Buying points from a friend

[cggmommy]

My friend has offered his BCV 150 pts contract for 8,500. Does this have any chance of ROFR? Is there anyway to buy this from my friend without doing ROFR? New to DVC and don't really know how it all works. Advice welcome

 

[McCrae]

All sales must be go through the ROFR process.

 

[PCMama]

My friend has offered his BCV 150 pts contract for 8,500. Does this have any chance of ROFR? Is there anyway to buy this from my friend without doing ROFR? New to DVC and don't really know how it all works. Advice welcome

I'm not an owner yet but I'm interested to hear.

I mean since its your friend I'm assuming escrow etc isn't needed so Disney doesn't necessarily need to know money has changed hands. There must be a way for a member to give their contract to a family member or friend.

 

[Pirate Granny]

At that price I would almost guarantee that Disney would take that contract. It's almost $20 per point lower than the going price.

 

[disneynutz]

I'm not an owner yet but I'm interested to hear.

I mean since its your friend I'm assuming escrow etc isn't needed so Disney doesn't necessarily need to know money has changed hands. There must be a way for a member to give their contract to a family member or friend.

The only way is to keep the contract in the friends name and who wants to mess with that?

Bill

 

[chalee94]

...Disney doesn't necessarily need to know money has changed hands. There must be a way for a member to give their contract to a family member or friend.

there is a way to "give" your contract to a family member. you can gift it, and DVC has historically waived ROFR.

if you are suggesting that someone commit fraud by writing up a contract that doesn't represent what is actually taking place, you should be aware that criminal and civil penalties may apply. that's really not a good suggestion.

 

[pmaurer74]

that is an awesome price! I wish I could get that. I m considering a 150 pt. BCV at $11250 and it is a fair price I think though no points until 2014.

 

[goNDmay9]

Putting a disclaimer out there that I have no clue on the legality part of this but...

What if the contract also had some sort of barter / trade / service in addition to the money. For instance, you will wash your friends car or agree to watch their children for X number of times so they could have date night. Or free use of your trampoline or pool for X amount of years.

I think this would still qualify as consideration to satisfy the contract and wouldn't Disney have to agree to do those in addition to the funds to take it in ROFR?

Although this seems so simple, it has most likely been thought of. Maybe a monetary amount would be assigned to the service or something which would keep it from passing ROFR.

 

[drusba]

OP, any legitimate sale, which it would be with your friend, must go through ROFR, and at that price there is a real risk of Disney exercising its right.

Actual gifts of points (to relatives or otherwise) also go through ROFR but Disney really does not have a right to exercise ROFR with a gift. However, it has the right to confirm it is a gift and any gift needs to go through ROFR so that Disney files a waiver of the exercise of ROFR in the public record so that the public record shows the transfer is free and clear of all ROFR rights.

Adding off-beat provisions like the suggested car washing or watching kids (or, as some have tried to defeat ROFR rights, throwing in something that cannot be matched like a photo album of one's family), can be challenged in three ways by Disney: (a) it can assert ROFR and sue to have the extra items valued for the purpose of the ROFR; (b) it can sue the seller for breach of contract including violation of his implied obligation of good faith for trying to avoid ROFR, and (c) potentially sue the buyer for interference with Disney's contractual rights with the seller if the buyer is aware that the item is being added to avoid ROFR. To put it mildy, your litigation costs (including for the attorney you will need to hire), even if you were lucky enough to win, are likely going to be more than you would ever pay for that 150 point contract.

 

[PCMama]

OP, any legitimate sale, which it would be with your friend, must go through ROFR, and at that price there is a real risk of Disney exercising its right.

Actual gifts of points (to relatives or otherwise) also go through ROFR but Disney really does not have a right to exercise ROFR with a gift. However, it has the right to confirm it is a gift and any gift needs to go through ROFR so that Disney files a waiver of the exercise of ROFR in the public record so that the public record shows the transfer is free and clear of all ROFR rights.

Adding off-beat provisions like the suggested car washing or watching kids (or, as some have tried to defeat ROFR rights, throwing in something that cannot be matched like a photo album of one's family), can be challenged in three ways by Disney: (a) it can assert ROFR and sue to have the extra items valued for the purpose of the ROFR; (b) it can sue the seller for breach of contract including violation of his implied obligation of good faith for trying to avoid ROFR, and (c) potentially sue the buyer for interference with Disney's contractual rights with the seller if the buyer is aware that the item is being added to avoid ROFR. To put it mildy, your litigation costs (including for the attorney you will need to hire), even if you were lucky enough to win, are likely going to be more than you would ever pay for that 150 point contract.

I'm not the op but thanks this was the info I was interested in. I by no means was suggesting committing fraud. Just not being an owner yet wanted a clearer picture of the rules.

