Creative ways around ROFR

[salmoneous]

Let me state up front that is anyone feels this thread is inappropriate, please report it right away to the moderators and have them yank it. And also, let me be clear that the only things I want to discuss in this thread are ideas that are 100% open and aboveboard.

There are situations where sports teams have a ROFR if another team signs one of their players as a free agent. If a player signs with someone else, the player's current team can agree to offer the player the same terms and keep them. To get around ROFR, the new team will often put creative clauses in the deal that won't cost the new team very much, but will make the current team not want to accept the offer.

Some examples of these creative clauses: (1) A last place team is signing the player away from a first place team. The contract to be matched offers a $10 million bonus if the player's team makes the playoffs. (2) The contract has a clause that guarantees the player will be the highest paid player on the team at their position. The new team has no high priced players at that position but the old team has someone currently making more than the player would otherwise make.

These clauses are completely legal. The only stipulation is they have to be legitimate clauses. You can't, for instance, put in a clause that says the player gets a $10 million bonus if forced to play home games in a city with the word "Green" in their name. But playoff bonuses and highest-paid-at-position clauses are common in sports contracts, so those are fine.

As a random thought, could you put something in a purchase agreement for DVC that would discourage Disney from exercising ROFR? I can see Disney not wanting to match a deal that requires the seller to pay $80/point up front, with payments of $1/point+interest+CPI over the next 3 years (such an obligation would be a nightmare for Disney to administer and account for under GAAP).

And yes, I fully realize most sellers have no reason to help a buyer avoid ROFR and would be fools to agree to such terms. But, as an academic question, if you wanted to sell to your BIL or something, would such clauses work?

 

[bicker]

I could see Disney simply exercising ROFR and paying the seller $81 per point up-front and calling the transaction completed.

 

[RobDoc]

My understanding is that DVC would ask for the cash value of any non-cash component of an accepted offer and make their decision based on that response.

In the past some have asked similar questions suggesting that "under-the-table" transactions might accomplish a means past ROFR. The seller would be asserting that the details of the offer comprise the entire offer when he presents the offer for ROFR. Any later variation from the specified details could be viewed as fraud and subject to problems far in excess of the few dollars gained from the questionable transaction.

I'm sure there are circumstances where atypical offers would make it past ROFR. An example might be where two individuals agree to trade their timeshares or other property of similar value and I'd assume that DVC would allow that to pass.

 

[JimMIA]

My impressions of ROFR, after a couple of years of watching it, are that we probably overthink it. Most of the deals that I've seen fail on the ROFR thread were imminently predictable. Most of the ROFRs I've seen have been for one very simple reason -- the price was too low. I really don't think ROFR is rocket science -- if you pay enough, you'll clear ROFR.

I've said many times, and many others have too, the most important consideration in any resale is paying a high enough price to clear ROFR. If you try to save $1 per point, all you'll do is make DVC, the realtor, and the seller happy. I hate to see people miss ROFR by $2-3 per point, especially when you can look at the ROFR thread and have a pretty good idea what will go and what won't. If you think you're close, pay another $200, and get your contract.

 

[CarolMN]

I doubt there are any "creative" ways to get around ROFR that will result in a price more than a few hundred dollars less than just playing it honestly.

IMHO, if a few hundred dollars means that much to someone, DVC is more than likely not a wise choice. DVC is a luxury purchase and most members spend more on vacations after purchasing DVC than they ever did before the purchase.

Best wishes -

 

[DutchsMommy]

DVC is a luxury purchase and most members spend more on vacations after purchasing DVC than they ever did before the purchase.

Best wishes -

This point made me kinda laugh and cringe at the same time. We are thinking of buying into DVC as a means to save on yearly trips to WDW, but I suppose if I have to be 100% honest with myself, it is more of a yearly excuse to have to go and I can see the $$ adding up. Oh well, best layed plans as they say!

