Prorated MF?

Discussion in 'Purchasing DVC' started by mvndvm, Jun 21, 2013.

  1. mvndvm

    mvndvm Mouseketeer

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    Trying to figure out the MF in a resale contract.

    I'm putting in an offer for 250 points, August UY, 314 available 8/1/13, meaning they banked 64 2012 points.

    When I'm making the offer and say I'm going to pay the 2013 MF, does that mean I'm essentially reimbursing the seller for the January 2013 MF they already paid?

    If that's what it means, is it reasonable to offer to pay prorated 2013 MF, whereby I just pay/reimburse the seller for the 64 points they did not use?

    So, regardless of UY, when you talk about prorated MF, it is based on calendar year since MF are charged every January based on contract size regardless of how many are in account at that time, correct?

    Or, when discussing prorated MF, do you divide MF by month and then reimburse the seller based on time left in the year? In this case, the prorated MF would be based on 5 months instead of the 64 points they banked?

    I hope I'm not confusing you by reading this.

    Thanks in advance of any replies.
     
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  3. NoleFan

    NoleFan DIS Veteran

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    Everything is negotiable so you could have seller pay, split MF, or pay MF. In any scenario the MF is on the 2013 UY points. That would be 250 points not the 64 banked points from 2012. Good luck.
     
  4. mvndvm

    mvndvm Mouseketeer

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    In January 2013, the seller paid $1447.50 (5.79/pt) for the 250 points regardless of what was in the account at the time.

    BUT, since they banked 64, that means they used 186, so my question is what is the most fair way to prorate the 2013 MF, by points (64) or time (5 months left in 2013 based on Aug UY)?

    I know anything and everything is negotiable, but I want to do what's the fairest (most fair??) to both sides.
     
  5. iluvthsgam

    iluvthsgam Mouseketeer DVC Gold

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    If it is banked 2012 points it means they were from 2012 UY and used 186 points in the 2012 UY. The MF's for the 2012 points were already paid long ago in Jan 2012.

    The MF's for all 250 2013 points (which you are getting) were just paid in Jan 2013. They haven't used any of those points yet and all 250 are yours to use. I guess if you are looking for "most fair" you should pay all the MF's on those 2013 points. You are also getting those 64 points that they paid MF's on already (without reimbursing them for those MF's).

    Their offer for you to pay the 2013 MF's is fair because you are getting all the 2013 points - however, that doesn't mean you can't negotiate.
     
  6. Dean

    Dean DIS Veteran<br><a href="http://www.wdwinfo.com/dis

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    Ignoring the banked points, paying 5/12 of the 2013 fees is the neutral position on fees for this contract.
     
  7. Sandisw

    Sandisw Moderator Moderator

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    IMO, since MF's are based on calendar year, I have always felt that it should be based on how much of the year you own the contract. I do think that having a full set of points, plus banked points may influence paying the full year, even if buying in June, it is all negotiable.

    I bought BWV in August, 2011 with a Dec UY. We were getting all 2011 UY points, but I asked that all MF's be covered. I took that into account when offering my price.

    I think what can be more important is the overall price--that is what I used and made my offer based on that.

    Good luck!
     
  8. Dean

    Dean DIS Veteran<br><a href="http://www.wdwinfo.com/dis

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    How I posted is how DVC does it. It's based on when you buy if you get current points or when the UY starts for no current points. There are a couple of other scenarios not applicable to a resale.
     
  9. ssawka

    ssawka DIS Veteran

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    I would probably initially offer to just pay the full 2013 MFs. Yes, you are getting 64 2012 points, but they received a benefit from not selling those points until 2013. Also, the 2012 points do not have the same value as when they paid MFs on them since they have already been banked.
     
  10. LisaS

    LisaS DIS Veteran

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    With an August UY, the maintenance fees paid in January 2013 cover the last 7 months of the Aug 2012 UY and the first 5 months of the August 2013 UY. The 64 banked points equate to about 3/12ths of the Aug 2012 points but by reimbursing the seller for all of the 2013 dues you would be paying for 7/12ths of the Aug 2012 points.

    If you value the banked points the same as the rest of the points, you would reimburse the seller for 8/12ths of the 2013 calendar year dues, 3/12ths for the 64 banked points and 5/12ths for the part of your 2013 UY that falls within the last 5 months of the 2013 calendar year. (The dues on the remaining 7 months of your 2013 UY points are paid in January 2014, along with the dues for the first 5 months of your 2014 UY points.)

    It would also be reasonable to devalue the banked points because you will have only one year in which they can be used before they expire.

    This is where things get tricky. Pro-rating the dues is the right thing to do but unfortunately the brokers and often the sellers as well do not really understand the relationship between Use Year and the calendar year dues, or perhaps they do but choose the easy way out and just say "if you get the 2013 points you pay the 2013 dues". But that is not how Disney does it and that is not what the seller originally paid if they bought their contract directly from Disney. Since everything is negotiable in a resale transaction, you could either offer to pay pro-rated dues or, if they insist on full reimbursement, try to negotiate on the price so you end up at the same figure.
     

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