Commerical Use Policy Update - New Thread!

[Cyberc1978]

So if they were to say any renting is commercial, with the history of no enforcement for 30 plus years - I would not bet that it would hold up.

But if they had some objective, published guidelines, consistently enforced, like less than 20 rentals , not advertised, personal use by owner for the majority of the time... I would bet that it would hold up.

But I have had shocking decisions from arbitration in the past so who knows, and there is no chance this ends in court with the arbitration clause in the contract.

But we don’t have any published guidelines and for all we know little or no enforcement have taken place in those 30 years.

Also inconsistently or selectively enforcement of a rule looks to be illegal. If DVC thought that you rented too much and took action that would be fine, however if I at the same time rented just as much or more but DVC did nothing then it would be illegal.

All owners should be held to the same standard.

 

[Mouseforward]

wait a minute ... what is this " should not be purchased by any purchaser for resale" ... as of now, I've only seen discussion focused on renting your ownership interest but to me this clearly reads that you are not to purchase with the intent to SELL your ownership interest. (presumably for a profit) This would be the "flipping" part of the equation. This is incredibly simple to prove as the Orange County Comptroller provides a "print" button, and you can pull up an LLC's entire buy/sell history. Why isn't this being enforced? Some of these brokers own tens of thousands of their own points. They are NOT just matchmakers for other members. Add it to the list for the September meeting. Better yet ... I'll just bring the print outs with me to the meeting. I have one here on my desk, 428 buy/sell transactions ... in nobody's world is this personal use.

Because the entire section is simply saying, you can’t come after DVC if you didn’t profit off your resale or rentals. It’s making it very clear that there should be no expectation of making a profit off resale or the rental.

This goes back to the 80s and the 90s when timeshares were sold using that as a hook that you could rent it and make tons of money.

Any other use is out of context

 

[Genie+]

I wouldn’t say the contracts are ambiguous. Activity that DVC later allowed is what made them fuzzy and blurred the lines. Consistently throughout the contract it says this product is for personal use only and commercial use prohibited.

The ability to rent is also mentioned but in no way does the ‘ability to rent’ necessitate falling into the realm of commercial. Renting to recoup annual costs one year does not by itself determine whether it was personal or commercial use - the pattern of activity it is among does.

DVC continues being very discreet about what constitutes these patterns of activity.

I think DVC has alot more leeway on how strictly they can choose to enforce the existing contract wording. I’d guess their bigger problem is deciding where that line makes sense today while keeping in mind where they might want it in the future, while not creating legal issues from how they handled things in the past.

The more precise DVC gets, the less maneuverability retained. Management seems timid on where to put the scalpel. The history of DVC career ending mistakes doesn’t help.

I don’t know what to think. Are they just yelling louder threats, with no real plans to act? Then why bother drawing more attention in the first place… when they could’ve just quietly kept kicking the can down the road saying ‘not widespread’?

 

[mkatsy]

Because the entire section is simply saying, you can’t come after DVC if you didn’t profit off your resale or rentals. It’s making it very clear that there should be no expectation of making a profit off resale or the rental.

This goes back to the 80s and the 90s when timeshares were sold using that as a hook that you could rent it and make tons of money.

Any other use is out of context

While this particular verbiage was used out of context, the end result remains the same. Contracts are being purchased in large quantities with the sole intention of marking them up (to obtain a profit) and reselling them. This is a commercial enterprise and is expressly prohibited. This vacation product is for personal use only. If you require a private equity firm to fund your purchases … you are a commercial enterprise.

 

[Mouseforward]

While this particular verbiage was used out of context, the end result remains the same. Contracts are being purchased in large quantities with the sole intention of marking them up (to obtain a profit) and reselling them. This is a commercial enterprise and is expressly prohibited. This vacation product is for personal use only. If you require a private equity firm to fund your purchases … you are a commercial enterprise.

And DVC knows this how? With an LLC your funding is not public - and never mind attempting to prove what is the motivation of the seller.

You’re gonna have a very hard time, going after somebody who buys a cheap contract and sells it higher. Especially when contracts do tend to go up in value in certain circumstances.

 

[mkatsy]

And DVC knows this how? With an LLC your funding is not public - and never mind attempting to prove what is the motivation of the seller.

You’re gonna have a very hard time, going after somebody who buys a cheap contract and sells it higher. Especially when contracts do tend to go up in value in certain circumstances.

have you ever seen a contract go up $10,000 in 60 days … I have ETA: this is all public record, which I believe is highly suggestive that nobody at DVC cares to do anything about it.

 

[Sandisw]

An idea so nice, I wish I could like it twice.

This seems logistically impossible and, unless I am not understanding you, is not how the law works. And honest misunderstanding of the contract is not a defense to breaching it unless it is reasonable, and I’ve seen a lot of unreasonable takes on the commercial renting threads over the past two months.

They have clearly set themselves up to enforce against anyone they believe is regularly and frequently renting as well as LLCs renting to guests— why they haven’t is anybody’s guests— and I agree with you we deserve better than the uncertain (and I would add lax to zero enforcement).

