What happens when the contract ends?

[jp02]

I was reading a thread and noticed several people made references to avoiding the resorts that the contract is over sooner than others if the buyers are young. I am 30 and DB 33 and we are considering buying DVC. Can you tell me what resorts have the longest contracts currently? Also, what exactly happens when the contract runs out for those who purchase at that resort? Thanks!

 

[DenLo]

When a DVC contract ends, membership ends and you no longer are allowed to make DVC reservations based on that contract. If you own at another resort you still maintain a DVC membership but you no longer can use the points for the resort who's contract has expired.

There was a recent thread about this subject. I would suggest you do a search for it as there was several comments posted.

 

[OKW Lover]

While nobody knows what Disney will do at that point, those making investment decisions today should assume that they have nothing at the end of the contract.

 

[chalee94]

I was reading a thread and noticed several people made references to avoiding the resorts that the contract is over sooner than others if the buyers are young. I am 30 and DB 33 and we are considering buying DVC. Can you tell me what resorts have the longest contracts currently?

onsite at wdw, BLT goes to 2060, AKV goes to 2057 and SSR goes to 2054. some OKW contracts were extended to 2057 (all direct OKW contracts but only a few resale OKW contracts).

VGF will probably last 50 years if recent history continues.

Also, what exactly happens when the contract runs out for those who purchase at that resort? Thanks!

the property reverts to disney's ownership. i will own nothing and owe nothing further to disney in terms of maintenance fees.

edited to add: it's worth noting that most people will not own for the entire life of the contract. as kids age, lifestyles change, big life events turn you in a different direction...you probably will find yourself selling well in advance of even 2042 (the end date for most DVC resorts)...

here are a couple of recent threads:

http://www.disboards.com/showthread.php?t=2950426

http://disboards.com/showthread.php?p=45423438

 

[BEASLYBOO]

Well, at 80 years old, I will have gotten my fill of Disney and it will be time for my son, then 46 to determine if he wants to continue on the Disney tradition, of course depending on what the future brings and that no one knows! I had the opportunity to extend another 15 years but declined, Disney can have it back in 2042!

Of course as I beg & borrow points every year, my contract will end sooner than the actual deadline!

 

[drusba]

VWL, BCV, BWV, Hilton Head and Vero Beach, and older OKW contracts expire January 31, 2042. It is those that should create real second thoughts about purchasing for a new purchaser that is only 30 or in early 30s because contract will expire when you are in late 50s or early 60s and (a) there is no assurance any extension will ever be offered, and (b) there is definitely no assurance that if one is offered you will want to pay the exorbitant price Disney will be charging for it. What I can tell you from experience is this. When you do reach your late 50s and 60s and kids have departed from home, you will likely find yourself using your points to go to WDW more often than you ever did before and thus by purchasing one of those resorts you may giving that up.

 

[disneynutz]

No one but Disney knows their future.

Will owners still be going to Disney after years and years of ownership?

Will Disney tear down the buildings because they need the land for something else?

Will they tear down the buildings and rebuild new resorts?

Will Disney still be Disney or will someone buy them?

Will someone buy the resorts from Disney?

Almost anything can happen.

Bill

 

[DougEMG]

It doesn't matter what Disney does. The contract between you and Disney ends on the termination date.

Think of it like renting an apartment and using a lease. When the lease expires neither party has any claims against the other. If they apartment owner (in this case Disney) wants to make you an offer to continue with a new lease, that is totally their option.

 

[Dean]

To me the more interesting questions are whether they will offer extensions at other resorts (and the details) and HOW it will end. The simple fact is there are not enough villas to accommodate all the points the last couple of years thus not everyone will be able to use points in the last couple of years. It's also likely that other changes will occur as well including limitations or cessation of banking, transfers, cash exchange options, etc.

 

[ELMC]

The simple fact is there are not enough villas to accommodate all the points the last couple of years thus not everyone will be able to use points in the last couple of years.

How can that be? DVD can't "oversell" a resort. I'm not getting what you're saying here.

 

[wbl2745]

Will someone buy the resorts from Disney?

I've always wondered about this possibility. Some of the resorts are stand-alone, such as HHI, AUL, OKW, VB, and SSR. Others are part of an existing resort. At VGC, where we own, you turn left and you're in DVC, turn right and it is the GCH. In fact, if I recall correctly, a couple of the GCH rooms exist between DVC villas. Although you can sell whatever you want to sell, it would seem a problem to sell the villas and not the hotel. What if the new owners don't keep up the rooms of the villas. Wouldn't that reflect on the hotel?

Another question is how many resorts can Disney build? What happens when every single deluxe resort has a DVC component? Do they start building at the moderate resorts with a different price model? It seems the big money is in the sales of the villas, not in the maintenance. Will Disney be bored of just the maintenance and sell that off?

Time will tell.

 

[chalee94]

How can that be? DVD can't "oversell" a resort. I'm not getting what you're saying here.

the last year (2041) will feature everyone but the feb UYs getting their pts with less than 12 months to use them. a dec UY will get their pts on dec 1, 2041 and need to complete a stay by jan 31, 2042.

it does no good to say those thousands of members can just borrow the pts back to 2040...that still creates something of a traffic jam with more pts than usual being borrowed to try to squeeze some usage in before things shut down.

so for normal usage, they haven't oversold the resorts. but that last year presents some interesting logistical choices...

 

[Dean]

How can that be? DVD can't "oversell" a resort. I'm not getting what you're saying here.

Think about it. Just look at 2041. There are 8 UY months. Clearly there are not enough Villa's to accommodate all the points in the last year. Now think back to the first year of say OKW where there were there were Use Years that did not come into play for up to 10 months and thus those owners usage was shifted into the future. There are ways to handle this issue but I thought I'd reserve and only discuss if others so chose, I don't know how DVC will handle it and while I'm sure they've discussed it, I doubt they have a final decision in place but should have by around 10 years out.

