Are Disney-Financed Contracts More Likely to be ROFR'ed?

[lilpooh108]

My husband and I are having a debate over this one---let's hear your POVs

We're looking at an AKV contract that is attractively priced. The seller's contract is financed. We're not sure if they financed it through Disney. We believe so since the contract is for an even 160 points and the balance remaining on the finance seems like it was purchased by the seller directly from Disney a few years ago (just a guess).

Here's our question. If the contract is financed through Disney, would Disney be more likely to exercise ROFR since all Disney has to do is write off the loan rather than paying "actual" money to the seller to buy the contract back?

There's no real overhead to Disney to "buy" back this particular contract, since it would just write off the loss of the loan, and turn around and sell the points at a profit. What do you think?

 

[Chuck S]

I would think that Disney would rather not exercise ROFR on a financed contract. That way they will receive the full payment at closing, and not have to write off anything.

 

[lilpooh108]

I would think that Disney would rather not exercise ROFR on a financed contract. That way they will receive the full payment at closing, and not have to write off anything.

Score 1 for DH. I feel differently, of course

 

[JimMIA]

I agree with Chuck, but I have another concern.

As Chuck mentioned, whatever financing they have will have to be paid off -- either from the proceeds of the sale, or by them paying the balance off. If they are not clearing enough to cover the payoff, and don't have the money to pay off the loan, they would not be able to close.

I would check with the broker and be sure they understand what their proceeds, payoff, and net to them (if any) are.

You don't want to get stuck in a situation where they are scrambling to find the money to pay off the loan, then can't close, and the delay has pushed you past the 3/20 deadline. Personally, I'd like to know what all those numbers are, but the broker may not be able to tell you that for privacy reasons.

If I couldn't get some solid assurances that they will close promptly (like they've deposited the funds needed to close into escrow), I'd probably rescind and look for another contract with no complications. There are plenty of AKV contracts out there.

 

[rock_doctor]

It only has to be sent to Disney for ROFR by 3/20 or at least that is what the resale people are telling everybody... I would assume most people finance though Disney. If you wan to know for sure go here and put the last name of the seller into the last first name block under the both names title and click search. Someplace on the page will be the deed and mortgage sheet. It will tell you if it is Disney financed and how much the sellers paid for the points originally.

 

[JimMIA]

It only has to be sent to Disney for ROFR by 3/20 or at least that is what the resale people are telling everybody...

That's correct.

But the danger to OP is that they agree to purchase the contract, it goes to ROFR prior to March 20 and passes, but then the seller is not able to close because they are under water on their loan, or they are not getting enough proceeds to pay off the loan and the commission.

Don't forget, there are some small costs to the seller, but there's also the 10% or so commission that will be deducted from the proceeds in addition to the loan payoff. If the proceeds aren't enough to cover all that, the seller has to pay money IN to close.

If that process drags out beyond March 20, OP may find the seller can't close and the deadline has passed for them to purchase another resale with the full benefit package.

 

[lilpooh108]

That's correct.

But the danger to OP is that they agree to purchase the contract, it goes to ROFR prior to March 20 and passes, but then the seller is not able to close because they are under water on their loan, or they are not getting enough proceeds to pay off the loan and the commission.

Don't forget, there are some small costs to the seller, but there's also the 10% or so commission that will be deducted from the proceeds in addition to the loan payoff. If the proceeds aren't enough to cover all that, the seller has to pay money IN to close.

If that process drags out beyond March 20, OP may find the seller can't close and the deadline has passed for them to purchase another resale with the full benefit package.

Thanks! Great point...we'll do some research and figure it out.

 

[lilpooh108]

It only has to be sent to Disney for ROFR by 3/20 or at least that is what the resale people are telling everybody... I would assume most people finance though Disney. If you wan to know for sure go here and put the last name of the seller into the last first name block under the both names title and click search. Someplace on the page will be the deed and mortgage sheet. It will tell you if it is Disney financed and how much the sellers paid for the points originally.

Thanks! I'd forgotten that we could do this. I've never seen a mortgage sheet though--where is that? Is that the gray box that says "Mortgage Amount" before you pull up the deed?

 

[wdrl]

It only has to be sent to Disney for ROFR by 3/20 or at least that is what the resale people are telling everybody... I would assume most people finance though Disney. If you wan to know for sure go here and put the last name of the seller into the last first name block under the both names title and click search. Someplace on the page will be the deed and mortgage sheet. It will tell you if it is Disney financed and how much the sellers paid for the points originally.

One caveat: When you double click on a deed on the the Orange County Comptroller's website, it will display a page of information about the deed, including a "Consideration/Sale" amount. However, this amount does not reflect any incentives the buyer may have received from Disney.