Did you share where they said you can rent to anyone, not just friends and family you know personally? I looked at the attachments you referenced last time and didn’t see it in there. If I missed it, my sincere apologies, hopefully someone will point it out to me. I’m on the member cruise with family and following less closely than usual.

Hopefully we all agree on this, except the people getting rich as DVC landlords.

I posted the exact quote a few times. Here it is again. Copied from the email;




What I meant by interpretation was that some things quoted in the contract can indeed be seen to mean different things to different people.

For example, my definition of what “frequently and regularly renting looks like in the context of commercial may not be the same as yours or the next owners, or even what and how DVC has interpreted it in the past.

So if one owner thinks that frequently or regularly is every month year after year, and another thinks that it should be a few times ever few years or only in emergencies, both are nothing more than opinions that could be correct until DVC says, through actions or words, that it is not.

As I said, the more vague they are, the better it is for them and honestly for the professional renters because until DVC says something is not allowed or is considered commercial activities that violate the contract, then people have to make their own decisions as to what is reasonable

Take spec renting…some believe there is already language that DVC could use to stop it…but since DVC gets to decide how to define commercial, if they do decide to continue to let owners do it, it certainly implies they have decided it doesn’t meet the standard or that they don’t interpret the contract the same way as those owners.

Which means, only DVCs interpretation of where spec renting falls matters.

So, we come back to ambiguity and vagueness in rules and as an owner, I am never going to be okay with giving DVC a pass to keep things from owners if they are enforcing elements of the contract.

The good news for me is that all the information they have given me lately leads me to believe that whatever happens moving forward in this area will be communicated to owners in some way.

 

[Sandisw]

have you ever seen a contract go up $10,000 in 60 days … I have ETA: this is all public record, which I believe is highly suggestive that nobody at DVC cares to do anything about it.

My only comment in this is whether DVC wants to spend money to go after this....remember, how much we pay them to manage the product is fixed....12% of operating costs for the resort.

Where DVC can step is via the ROFR process because any sale goes through them....and, the strip and flip model may be less attractive now that the transferring of points isn't as easy, plus, the HRR state that DVC can step in an cancel or fail to confirm reservations using transferred points if they felt the points were done for a commerical reason.

I can understand why DVC wants to keep things vague, but they do have the 2011 policy in place still, and have a history of how they interepreted and enforced that policy since 2008.

While they can certainly decide to interpret it differently, and even do things outside of that policy, you still have to wonder how much of that is playing a role in why we haven't seen DVC do more up to this point?

 

[lowlight]

The next quarterly board meeting is September, and then the big one is in December? So they have a little over 3 months to do something (anything at all) so that we will, to quote Yvonne Chang, "see some improvement". We need to take this one to an oddsmaker.

 

[JackosinDIS]

Even if one doesn’t agree with DVC interpretation of the contract or their definition, IMO, owners should never be okay with DVC acting in secret, no matter what it relates to when it comes to using our membership.

100% agree.
Stepping back from all the details and debates about the precise wording in our contracts, the overall result of whatever it is that DVC has done here is confusion, uncertainty and some element of distrust, whether that’s from owners who want to see enforcement but doubt DVC will do anything, or from owners that rent some points but are now don’t trust that there are consistent rules that will be adhered to fairly.
Not a great look IMO.

 

[mkatsy]

With an LLC your funding is not public

As you know, these contracts are considered real estate by the state of Florida. Anytime a property is used as collateral for a loan the transaction is recorded at the comptroller. In this case, batches of contracts are used as collateral to the equity firm. Both the name of the funding source, and the number of each contract appears on the document. Just another reason to invest in a title search when buying resale

 

[Cyberc1978]

As you know, these contracts are considered real estate by the state of Florida. Anytime a property is used as collateral for a loan the transaction is recorded at the comptroller. In this case, batches of contracts are used as collateral to the equity firm. Both the name of the funding source, and the number of each contract appears on the document. Just another reason to invest in a title search when buying resale

Dont know why, but I always thought that the LLC' bought the contracts outright using cash. If they own thousands and thousands of points, they make a lot of money. Assuming each LLC owns 8,000 points (they probably own more) and they rent them at an average at $25, thats $200,000 before dues and around $120,000 after dues. Thats a nice income, just for a single LLC.

 

[zavandor]

I posted the exact quote a few times. Here it is again. Copied from the email;

View attachment 990676


What I meant by interpretation was that some things quoted in the contract can indeed be seen to mean different things to different people.

For example, my definition of what “frequently and regularly renting looks like in the context of commercial may not be the same as yours or the next owners, or even what and how DVC has interpreted it in the past.

So if one owner thinks that frequently or regularly is every month year after year, and another thinks that it should be a few times ever few years or only in emergencies, both are nothing more than opinions that could be correct until DVC says, through actions or words, that it is not.

But we know what DVC's own interpretation of frequent and regular is: over 20 reservations. It's what is in writing and what's been enforced (loosely) until now. Can DVC change it to a lower number? Maybe, it's more debatable, but going from 20 to (say) 1 or 0 is a step too far, I think

 

[Sandisw]

The next quarterly board meeting is September, and then the big one is in December? So they have a little over 3 months to do something (anything at all) so that we will, to quote Yvonne Chang, "see some improvement". We need to take this one to an oddsmaker.