 

[Dean]

I'm likely one of the few who has any direct evidence in this area. I traded (even) another timeshare for a small DVC package. We wrote it up that way where the cost was the other persons ownership. DVC asked for the cash value so we just picked a number for each high enough to pass ROFR but still in a fair price range. There was also a similar thread on TUG about Marriott's ROFR recently with similar conclusions to what I'm posting. Overall it appears the resort would have to accept the terms as written if the parties stuck to it. There appears to be nothing in the contract, POS or legal statues that would force a "cash value" to be substituted. However, who wants to push the issue as it's not in the best interest of the seller and could drag it out for the buyer. And one might have to go through a lawyer to get it sorted out if DVC wanted to be obstinate. I can't see any reason to go through this hassle unless one finds an awesome deal and is willing to take the chance and time involved.

But for existing owners, here's a tactic that I' think is workable, legal and in the buyers best interest. That is where one enters into a combination transfer/purchase agreement. It might work something like this. Say a member wanted to sell 200 BWV points to another member. You set the purchase price say at $82 per point. You pay a deposit which actually triggers, by contract, a transfer of one years points to the purchasing member prior to submission for ROFR. The contract stipulates the deposit is the property of the seller if the buyer backs out and is returned to the buyer if DVC exercises their ROFR. You have to do the transfer prior to the ROFR submission. If DVC acts, the buyer gets a free amount of points and the seller is whole. If DVC passes, the buyer and seller are merely whole.

 

[Cruelladeville]

I'm not sure if this is the same thing, but about 5 years ago, my DD went thru a divorce, and the Court ordered her DVC sold to satisfy the debt. We bought it from her/them. Since we were not paying fair market value, but money was exchanging hands, I called and asked Disney about this. I was told that yes we would have to go thru ROFR, which bothered me since we had been paying some of the payments. After talking to them for a few minutes, they suggested that I add up all the DVC payments and dues we had paid on DD's behalf. When I mentioned that we had bought her car for her, they advised us to include that, too. This allowed us to pass ROFR, pay off the remaining debt on her contract, and gain her contract. I thought it was nice of Member Accounting to help us keep the contract in the family, even though we had been supporting her for several months, while the lawyers fought things out. We had paid double the cost of the contract in support, but we didn't know that things like that could be included to pass ROFR.

 

[disneygrandma]

This isn't a creative way, but if someone really wants to pass ROFR, why not just pay a few dollars more per point than the asking price? I have read several posts on different threads where it's mentioned that the seller accepted their offer. If this means that they offered less than the asking price, then I don't have much sympathy for them if it doesn't pass. Why would you offer less? The little amount of money that you would save isn't worth the aggravation of going thru ROFR and then not passing. So I guess my tip for passing ROFR would be not to offer less than the asking price, and maybe offer more. Again, I know this isn't the creative idea that the OP was asking for, but it's a whole lot easier than a creative plan.

 

[Dean]

I'm not sure if this is the same thing, but about 5 years ago, my DD went thru a divorce, and the Court ordered her DVC sold to satisfy the debt. We bought it from her/them. Since we were not paying fair market value, but money was exchanging hands, I called and asked Disney about this. I was told that yes we would have to go thru ROFR, which bothered me since we had been paying some of the payments. After talking to them for a few minutes, they suggested that I add up all the DVC payments and dues we had paid on DD's behalf. When I mentioned that we had bought her car for her, they advised us to include that, too. This allowed us to pass ROFR, pay off the remaining debt on her contract, and gain her contract. I thought it was nice of Member Accounting to help us keep the contract in the family, even though we had been supporting her for several months, while the lawyers fought things out. We had paid double the cost of the contract in support, but we didn't know that things like that could be included to pass ROFR.

That's a tough one. Technically it was not likely 100% legal but who's to say. And if the party at risk is telling you how to do so, it'd be hard to argue against it.

 

[bicker]

Yet, keep in mind that allowing something in the past doesn't serve as foundation for a claim that they must allow for it every time. ROFR is defined so that even the winds of time could change the criteria that Disney uses to determine whether it will exercise its rights or not.