Anyone read the Multi-Site Public Offering Statement (disclosure)- Concerns

[bridget]

I have some concerns:
1. Cannot accept compensation for transferring points (page 52 USING HOME RESORT VACATION POINTS). I see this being done all the time, but it says it is prohibited.

2. Page 55 & 74, the fact that they can reduce the home resort priority to 1 month (there is no guarantee that they will always have the 11 month priority).

3. The possibility that they could require a max of 5 consective days -Page 42

4. Termination of membership Page 40. If I read this correctly, if something physically happens and they don't rebuild at your home site, then you have nothing (unless you own DVC property).

Anyone have any knowledge about what I'm concerned about? THANK YOU!!!
Bridget

 

[Chuck S]

All of those provisions have been in the POS since the original OKW POS in 1991.

You are correct, that transfers are not allowed for compensation by the POS. DVC obviously currently routinely ignores this provision, and I would suspect, will continue to do so UNLESS they see some sort of ongoing problem.

The home resort priority reduction would simply mean most members would be making their desired reservations right at 11 months. Again, unless DVC sees a problem, I think we're pretty safe for the time being.

The minimum stay requirement could certainly be instituted to balance demand, and encourage weekend night usage, along with reallocating the point charts. It is likely a fairly extreme measure, but well within the realm of possibility.

The termination of ownership clause...if a resort (or even the building/unit you own) is devastated to the point to where it is not practical to rebuild (for instance, if Vero Beach had a severe hurricane in 2035, or something) then any insurance proceeds would be divided amonst the owners, and the resort membership dissolved. Seems fair, as you would no longer have a room to trade for other DVC resorts or out to other locations, and points legally represent your physical ownership interest. If your resort isn't physically standing, you have no ownership interest. I would guess this clause is standard to pretty much any timeshare, anywhere.

Additional clauses could limit you to using your points to your home resort only, could impose a special assessment, could eliminate booking seasons (making the room the same number of points every day of the year), etc. Again, all pretty standard stuff for timeshare language.

 

[WebmasterDoc]

Yes, all of those statements have been in the POS since 1991. Hopefully, potential buyers will address any concerns before purchase.

1. DVC does not want to get involved with any dispute regarding a transfer of points after-the-fact. That statement protects them and reinforces other statements regarding the "value" of points. (DVC points have no intrinsic value.) If you transfer points, expecting payment do not expect DVC to offer any assistance. If you pay for a transfer that does not come, don't expect any assistance from DVC.

2. Currently, owners enjoy a 4 month advantage for reservations at their home resort, but that can be reduced to 1 month without approval of the membership since that approval comes with membership. We are guaranteed a one month priority at our home resorts.

3. Currently, the minimum stay is one night but that can be increased to five without member approval - since that approval already exists with purchase. We are guaranteed no more than a 5 night minimum stay.

4. If there is some catastrophic event, DVC could opt not to rebuild the resort. Any insurance proceeds would be split among the owners on a pro-rata basis and they would not have access to other DVC resorts using points from the excluded resort. Most timeshares and condos have similar clauses regarding catastrophic events.

DVC has the responsibility to maintain occupancy levels at the resorts. The tools they have available are reallocation of points (they have exercised that in 1996, 2010 and 2011), changing the Home Resort Reservation Priority (that has not been changed to-date) and changing the minimum stay requirements (that has never been changed).

IMO, it is important for DVC members to understand that these issues are within the right/responsibility of DVC before purchase. While these policies may never be implemented, they certainly could be - just as the point chart reallocations of the past 2 years caught many unaware.

It is wise to read all of the documents before purchase or have them reviewed by your attorney for explanation.

 

[JimC]

All of the above provisions may be used by DVC more as contracts approach expiration. Banking and borrowing could also be affected. I suspect bringing a timeshare to a successful conclusion is more difficult then operating it in steady state.

I suspect only a very small fraction of members have thoroughly read the legal documents.

 

[bridget]

I could not find anywhere where it was stated that the insurance would be divided among the owners.

I also was concerned because if you are being paid to transfer points, you are breaching the contract. I know people do this, but I had no idea, this was prohibited in the disclosure.

Thanks for your answers

 

[jlewisinsyr]

I could not find anywhere where it was stated that the insurance would be divided among the owners.

As owners, we pay for the insurance on the property as part of our dues, so we are in essence are the insured and the property being insured is ours. In the event of a loss, the insurance proceeds would be used to rebuild, however if the destruction was greater then the amount of insurance or Disney choose not to re-lease the land to build a new resort then the proceeds could be paid to the owners. It's not really a contractual obligation in terms of DVC, rather just how insurance works.

 

[mjy]

I suspect only a very small fraction of members have thoroughly read the legal documents.

Maybe because we believed the people who sold it to us?

I know, for myself, one of the things that my sales person told me over and over again was, "You can always use your points for a one night stay if you preferred. Most time share require a week, but we are really flexible. The option to book as many or as few days as a time is really nice." (or something very similar to that)

You're right. I never did read all the legal "stuff." I've gone there for one or two nights before (as I'm passing through) and plan on doing that again at the end of October a night before leaving for a cruise. Would hate to lose that flexibility . . . don't think we would, but hate to even think about it.

 

[Deb & Bill]

I could not find anywhere where it was stated that the insurance would be divided among the owners.

I also was concerned because if you are being paid to transfer points, you are breaching the contract. I know people do this, but I had no idea, this was prohibited in the disclosure.

Thanks for your answers

The POS also requires members to notify MS if they are renting a reservation. It allows renting, but not commercial activities. The POS also talks about perks and they may be extended to guests staying with the member, but not to anyone who compensates the member for the stay.

 

[LisaS]

I could not find anywhere where it was stated that the insurance would be divided among the owners.

I'm pretty sure I've seen that stated somewhere in the POS. This could apply to the resort as a whole or to just a single unit within the resort. For example, if a single building at OKW was badly damaged and DVC opted not to rebuild it, the members who own the Unit that consists of that building would receive the insurance proceeds and cease to be owners of OKW even though the rest of the resort continued to operate.