All guests that you take up to TOTWL must be staying on your reservation. You say that they live nearby - so not sure if they are staying with you or just joining you for the day.
From the DVC Member website:
Top of the World Lounge
Discover a soothing space to unwind at Top of the World Lounge, located at Bay Lake Tower at Disney's Contemporary Resort. One of the vacation kingdom’s most exclusive spaces, this lounge is available only to Members and those in their traveling party who are staying on that Member's reservation. It’s an ideal place to savor light bites and refreshing cocktails—and unforgettable views.
Disney Vacation Club Members staying at any Disney-owned-and-operated hotel at Walt Disney World Resort (whether they booked with Vacation Points or cash) may enjoy access to one of the vacation kingdom's most exclusive spaces: Top of the World Lounge atop Bay Lake Tower at Disney's Contemporary Resort through December 29, 2016.
Blockout dates apply for Top of the World Lounge, including but not limited to: July 3, 2016; July 4, 2016; December 30, 2016; December 31, 2016. Current operating hours are 6:00 PM to midnight.
Accessing the Lounge
This perk is available exclusively to Members. People who are in that Member’s traveling party and staying on that Member’s reservation are also eligible to visit Top of the World Lounge. At least one Member in the traveling party must accompany the group and present his or her current MagicBand or Key to the World card with a Disney Vacation Club Membership notation in order to gain admission to the lounge and observation deck. If the Member's MagicBand or Key to the World card doesn't display a Membership notation, a Disney Vacation Club Membership Card is also required to verify Membership.