Aggressive anti-rental email response from MS

[tjkraz]

The legal language is vague on purpose because they knew that they would not be able to anticipate all the things dvc owners would do as far as renting. Like 30 years ago, Disney probably did not anticipate that a broker would buy contracts, strip them, make a rental profit, and then sell them. They left the language vague so that they could address any future issues that would arise.

Renting was not a problem when it was low key and not widespread. However, it’s pretty obvious that the system isn’t working the way it is supposed to work and that is partially due to large commercial renting agencies. It’s as if other companies have come in and taken over the DVC system.

Agree with this.

I also think there is (should be) a legitimate concern within DVC as to whether this provision would stand up to a legal challenge. While many would argue that limiting rentals serves a greater good, we're talking about a large corporation trying to dictate how customers can use a very expensive product. Just because DVC wrote this vague language into the contract prohibiting "commercial rentals" doesn't mean that courts would agree that Internet rentals or 20+ transactions per year are a reasonable test. They may find that Disney has absolutely no right to prohibit owners from selling points after purchase.

Or they could go the other direction and uphold the clause, while expanding it to include Disney's own commercial point rental activities. This could potentially leave Disney unable to use its own point holdings to sell villas to cash guests.

DVC could consider some across-the-board policy changes which are designed to limit rentals. But there would likely be fallout for all members. For instance, if they tried to limit changes to the names on a reservation to avoid spec rentals, it would impact all of us whenever we need to make changes to a traveling party.

 

[fumanchu2488]

Yes, I agree. But I suspect Disney will put things in place to limit renting to once or twice a year per membership or something like that. The same way they limit transferring. Or maybe they will just leave the system in place and go after real commercial players. Or maybe they will say something like you cannot rent through an agency. Regardless, those emails they sent out show that Disney will definitely do something. Those are pretty serious emails.

Or they could only allow one stay (or whatever number) without an Owner checking in. So if you checked in with three rooms, two of which you rented to family/friends for the same stay you would be good. But if you just rent 10 different reservations a year and never actually use the points as an Owner you would be flagged.

 

[fumanchu2488]

Agree with this.

I also think there is (should be) a legitimate concern within DVC as to whether this provision would stand up to a legal challenge. While many would argue that limiting rentals serves a greater good, we're talking about a large corporation trying to dictate how customers can use a very expensive product. Just because DVC wrote this vague language into the contract prohibiting "commercial rentals" doesn't mean that courts would agree that Internet rentals or 20+ transactions per year are a reasonable test. They may find that Disney has absolutely no right to prohibit owners from selling points after purchase.

Or they could go the other direction and uphold the clause, while expanding it to include Disney's own commercial point rental activities. This could potentially leave Disney unable to use its own point holdings to sell villas to cash guests.

DVC could consider some across-the-board policy changes which are designed to limit rentals. But there would likely be fallout for all members. For instance, if they tried to limit changes to the names on a reservation to avoid spec rentals, it would impact all of us whenever we need to make changes to a traveling party.

The only thing I would say to this is that if local government can limit short term rentals for homes that people own (i.e. no AirBNB allowed) then I would say that DVC could limit rentals on their timeshare system. They are completely separate issues but the concept to me is still similar.

I would also say that you could argue very easily that chronic rentals hurts the majority of DVC Owners that try and use the product the 'correct' way.

 

[tjkraz]

The only thing I would say to this is that if local government can limit short term rentals for homes that people own (i.e. no AirBNB allowed) then I would say that DVC could limit rentals on their timeshare system. They are completely separate issues but the concept to me is still similar.

I would also say that you could argue very easily that chronic rentals hurts the majority of DVC Owners that try and use the product the 'correct' way.

One could certainly make those arguments, and I'm not saying they are wrong. But I'm also not sure how a court or arbitrator would feel about it. A local government issuing a blanket ban on certain activity in the interest of the "greater good" is a little different than a private corporation telling deeded owners "you can use the points we sold you THIS way, but not THAT way."

And by most definitions, Disney itself is a "commercial renter", so they'd effectively be imposing these restrictions on Average Joe while trying to maintain complete autonomy for their own activity.

It has been 8-10 years since DVC started communicating this "20 reservations per year" test, and it looks like an empty threat. There are unquestionably big players who manipulate the system for their own profit. My impression is that DVC hasn't taken any further action because of the Pandora effect.

 

[Matty B13]

If I was a rental company I would be concerned about this, they might be getting some legal paperwork soon.

