Buying points from a friend

[Dean]

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).

There are other and cheaper options for transfer of ownership.

 

[iluvthsgam]

There are other and cheaper options for transfer of ownership.

What are they? After speaking member services they said this is the only option. I haven't read of anything else. If you would care to share, that would be great to know. Thanks.

 

[Dean]

What are they? After speaking member services they said this is the only option. I haven't read of anything else. If you would care to share, that would be great to know. Thanks.

You can do it yourself for under $50 for a single contract for the WDW resorts. The cheapest I know to get a company to do it is LT transfers at $95 plus $7 shipping and the closing costs, they charge more for places like CA & HI. I've personally changed 4 contracts (4*25) and the total cost was under $100. If it were simply changing a name or giving it to a family member for WDW, I'd do it myself. There are companies that will do deed prep for you for $100 or less if you're uncomfortable with that option. The discount companies usually don't do escrow but some do. Timeshare Transfers is $300 but includes escrow. Resort closings will do the same about $350 or for a little more will do some additional verifications and digging. JRA is $275 plus recording fees. What I would chose personally would depend on the location of the timeshare and the situation. For WDW and a trusted recipient, I'd do it myself. For SC, CA or HI or for a more arms length transaction, esp where escrow is needed, I'd use a company and which one would depend on the situation, dollar amount, etc. If the dollars were close, might as well use the one DVC recommends.

 

[dmunsil]

You can do it yourself for under $50 for a single contract for the WDW resorts.

Can you share a checklist or templates to do a simple gratuitous transfer? That could come in handy if we want to give a contract to our kids some day.

 

[iluvthsgam]

Thank you Dean. I started doing a little more searching and saw that you can indeed do it yourself. For me, they have 2 contracts at WDW and it would be a gratuitous transfer, and I'm a lawyer so comfortable with the legal documents - probably should do it myself.

One thing I saw when looking at some deeds at the OC Comptroller's website is that there is a "Deed Doc Tax" that looks like - for new deeds at least - about .98 per point. So if it that cheap, then I am guessing the Deed Doc Tax is not actually charged? Anyone have any experience with that?

EDIT: Figured it out. Florida charges $.70 for each $100 of total paid. So this deed doc tax is shown on the deed when buying direct from Disney, so using this it is easy to reverse how much the person paid per point. Example, I saw a deed for 320 points that had a deed doc tax of $313.60. This means they paid $44,800 or $140 per point. So if you do a gratuitous transfer the price should be $0, but I still think I read somewhere you still owe the $.70 on the first $100. This is called the Documentary Stamp Tax.

 

[iluvthsgam]

Can you share a checklist or templates to do a simple gratuitous transfer? That could come in handy if we want to give a contract to our kids some day.

There are some floating around, but look outdated. I will document what I do when I do it. For a deed, just use your original deed and change the names around.

I was trying to search online for some sample deeds from people who did it themselves but could not find any, but that is basically what you can do, I believe.

 

[Dean]

Can you share a checklist or templates to do a simple gratuitous transfer? That could come in handy if we want to give a contract to our kids some day.

Short version

1. Contact DVC for the transfer info. It'll include transfer form #1.
2. Complete the transfer form and send that to Member admin along with the contract if applicable.
3. They'll either take it under ROFR or send you a ROFR release along with another transfer form.
4. Get deed and record new deed along with ROFR and do the new tax form mentioned above.
5. Send copy of recorded deed and the second transfer form to member admin.

Additionally you must decide about the deed such as warranty or quit claim. Since I personally don't believe that title insurance is needed for most DVC situations, and certainly not for the type being discussed, I'd say quit claim. A lawyer doing it should likely go with warranty deed. You may want to ask your lawyer about how to have it titled.

Thank you Dean. I started doing a little more searching and saw that you can indeed do it yourself. For me, they have 2 contracts at WDW and it would be a gratuitous transfer, and I'm a lawyer so comfortable with the legal documents - probably should do it myself.

One thing I saw when looking at some deeds at the OC Comptroller's website is that there is a "Deed Doc Tax" that looks like - for new deeds at least - about .98 per point. So if it that cheap, then I am guessing the Deed Doc Tax is not actually charged? Anyone have any experience with that?

