquent until February 15. Is it possible DVC will have a 13-month budget for 2041 that includes January 2042? I can't see DVC setting up a budget for 2042 if it only covers a single month. If it tries to bill members for a single month in 2042, I can see a lot of DVC members just stiffing DVC and ignoring the bill.

 

[LisaS]

Could DVC legally pro-rate the points in the final UY based on the remaining months of ownership? I have an Oct UY so the dues I pay in Jan 2041 will cover the last 9 months of my Oct 2040 UY and the first 3 months of my Oct 2041 UY, and possibly the first 4 months of my Oct 2041 UY if they do a 13-month budget. Is it possible I might get only 3/12ths or 4/12ths of my 2041 UY points if I'm billed for only 3 or 4 months of dues for my Oct 2041 UY at the end of my contract?

 

[wdrl]

Annual dues are not tied to a member's Use Year. They are ties to the calendar year. Everyone, regardless of their Use Year, has to pay the same amount for this year. I have a February UY so I get my current allotment of 2016 points on February 1. Someone with a December UY doesn't get their allotment of points until December 1. However, we all pay the same annual dues amount for 2016 and its due no later than February 15, regardless of UY.

 

[LisaS]

Annual dues are not tied to a member's Use Year. They are ties to the calendar year. Everyone, regardless of their Use Year, has to pay the same amount for this year. I have a February UY so I get my current allotment of 2016 points on February 1. Someone with a December UY doesn't get their allotment of points until December 1. However, we all pay the same annual dues amount for 2016 and its due no later than February 15, regardless of UY.

Yes but you need to look at how the calendar year overlaps with your UY. With a Feb UY, the dues you paid in Jan 2016 cover the last month of your Feb 2015 UY and the first 11 months of your Feb 2016 UY. In my case, my 2016 calendar year dues cover the last 9 months of my Oct 2015 UY and the first 3 months of my Oct 2016 UY. It is not the case that I pay in January for points I do not get until October, but rather that I am paying for some of my Oct 2015 UY points and some of my Oct 2016 UY points in calendar year 2016.

It's easier to explain if you look at how DVC pro-rates the dues in the first year of ownership. You pay pro-rated dues the first year based on when you get (and can use) your points and how many months are left in the calendar year. For example, I purchased AKV in Feb 2007 and got a full year's worth of points in that first year but I paid approximately 3 months worth of dues because my first points were my Oct 2007 UY points, so I paid for Oct, Nov and Dec only. Someone with a June UY paid either 4 months worth if they had an occupancy date of Sep 1, 2007 or 7 months' worth if they had a July 1 occupancy date. We all got a full allotment of points that first year, so why did some pay more dues than others for the same amount of points? It's because you pay the rest of the dues on those points the following calendar year. In 2007, I paid dues for Oct, Nov, Dec. I paid the rest of the dues on those points (for Jan through Sep) in Jan 2008, along with the dues for the first 3 months of my 2008 UY.

 

[Dean]

Could DVC legally pro-rate the points in the final UY based on the remaining months of ownership? I have an Oct UY so the dues I pay in Jan 2041 will cover the last 9 months of my Oct 2040 UY and the first 3 months of my Oct 2041 UY, and possibly the first 4 months of my Oct 2041 UY if they do a 13-month budget. Is it possible I might get only 3/12ths or 4/12ths of my 2041 UY points if I'm billed for only 3 or 4 months of dues for my Oct 2041 UY at the end of my contract?

They have options but regardless I think limiting banking the last few years and possibly limiting borrowing at least the 2041 points are pretty set. As I see it they could do a lottery of some type, a voluntary opt out or a free for all or any combo of those or similar options. Regardless, dues should be limited to points able to be used or something similar.

 

[MouseOfCards]

How interesting - seems more folks than not believe that DVC will make some change before expiration. Hopefully they also do something that provides strong incentive for most owners to extend or renew. Wonder how many 2042 owners are planning to sell before then.

 

[Dean]

How interesting - seems more folks than not believe that DVC will make some change before expiration. Hopefully they also do something that provides strong incentive for most owners to extend or renew. Wonder how many 2042 owners are planning to sell before then.

I think it likely there will be at least one or two reallocations over the years. I go back and forth on the extension issue. On one hand they need sufficient volume to support the infrastructure they've built up. On the other, they've really backed themselves into a corner with the botched OKW extension and tying the RTU to the land lease. If they offer an extension they either have to do so late or they have to do it dramatically differently.