 

[we"reofftoneverland]

Or they could only allow one stay (or whatever number) without an Owner checking in. So if you checked in with three rooms, two of which you rented to family/friends for the same stay you would be good. But if you just rent 10 different reservations a year and never actually use the points as an Owner you would be flagged.

Yes, agree. I was also thinking about if you book for a friend or adult child to use for free. So I do think they will still allow for some renting or sharing. But Disney has to address more commercial uses. Otherwise, there is an extent to which they are not in charge of their own company anymore. I also like your local government comparison. You would think—- how can government tell me if I can rent out my own house? But yes they can. That to me is even more heavy handed than a timeshare system implementing rental rules.

 

[fumanchu2488]

One could certainly make those arguments, and I'm not saying they are wrong. But I'm also not sure how a court or arbitrator would feel about it. A local government issuing a blanket ban on certain activity in the interest of the "greater good" is a little different than a private corporation telling deeded owners "you can use the points we sold you THIS way, but not THAT way."

And by most definitions, Disney itself is a "commercial renter", so they'd effectively be imposing these restrictions on Average Joe while trying to maintain complete autonomy for their own activity.

It has been 8-10 years since DVC started communicating this "20 reservations per year" test, and it looks like an empty threat. There are unquestionably big players who manipulate the system for their own profit. My impression is that DVC hasn't taken any further action because of the Pandora effect.

I guess what I am saying is that I would argue banning commercial rentals or any rentals for profit is for the "greater good". Since the vast majority of owners do not rent their points it seems there would be a very easy argument to make.

Also, DVC is completely separate than the hotel or theme park side of Disney Parks and Resorts. DVC is responsible for protecting the ability of all of it's members to use their membership. And if renting is reaching a point where the majority of day to day Owners cannot use the system effectively, they have a duty to do something. What if I was to sue Disney for not enforcing their prohibition of commercial use?

As far as precedent and history, I would say the recent advent (5-10 years) of commercial rental agencies, internet communities, and ability to easily rent points for profit or commercial use has changed the game for DVC and requires a new approach to managing it. I would bet back in the early to mid 90s the only renting that was happening was friend to friend or family that they knew and was very limited.

 

[Matty B13]

I also like your local government comparison. You would think—- how can government tell me if I can rent out my own house? But yes they can. That to me is even more heavy handed than a timeshare system implementing rental rules.

Depending on your zoning and housing bi-laws, local government can tell you how you can and cannot rent your house out. Airbnb and other companies have circumvented these laws in some areas, but some local governments have pushed back and/or just enforced the laws currently on the books.

 

[we"reofftoneverland]

Depending on your zoning and housing bi-laws, local government can tell you how you can and cannot rent your house out. Airbnb and other companies have circumvented these laws in some areas, but some local governments have pushed back and/or just enforced the laws currently on the books.

Agree and it is probably for the best that short term rentals are not allowed in residential neighborhoods.

 

[take36]

Yes, agree. I was also thinking about if you book for a friend or adult child to use for free. So I do think they will still allow for some renting or sharing. But Disney has to address more commercial uses. Otherwise, there is an extent to which they are not in charge of their own company anymore. I also like your local government comparison. You would think—- how can government tell me if I can rent out my own house? But yes they can. That to me is even more heavy handed than a timeshare system implementing rental rules.

I "rent" to my friends and family usually for a nominal fee or free often so I hope DVD doesn't crack down too hard and take that away. I get a lot of joy and use from my points from sharing. I never use a contract though so am I out of regulations?

 

[Sandisw]

Doesn’t DVC Rental Store own a decent number of contracts (the whole, buy, strip, sell thing they do), and therefore couldn’t they be contacted for that reason?

Potentially, they have a membership or memberships in the names of LLC, etc.

But, the vast majority of the rentals being offered by them are private owners which means those don’t count against their own rentals meeting the limit.

DVC has access to our memberships and can only go after owners individually and not via a broker.

The business itself is not a violation as it simply puts an owner and renter together.

But, if they have their own rentals they offer those would be dealt with in the same way as you or I.

I would bet the way they have it set up keeps every membership that is owned by them under the offical rules.

 

[Matty B13]

Agree and it is probably for the best that short term rentals are not allowed in residential neighborhoods.

I agree, it changes the whole character of a residential neighborhood when investors come into a nice area and buy up a few houses to rent out short term instead of a family with kids. The renters could careless about the neighborhood, and you have no idea who these people are.

 

[tjkraz]

I guess what I am saying is that I would argue banning commercial rentals or any rentals for profit is for the "greater good". Since the vast majority of owners do not rent their points it seems there would be a very easy argument to make.