The information for the September one should be up soon. Although I can’t attend that one…should be there for December…I’m keeping an eye out for when registration opens for others!

 

[Cyberc1978]

But we know what DVC's own interpretation of frequent and regular is: over 20 reservations. It's what is in writing and what's been enforced (loosely) until now. Can DVC change it to a lower number? Maybe, it's more debatable, but going from 20 to (say) 1 or 0 is a step too far, I think

I honestly dont think that they can lower it - if they could they would have done it.

After the FL stat 718.110 came into force in 2021 the ship has more or less sailed for DVC in terms of restricting the number of times owners can rent. They can restrict it for future owners, but that doesn't help them with the current ones.

That might also be why we haven't seen an updated policy - any limitation would require a vote, and only apply for those in favor of it.

DVC and owners for that matter is more or less stuck with what we have.

 

[zavandor]

Apologies if it seems I'm beating a dead horse, but there is a very low hanging fruit: LLC. It's very clear that LLC can only book for board members and employees. DVC could start enforcing it immediately and in the most spectacular way. Communicate that any guests booked on points belonging to LLCs will have to present proof of employment at check-in. Failure to do so will have the reservation canceled. DVC will offer the guest to pay rack rates for the same room.
Cancel a few reservations and a sh**storm will happen on social media, some people will blame Disney, but mostly the message that renting DVC points is a scam will pass.
And as BrianNoble said 200 pages of posts ago, this will mostly kill the rental market. Problem solved.

I say that if DVC doesn't do this is because they don't really want to kill the rental market (your guess is as good as mine as to why).

 

[Cyberc1978]

Apologies if it seems I'm beating a dead horse, but there is a very low hanging fruit: LLC. It's very clear that LLC can book only book for board members and employees. DVC could start enforcing it immediately and in the most spectacular way. Communicate that any guests booked on points belonging to LLCs will have to present proof of employment at check-in. Failure to do so will have the reservation canceled. DVC will offer the guest to pay rack rates for the same room.
Cancel a few reservations and a sh**storm will happen on social media, some people will blame Disney, but mostly the message that renting DVC points is a scam will pass.
And as BrianNoble said 200 pages of posts ago, this will mostly kill the rental market. Problem solved.

I say that if DVC doesn't do this is because they don't really want to kill the rental market (your guess is as good as mine as to why).

I 100% agree, if they go after the LLC', it will impact the entire rental market - but only until people figure out whats up and down, then it will continue without the LLC'

 

[zavandor]

I 100% agree, if they go after the LLC', it will impact the entire rental market - but only until people figure out whats up and down, then it will continue without the LLC'

But without LLCs, the market will shrink considerably. There are only so many family members and employees one can trust to put contracts in their name and trust they'd just wouldn't keep them. With an enforced 20 reservations limit, we won't see hundreds of spec reservations on one site for AKV value anymore.
And that is IF the market recovers, it seems for other timeshares it never did.

ETA: maybe I should have said that enforcing it that way would kill the commercial renting market, rather than the rental market in general. Real brokers and forums like this one would probably survive, which actually is also the best possible outcome, I think

 

[mkatsy]

Dont know why, but I always thought that the LLC' bought the contracts outright using cash. If they own thousands and thousands of points, they make a lot of money. Assuming each LLC owns 8,000 points (they probably own more) and they rent them at an average at $25, thats $200,000 before dues and around $120,000 after dues. Thats a nice income, just for a single LLC.

they have borrowed money against contracts … what they did with that money is anyone’s guess … maybe they bought a yacht ETA: the Orange County foreclosure sales only accept cash.

 

[Sandisw]

But we know what DVC's own interpretation of frequent and regular is: over 20 reservations. It's what is in writing and what's been enforced (loosely) until now. Can DVC change it to a lower number? Maybe, it's more debatable, but going from 20 to (say) 1 or 0 is a step too far, I think

I happen to agree with you. For years, when asked, DVC said that the policy was only over 20 was at risk, and when owners were called on it, only over 20 were canceled.

Now, the info they sent me said that if they decide to update the policy we would notified in some way.

I do think there are things they can do but changing or new definitions to what it means to be in it commercial purposes also has to mesh with the 2021 FL 718.111 law which could mean it’s not as easy as one thinks?

Remember, the board stated they want to stop it as as best as we can” which could have been a clue that legal hurdles needed to be dealt with?

What I know is that when pushed to explain how renting to family and friends only…what has been implied or stated by MS…would fit both commercial and not be in conflict as being further limiting, the response was what I posted above.

There is no such rule and that renting to anyone is still allowed.

For me, it confirms that no matter what DVC does, assuming changes could be coming, they will have all their ducks in a row to withstand questions from owners.

All the same contract language today was there in 2008 when DVC decided to actually adopt a written policy…why would they have done that if not for the reason they knew they needed it to enforce?

And I also agree that that LLC issue should be an easy one because they can stop rentals to anyone not listed as acceptable guests which has nothing to do with what the commercial use policy even is!