EDIT: Figured it out. Florida charges $.70 for each $100 of total paid. So this deed doc tax is shown on the deed when buying direct from Disney, so using this it is easy to reverse how much the person paid per point. Example, I saw a deed for 320 points that had a deed doc tax of $313.60. This means they paid $44,800 or $140 per point. So if you do a gratuitous transfer the price should be $0, but I still think I read somewhere you still owe the $.70 on the first $100. This is called the Documentary Stamp Tax.

When I did it they had a different but similar form then did away with all and this is fairly new. As you know it's common to put a lower amount than the actual sales price on the deed. Something like $10 and other considerations. Even DVC has done that in the past. For gift's you have to consider the gift tax implications though it's not usually a big deal. A couple of other caveat's. FL has some requirements for how the deed is structured. One is the size and location of free space on page one. Another is that you must have TWO witnesses. The notary can serve as a witness but have to sign separately, the act of notarizing does not count as a witness.

There are some floating around, but look outdated. I will document what I do when I do it. For a deed, just use your original deed and change the names around.

I was trying to search online for some sample deeds from people who did it themselves but could not find any, but that is basically what you can do, I believe.

I do have a FL specific quit claim template.

 

[ptlohmysoul]

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.

With the ROFR form, send a cover letter addressed to Disney explaining this is not a arms-length transaction, that you know each other, and your friend wanted to give you a deal, but at the same time to get some money out of it. Disney is likely to let it pass. Disney is in the business of making people happy, not to their own detriment, but this seems like a no brainer. They do not buy up all the cheap contracts (just some).

 

[iluvthsgam]

Dean, I have been looking through the deeds online tonight, do you know - if I have 2 contracts can I put them both on one deed for the gratuitous transfer? Thanks!

 

[dmunsil]

Dean, I have been looking through the deeds online tonight, do you know - if I have 2 contracts can I put them both on one deed for the gratuitous transfer? Thanks!

I saw a deed today that had three contracts on it, all identical 200 point Wilderness Lodge. Let's see...

Document 20130265392. Transfer from the Scotts to the O'Briens.

They also transferred two other 200 point lots that same day using a different title company, who filed two separate (essentially identical) deeds. They sold 1000 points of VWL in five 200-point chunks to three different buyers - 200 to two and 600 to another.

 

[Dean]

Dean, I have been looking through the deeds online tonight, do you know - if I have 2 contracts can I put them both on one deed for the gratuitous transfer? Thanks!

I don't know for sure but I would assume so. I considered it but didn't for my 4*25 pt contracts that I did. I wasn't sure I was going to keep them all as I was thinking about selling all but a 25 pt contract plus I wasn't sure how much of an issue it would cause. What I was able to do with the quit claim deed was get them all down to one page each. I was also able to get them to combine the ROFR all on to one 2 page document. Remember when it says $10 for page 1 & $8.50 for each additional page (or whatever it is now), each separate document is a new page 1. If you had them combined then needed to change or sell 1 later, you might have to do deeds for each component. even the portion not being changed.

 

[drusba]

Dean, I have been looking through the deeds online tonight, do you know - if I have 2 contracts can I put them both on one deed for the gratuitous transfer? Thanks!

The answer to this is maybe. If you have two contracts, they could be transferred via one deed if they both have timeshare ownership interests in the same unit number at the resort. That way you are actually putting on the new deed the same property with just cumulative percentage interests in that property. If you have two contracts that have different unit numbers, which you probably have if you bought both contracts at different times from Disney, you will need to have separate deeds.

 

[iluvthsgam]

The answer to this is maybe. If you have two contracts, they could be transferred via one deed if they both have timeshare ownership interests in the same unit number at the resort. That way you are actually putting on the new deed the same property with just cumulative percentage interests in that property. If you have two contracts that have different unit numbers, which you probably have if you bought both contracts at different times from Disney, you will need to have separate deeds.

It's my in-laws who bought, but they did buy at the same time but there are 2 different units. I think I'm going to just keep it on 2 deeds but ask Disney to put the ROFR all on one form, that way I can file 1 ROFR waiver and 2 deeds and it will still only run me about $58 all-in. Much better then $425 per contract!!!