 

[Dean]

I've always wondered about this possibility. Some of the resorts are stand-alone, such as HHI, AUL, OKW, VB, and SSR. Others are part of an existing resort. At VGC, where we own, you turn left and you're in DVC, turn right and it is the GCH. In fact, if I recall correctly, a couple of the GCH rooms exist between DVC villas. Although you can sell whatever you want to sell, it would seem a problem to sell the villas and not the hotel. What if the new owners don't keep up the rooms of the villas. Wouldn't that reflect on the hotel?

Another question is how many resorts can Disney build? What happens when every single deluxe resort has a DVC component? Do they start building at the moderate resorts with a different price model? It seems the big money is in the sales of the villas, not in the maintenance. Will Disney be bored of just the maintenance and sell that off?

Time will tell.

DVC can't sell the resorts utiti they revert to Disney at the end of the RTU. What they can do is sell the management and any owned inventory. They could do this resort by resort or the entire system.

 

[ELMC]

Think about it. Just look at 2041. There are 8 UY months. Clearly there are not enough Villa's to accommodate all the points in the last year. Now think back to the first year of say OKW where there were there were Use Years that did not come into play for up to 10 months and thus those owners usage was shifted into the future. There are ways to handle this issue but I thought I'd reserve and only discuss if others so chose, I don't know how DVC will handle it and while I'm sure they've discussed it, I doubt they have a final decision in place but should have by around 10 years out.

Ok, I see what you're saying. Well, if you have a Dec UY, when you get your final set of points, don't they have to allow you your full use year? So if the contract expires in 2042 and you have a Dec UY, aren't they contractually obligated to give you until Nov 2043 to use your points? Then you won't have the issue where you are trying to squeeze all of the Dec UY people in one month.

 

[DougEMG]

Ok, I see what you're saying. Well, if you have a Dec UY, when you get your final set of points, don't they have to allow you your full use year? So if the contract expires in 2042 and you have a Dec UY, aren't they contractually obligated to give you until Nov 2043 to use your points? Then you won't have the issue where you are trying to squeeze all of the Dec UY people in one month.

Good question, but I'm betting that those with Dec UY (I've a lot of points in DEC) will have just the 1 month to use them up, at least that was my assumption when I bought. Certainly not something I'm going to worry about now and certainly didn't have any impact on my purchasing decision.

Now in 20 years time if I was a resale purchaser and a resort only had 9 or 10 years left I'd want to know exactly how that last year was going to work.

Worst case if they do something screwy and I can't book in that last year I'll just not pay them the MF for that last year and they can foreclose on me

 

[Dean]

Ok, I see what you're saying. Well, if you have a Dec UY, when you get your final set of points, don't they have to allow you your full use year? So if the contract expires in 2042 and you have a Dec UY, aren't they contractually obligated to give you until Nov 2043 to use your points? Then you won't have the issue where you are trying to squeeze all of the Dec UY people in one month.

No they don't, the contract still has a fixed ending date. They will have to find a way to decrease the number of points used those last 2-3 years. Likely choices include one or more of the following:

• Eliminate banking
• Eliminate borrowing
• Eliminate transfers
• Allow people to opt out (both fees and usage)
• A lottery to see who can reserve (likely without having to pay the fees on unused points
• A free for all, loser is just out of luck.
• Stop usage of developer owned points
• There are a couple of additional variations related to club usage at other resorts.

My guess guess is they will stop banking about 3 years out, not stop borrowing and then implement some type of strategy that will set up some members to use their points and some not (either by choice or forced) and not pay fees on unused points. They could allow usage in non home resort resorts to finish out the points but I doubt they will, at least for those members who will cease to be members.

 

[DougEMG]

I bet they haven't figured out what they are going to do and the lack of up take on the OKW extension probably confused them even more.

 

[ELMC]

My guess guess is they will stop banking about 3 years out, not stop borrowing and then implement some type of strategy that will set up some members to use their points and some not (either by choice or forced) and not pay fees on unused points.

I'm going to start by saying that I typically defer to you on all things timeshare based on the experience that you have. But I have to say that I can't see a way that DVD can legally prohibit people from using their points. The contract provides for an allotment of points every year. In my mind, to remove the ability to use them violates the contract.

That being said, if maintenance fees continue on their current trajectory, I don't doubt that people would accept the opportunity to not pay said fees. But like Doug said, there may come a point in time where it might be easier (and cheaper) to just not pay the fees and let Disney foreclose on the contract.

 

[Dean]

I'm going to start by saying that I typically defer to you on all things timeshare based on the experience that you have. But I have to say that I can't see a way that DVD can legally prohibit people from using their points. The contract provides for an allotment of points every year. In my mind, to remove the ability to use them violates the contract.

That being said, if maintenance fees continue on their current trajectory, I don't doubt that people would accept the opportunity to not pay said fees. But like Doug said, there may come a point in time where it might be easier (and cheaper) to just not pay the fees and let Disney foreclose on the contract.

DVC doesn't guarantee the use of points, only the potential use. Points are merely representative of an ownership. Plus there are measures for lotteries and special season lists that could cover this issue. Regardless there is simply not enough time for all to use their points the last 1-2 years. That's factual, the only question is HOW they limit who gets to use it. As for experience in timeshares, there really isn't much to cover this issue. The only system that comes to mind is the Royal resorts in MX and the situation is so different as to not apply. The easiest out is to allow members to opt out of usage and fees and hope they get enough participation, along with not booking the company owned points, that it doesn't matter. There is a chance they could kick the can down the road with extensions but it doesn't change the principles.