Philosophically I agree. Again, it's more a question of whether courts would agree that Disney has the authority to impose that restriction. Corporations generally aren't allowed to dictate exactly when / where / how their products are used after the purchase. The people who own points for rental purposes have rights too. I'm not convinced that a court would agree that the rights of Average Joe supersede the rights of Renter LLC. At the end of the day, there's availability for all of us, even if Renter LLC has the means and knowhow to manipulate the system in their favor.

 

[take36]

knowhow to manipulate the system in their favor.

literally who we are lol

 

[RoseGold]

I guess what I am saying is that I would argue banning commercial rentals or any rentals for profit is for the "greater good". Since the vast majority of owners do not rent their points it seems there would be a very easy argument to make.

Disney makes the rules. It doesn't matter what we as owners think the "greater good" is. It matters what is good for the mouse.

 

[fumanchu2488]

Philosophically I agree. Again, it's more a question of whether courts would agree that Disney has the authority to impose that restriction. Corporations generally aren't allowed to dictate exactly when / where / how their products are used after the purchase. The people who own points for rental purposes have rights too. I'm not convinced that a court would agree that the rights of Average Joe supersede the rights of Renter LLC. At the end of the day, there's availability for all of us, even if Renter LLC has the means and knowhow to manipulate the system in their favor.

But our POS agreement says that they can restrict it. Here is exactly what the POS says as it relates (V. Rentals part 5.1)

"Except for DVD, DVCM or any of the TWDC Companies, use of Vacation Homes and recreational facilities for commercial purposes or any purpose other than the personal use described in the Condominium Documents is expressly prohibited. "Commercial purpose" may include a pattern of rental activity or other occupancy by an Owner that DVCM or the Board determines constitutes a commercial enterprise or practice."

My read on that is they have the authority to say that a pattern of rental activity by an Owner for profit would allow them to flag that as a commercial purpose. I would say at a minimum, using a third party agency would definitely qualify as a commercial practice. Also, it seems that they can determine what a commercial practice is at their discretion. That is what we signed up for.

 

[fumanchu2488]

Disney makes the rules. It doesn't matter what we as owners think the "greater good" is. It matters what is good for the mouse.

Yup! If they can get more unused points for themselves that they can rent out they would make more money than Owners renting their points.

 

[kristenrice]

But our POS agreement says that they can restrict it. Here is exactly what the POS says as it relates (V. Rentals part 5.1)

"Except for DVD, DVCM or any of the TWDC Companies, use of Vacation Homes and recreational facilities for commercial purposes or any purpose other than the personal use described in the Condominium Documents is expressly prohibited. "Commercial purpose" may include a pattern of rental activity or other occupancy by an Owner that DVCM or the Board determines constitutes a commercial enterprise or practice."

My read on that is they have the authority to say that a pattern of rental activity by an Owner for profit would allow them to flag that as a commercial purpose. I would say at a minimum, using a third party agency would definitely qualify as a commercial practice. Also, it seems that they can determine what a commercial practice is at their discretion. That is what we signed up for.

...like, for example, rental companies that advertise renting out your points to then offer to make reservations at (gasp!) Universal? Don't get me wrong, it's a great idea and I myself would not hesitate to do it if I had enough points, but this is something that may soon catch the attention of the powers that be and could be interpreted as "commercial". I do not know how this would impact the business itself, but the individual owners involved could be impacted.

 

[EYL]

I'm changing my rental contract to "You are buying my friendship for $XXXX and since we are friends, I'm giving you a free stay at [DVC resort]"

 

[GoingSince1990]

Interesting to ponder how Disney could crack down in practice on “commercial” renting as opposed to making reservations for friends and family. If an owner claims that they made a reservation for a friend, charging nothing, how does Disney prove otherwise? Demand an affidavit from both parties testifying under penalty of perjury that they are, indeed, buddies? How long must the friendship have existed? Do Facebook friends count? How do you prove that no payment was made? Give Disney access to all of your bank account, PayPal, and Venmo records? It’s hard to imagine Disney doing any of this.

On the other hand, confirmed reservations being listed on eBay or Redweek, for example, would be much easier to clamp down on; it would be easy for Disney to monitor such listings, see when the reservation is made and the listing falls off, and cancel it. They could also use the same approach to attack the DVC Rental Store, which publicly lists reservation requests, complete with check-in dates and point amounts, which drop off the list when the reservation is made (obviously this would cause that platform to quickly change its model to more like the behind-the-scenes points matching that David’s does).