??? about stripped contracts and dues?

[edk35]

I was wondering.... when I see these contracts WITH no points available on UY late in the year say Sept. through Dec. until 2011 and there are actually some that points aren't available until 2012...Does the buyer still pay the dues as soon as the contract closes? How does that work? I am always keeping my eyes out for Oct. UY small contracts. It seems the contracts that have NO points available any time soon are lower in cost. Just curious how all of this works.

Thanks

 

[RobDoc]

Since everything is negotiable, you can include language in your offer regarding dues payment on a stripped contract. If there are no points available until 2012, it might be worth asking the seller to include those dues as a closing item. Regardless, the owner of record on January 1, 2011 will be responsbile for paying the dues for 2011.

 

[Dean]

I was wondering.... when I see these contracts WITH no points available on UY late in the year say Sept. through Dec. until 2011 and there are actually some that points aren't available until 2012...Does the buyer still pay the dues as soon as the contract closes? How does that work? I am always keeping my eyes out for Oct. UY small contracts. It seems the contracts that have NO points available any time soon are lower in cost. Just curious how all of this works.

Thanks

DVC charges dues on a calendar year, not UY basis. Thus the "you get the points you pay the dues" approach taken by most resale companies is technically incorrect. The neutral position is you pay the dues for the number of months remaining in the UY adjusted by the % of points available. You normally ignore banked or borrowed points and reservation points since they are restricted. Likewise, any non bankable points are restricted and should be ignored or adjusted in the dues calculations. Here are a few examples using the calculations applicable IF you were buying directly assuming 100 points and closing 1 Oct for sake of simplicity.

• Feb UY all 2010 & 2011 points available - 3 months of dues at closing, all 2011 dues to buyer.
  
• Feb UY no 2010 but all 2011 points available - no dues at closing, a 1 month credit to buyer from seller for 2011 dues.
  
• Dec UY all 2010 & 2011 points available - 1 month of dues at closing, all 2011 dues to buyer.
  
• Dec UY no 2010 but all 2011 points available - no dues at closing, a 11 month credit to buyer from seller for 2011 dues.
  
• Dec UY no 2010 but 1/2 2011 points available - no dues at closing, a 12 month credit to buyer from seller for 2011 dues PLUS 5 months of credit to the buyer for hte 2012 dues.

Certainly it's all negotiable and one should ultimately look at the overall deal and determine what works for you. At least knowing what you're actually getting and not getting will help you decide the value of a given option. MOST people overpay dues on resale contracts.

 

[edk35]

Thanks very much guys..... I do appreciate the explanation.

 

[Simba's Mom]

Yes, as Doc said, it's all negotiable, so just make sure you put it in writing who's going to pay the dues. We've bought 1 stripped contract, tried to buy a second and the dues became the stumbling block. Sellers initially had no problem being responsible for 2010 dues, then waffled.

 

[wbl2745]

We were in the market for some extra points and I noticed that many of the contracts had no available points until 2011 or 2012. I had a really hard time putting money into a product that I couldn't use for over a year. If I were purchasing a stripped contract I'd make sure that the dues were paid by the seller as a part of the total package at the time of closing, since as a previous poster said, DVC will bill the owner of record on January 1, so you better already have the money from the seller.

 

[JimMIA]

Like most things DVC, I don't think there is one cookie-cutter answer for the question of points availability on a resale contract.

Banked points are great if you are going to use them. But if you are buying a contract with banked points that will expire before you make a trip, they have zero value...so a "loaded" contract may just turn out to be something you paid too much for.

Stripped contracts are just the opposite. If you are planning to use your points for a near-future trip, then a stripped contract means you will have to borrow if possible (and it may not be possible). OTOH...if you're not making a trip for a couple of years, buying a stripped contract at a lower price may be a perfect fit for your situation and should save you money...especially if you get the seller to reduce the price to offset the dues for the period when you will not have any points. You'll have to approximate that based on previous years dues, because nobody knows exactly what the dues will be until the actual bills go out in December.

And in between are "full" contracts which have their full complement of current year points (or the vast majority of them) available AND are well within their banking deadline. With a full contract, you have to ability to use the points -- or if you don't, you can bank them into the following UY.

A "loaded" or "full" contract will usually work best for frequent visitors, but a "stripped" contact may be perfect for someone whose next visit (or a special event like a cruise or family reunion) is a year or more off.

 

[hollis]

A lot of good thoughts.

 

[Jason@dvcstore]

I was wondering.... when I see these contracts WITH no points available on UY late in the year say Sept. through Dec. until 2011 and there are actually some that points aren't available until 2012...Does the buyer still pay the dues as soon as the contract closes? How does that work? I am always keeping my eyes out for Oct. UY small contracts. It seems the contracts that have NO points available any time soon are lower in cost. Just curious how all of this works.

Thanks

I can speak for The Timeshare Store, Inc.® and will use this listing as an example. I am just going to assume you buy the property at the asking price and no negotiation.

BLT100-02-1015 Bay Lake Tower-$100/pt. 100 February $10,000.00
15 points currently available in "Hold Status", which must be used by 2/1/11, 23 points coming on 2/1/11 and 100 points coming on 2/1/12. Priced at $100 per point.

The buyer would only have to pay dues on 23 points for 2011 and the seller would have to pay dues on 77 points for 2011. The buyer would have to pay the full annual dues on 100 points starting January of 2012.

I hope that helps.

Jason

 

[saratogagirls]

One of our resale purchases was actually just like Jason's example....points in "hold" status and the following year's nearly depleted. We only paid dues on what we were getting.

Since the contract was "distressed", we were also able to negotiate that the seller's paid all of the closing costs. Once the contract closed, we rented out the points that were in "hold" status.

Like a few of the other posters mentioned, because we had no immediate plans to use the points, it was a good deal.

 

[Dean]

I can speak for The Timeshare Store, Inc.® and will use this listing as an example. I am just going to assume you buy the property at the asking price and no negotiation.

BLT100-02-1015 Bay Lake Tower-$100/pt. 100 February $10,000.00
15 points currently available in "Hold Status", which must be used by 2/1/11, 23 points coming on 2/1/11 and 100 points coming on 2/1/12. Priced at $100 per point.

The buyer would only have to pay dues on 23 points for 2011 and the seller would have to pay dues on 77 points for 2011. The buyer would have to pay the full annual dues on 100 points starting January of 2012.

I hope that helps.

Jason

The neutral fees and if bought through Disney would generally depend on when it was bought for most situations but not in the case where you're into two UYs ahead. The appropriate fees for this contract bought in 2010 would be no fees paid by buyer for the 2010 UY AND a rebate from seller for the 2011 fees for the points not available in 2011. Ultimately the buyer should be reimbursed for dues on 77 points, as you say. To be truly neutral, you'd have to anticipate the increase in dues for the next year. It's actually quite easy to adjust a given contract for points available. However, adjusting for the dues alone is simply not enough to determine the price/value of a given contract. You really need to do it like all points were there and you rented out the points that are no longer available. That gives you more of an adjustment in the neighborhood of $10 per points not available rather than just the dues.