 

[cggmommy]

Thanks for the conversation everyone. I do not want to be fraudulent in any way. I think we are going to rent his points for this year to deplete the banked points so when it goes to ROFR it wont be so loaded. If anyone has any other suggestions that would allow us to honestly acquire the contract from a friend let me know. Can we put renting into the equation on the contract to help pass the ROFR or is that not allowed? Like renting this year for $2000 and that $2000 be included toward the purchase price after the reservation is complete.

 

[drusba]

I am not sure what you are suggesting. Do you mean that you would enter into an agreement to rent for one trip for $2000 with an option to purchase upon completion of that trip, with the $2,000 then being applied to the purchase price? If so, do you mean the total purchase price after applying the $2,000 would then be $8500, in which case Disney would still be facing the same low price for ROFR, or that the total price will be $10,500 -- the $2,000 rental plus the $8500 -- in which case one has to ask why don't you avoid any potential problems with that kind of deal and just agree to pay $10,500 now and significantly lower any risk of ROFR.

Also, there are issues raised by that kind of transaction. Disney is entitled to ROFR on any contract for sale and must be provided that contract after it is agreed to so it can determine whether to exercise ROFR. Probably that does not include purchasing merely an option to purchase but Disney could argue otherwise if the deal is simply being designed to avoid ROFR. Moreover, once DVD receives that contract, it may, as it usually does, cancel any reservation that exists on the account, rendering the rental meaningless. Also, even if you can wait for submission to DVD until after you have the final contract for sale that is entered into after the rental period and applies the rental price to the sale, DVD can assert the rental value ($2,000) should not be included in the price it should pay because it was actually for the rental and not the sale of the property.

The thing you need to understand here is that any attempt to be "clever" in your sale terms is likely to be challenged by DVD. In other words, you are inviting a potential lawsuit. What you have to consider is not just the price you may ultimately pay for the property but the additional price the seller and you are ultimately going to have to pay an attorney to defend the sale terms in court. I assure you that it is highly likely that the extra legal costs are going to be at least as much as the $8500 you want to spend on the property. You might even win, but in the end the seller and you will be out more money than you ever suspected you could spend on the property.

 

[cggmommy]

Really not trying to be misleading. I didn't negotiate the price, it is the price my friend offered cause they know we could pay cash for that amount. I just thought if we depleted the banked points with renting for our stay this year and in the contract stated that the $2000 we are paying would be included to make the total to $10500 then it might have a better chance to pass ROFR but I didn't know if renting could even be a clause on a contract. I really want to purchase the points but we can only do that if we can pay cash. My friend just wants out. It is a win win for us but not if Disney buys it back. He still wins but I don't . I was trying to figure out how to go about getting an awesome deal without being fraudulent, because obviously Disney has much more resources to fight and fraud is not worth it.

 

[tinkerpea]

Really not trying to be misleading. I didn't negotiate the price, it is the price my friend offered cause they know we could pay cash for that amount. I just thought if we depleted the banked points with renting for our stay this year and in the contract stated that the $2000 we are paying would be included to make the total to $10500 then it might have a better chance to pass ROFR but I didn't know if renting could even be a clause on a contract. I really want to purchase the points but we can only do that if we can pay cash. My friend just wants out. It is a win win for us but not if Disney buys it back. He still wins but I don't . I was trying to figure out how to go about getting an awesome deal without being fraudulent, because obviously Disney has much more resources to fight and fraud is not worth it.

I would say that depleting the points would give you a much better chance of getting Disney to pass the ROFR as they tend to exercise their right more on loaded contacts, also it may be worth adding even £500 more in so that it brings the amount closer to the going rate, Disney are much more likely to pass on it if its not too low!

 

[Dean]

Putting a disclaimer out there that I have no clue on the legality part of this but...

What if the contract also had some sort of barter / trade / service in addition to the money. For instance, you will wash your friends car or agree to watch their children for X number of times so they could have date night. Or free use of your trampoline or pool for X amount of years.

I think this would still qualify as consideration to satisfy the contract and wouldn't Disney have to agree to do those in addition to the funds to take it in ROFR?

Although this seems so simple, it has most likely been thought of. Maybe a monetary amount would be assigned to the service or something which would keep it from passing ROFR.

I am the only person I know of that's gone through such a situation, it was a non DVC timeshare traded for DVC points. DVD required us to put a dollar value on the other timeshare and that was their basis for considering ROFR. I might have been able to force their hand but it wasn't worth fighting with them at the time. I'd be careful with fancy worded contracts obviously intended to bypass ROFR, I'd get a RE attorney to advise me if I planned to go that route.

In all states I know of it's illegal to put info different than the agreement on the contract, it's criminal fraud at a state level. I personally think there are legal ways to do something such as this but it'll take time and likely some additional dollars.

 

[Sandisw]

Really not trying to be misleading. I didn't negotiate the price, it is the price my friend offered cause they know we could pay cash for that amount. I just thought if we depleted the banked points with renting for our stay this year and in the contract stated that the $2000 we are paying would be included to make the total to $10500 then it might have a better chance to pass ROFR but I didn't know if renting could even be a clause on a contract. I really want to purchase the points but we can only do that if we can pay cash. My friend just wants out. It is a win win for us but not if Disney buys it back. He still wins but I don't . I was trying to figure out how to go about getting an awesome deal without being fraudulent, because obviously Disney has much more resources to fight and fraud is not worth it.

What you could do is have them make the reservation for you, and then sell you the contract with a delayed closing after your vacation. I sold two contracts this way and the price my seller paid took into consideration that I would be using those points prior to closing.

So, if it went to ROFR with a price of $10,500 with that reservation using the banked points and Disney did step in, they wouldn't be able to buy it until after the reservation was completed as they have to accept the same terms as you offered.

Good luck!!!

 

[Iceman93]

Okay, I'm not a lawyer and I am generally very much a rule-follower. But it also seems to me that a friend should be able to sell a friend something like a DVC contract at a discount if they want to. Here is an idea that I'm sure the more experienced and legally-minded members out there can comment on.

What if the OP purchased the contract from his friend for a reasonable, market price that Disney is unlikely to ROFR; let's say $12,500 (rather than the $8,500 originally discussed). Then what if the friend simply gave $4,000 back to the purchaser as a gift between friends--in theory completed unrelated to the transaction that just took place with the DVC contract. Would that work?

 

[Dean]

Okay, I'm not a lawyer and I am generally very much a rule-follower. But it also seems to me that a friend should be able to sell a friend something like a DVC contract at a discount if they want to. Here is an idea that I'm sure the more experienced and legally-minded members out there can comment on.

What if the OP purchased the contract from his friend for a reasonable, market price that Disney is unlikely to ROFR; let's say $12,500 (rather than the $8,500 originally discussed). Then what if the friend simply gave $4,000 back to the purchaser as a gift between friends--in theory completed unrelated to the transaction that just took place with the DVC contract. Would that work?

There's nothing keeping one from selling to a friend, it's that there are other issues, namely ROFR. As for the gift, it'd be OK if listed on the contract but fraud if not. I think the thing that's being missed is that DVD has a legal right and depriving them of that right can be illegal.

 

[dmunsil]

What if the OP purchased the contract from his friend for a reasonable, market price that Disney is unlikely to ROFR; let's say $12,500 (rather than the $8,500 originally discussed). Then what if the friend simply gave $4,000 back to the purchaser as a gift between friends--in theory completed unrelated to the transaction that just took place with the DVC contract. Would that work?

At that point, you'd be better off going all in and just telling Disney it's a gift, then actually paying for it under the table. Then the buyer and probably the seller will need to fill out an affidavit saying that no consideration is being exchanged and that it is a gift. If Disney felt you were lying about it they could sue, probably boot you and them out of DVC, ban you for life from WDW, make the villain in a future movie be a blatant caricature of you, etc.

And of course if the transfer goes through but the buyer doesn't actually come through with the money, there's no legal recourse for the seller, since they said to Disney that they were giving the points as a gift.

Since I am not a lawyer, I don't know if that rises to the level of "fraud" in a legal sense, but it sure smells fishy to me. But I'm sure people do it, and my guess is that Disney just figures it's mostly not worth their time to investigate. If people are willing to sign their name to a document that is fundamentally a lie, what can Disney do?

It's not radically different from filling out a fake receipt for some large-ticket item to avoid taxes or take a bigger business deduction. People do it all the time. Is it right? I say no.

 

[iluvthsgam]

I will say that I am a lawyer but this is not legal advice - you have to pay for that!

My in-laws recently gave me and my wife their membership as our wedding gift. To put the deed in our name we have to file a gratuitous transfer with Disney. This is allowed and is common. It still goes to ROFR - as explained above by another poster - but they don't exercise ROFR on it because it is a gift.

In speaking with the member admin about this she acknowledged that in all reality, if someone really wanted to get around ROFR they could go this route. And they know that people do go this route. But its few and far between and probably not worth their efforts to fight it. There were red flags that make it obvious that it is not a gratuitous transfer (i.e. a broker is involved, there is a contract for a low amount, people don't live near each other or appear to have any connection to each other, etc.)

I will not opine on the legality or ethics or morality of doing a gratuitous transfer with a friend that you know and trust, but just say that Disney is aware of it, it is common, and there is a procedure for it. You just pay the $425 or so fee to do a title transfer (which Disney used to do but now outsources to First American Title).