Disney's ability to sell a DVC resort

[hoopsrob]

In reviewing my paperwork (all I have left to do is sign it and send it in and I'm official!), I noted a couple of statements that said:

"in the event the Condominum ceases to be a DVC Resort prior to the expiration of the club, Owners will not be able to partcipate in the DVC Reservation Component."

Of course, I don't want the resort to cease to be a DVC resort so I have 2 basic issues.

#1- I'm buying into the Disney brand and want it to remain Disney. When I asked about this, they indicated that the only way the management contract could change is if they were voted out by the members (which obviously is not likely to happen). OK, that issue seems settled for me.

#2- Disney can, however, legally SELL the resort and make it a non-DVC resort. While I would still have the right to stay there, it wouldn't be Disney and my ability to book at other DVC resorts would be taken away. This was confirmed by a Director in the Legal Dept. While that may not be the current plan for them, this one is a little more concerning.

I'm buying into HHI and I would think if any properties are at risk, it would be the off-site properties. I would like to think that the likelihood of this happening is remote (and it won't stop me from buying) but I was curious if anybody had any insight into this?

 

[bicker]

Always buy where you plan to stay the most. The exchange options, even within the timeshare, have always been subject to availability, and as you found out, there are conditions by which it is possible (though not likely) that such options will not longer be available.

 

[littlestar]

They could also limit you to the resort you bought at. So buy the one you want to stay at and you're fine.

If you want Hilton Head in the summer, you need to own there.

 

[Disney Doll]

So essentially what you are saying is if you bought at HHI, and then somewhere down the road, Disney sold HHI so that it was no longer a DVC property, then the points you own there would be essentially useless? You wouldn't be able to use those points to book at any of the other DVC resorts???

 

[bicker]

Useless? NO! They would continue to be useful for booking vacations at HHI. That's what they're for, principally. They would therefore maintain their primary purpose.

 

[Dean]

DVC can't really sell the resort though they could sell the rights to it for the time following the expiration of the DVC there. They could sell the management contract and if so, those members would not be part of DVC anymore. These are unlikely scenarios and not ones I'd worry about. What is real, IMO, is hurricane losses and fire losses without a rebuild and I believe VB & HH are more at risk in those areas.

 

[hoopsrob]

DVC can't really sell the resort though they could sell the rights to it for the time following the expiration of the DVC there. They could sell the management contract and if so, those members would not be part of DVC anymore. These are unlikely scenarios and not ones I'd worry about. What is real, IMO, is hurricane losses and fire losses without a rebuild and I believe VB & HH are more at risk in those areas.

Actually, the Legal Dept person said that they had the right to sell the resort prior to the expiration of the contract. This is different then the management contract. I was very specific with them on this question. Again, I don't think it is likely either but it is possible.

I also asked about the hurricane issue as I think that is more probable for any of the resorts...in extreme cases like this, they have the ability to amend the rules to allow those impacted members to book at other resorts even if their own resort isn't available, which would mean there could be potential cases of overbooking etc. Again, this is an extreme scenario and only a temporary one but I like to know all of the parameters when I enter a contract so I asked about the possibilities since it is a long-term contract.

 

[hoopsrob]

What is real, IMO, is hurricane losses and fire losses without a rebuild and I believe VB & HH are more at risk in those areas.

Dean, you got me thinking about that the hurricane potential so I checked the statistics just for fun. Here are the percentages for the coastal areas of hurricane probability for any one year (hurricanes passing within 75 miles of the city stated):

City/% chance of any hurricane/% chance of major hurricane

Tampa, Fla. 17.5 / 4.8

Cape Canaveral, Fla. 14.3 / 3.9

Savannah, Ga. 7.1 / 1.3

Orlando is 85 miles from Tampa; 55 miles from Cape Canaveral
Vero Beach is 76 miles from Cape Canaveral
Hilton Head is 35 miles from Savannah

[source: USA Today]

So statisically, HHI is roughly 1/2 the risk of the other locations for getting a hurricane.

But your point about a rebuild is interesting. I would agree with your opinion that the off-site locations would be more at risk if a rebuild was necessary vs. the on-site properties.

But I love HHI and that's why I'm buying there.

Let's hope none of us have to find out how any of these remote possibilities might pan out.

 

[Dean]

Actually, the Legal Dept person said that they had the right to sell the resort prior to the expiration of the contract. This is different then the management contract. I was very specific with them on this question. Again, I don't think it is likely either but it is possible.

I also asked about the hurricane issue as I think that is more probable for any of the resorts...in extreme cases like this, they have the ability to amend the rules to allow those impacted members to book at other resorts even if their own resort isn't available, which would mean there could be potential cases of overbooking etc. Again, this is an extreme scenario and only a temporary one but I like to know all of the parameters when I enter a contract so I asked about the possibilities since it is a long-term contract.

They don't currently own the sold out resorts to sell off, you were given info that was not completely accurate.

So statisically, HHI is roughly 1/2 the risk of the other locations for getting a hurricane.

You're reading too much into the statistics. HH is likely less risky than VB but not than WDW. And IF it were damaged, would be far more likely NOT to be rebuilt, which would end the owners membership.

 

[CarolMN]

They don't currently own the sold out resorts to sell off, you were given info that was not completely accurate........

I'm confused by this statement - who does own the resorts if not DIsney?

My understanding is that Disney owns the resorts (as well as the land they sit on), and that we DVC members have a deeded interest in a lease -one that expires in either 2042 or 2054, depending on the resort.

If that is true, Disney could sell the resort subject to the lease, right? I know that buildings here are often sold even though there are tenants/leases. The new building owner just "takes over" the lease - the leaseholders still have the same rights.

Best wishes -

P.S. I am not a lawyer and don't have a real estate license in either Florida or Minnesota.

 

[hoopsrob]

HH is likely less risky than VB but not than WDW.

Certainly not trying to argue with you (because this is a trivial issue anyhow) but I'll go with the stats from the meteorologists.

Having lived in Orlando for 10 yrs. and with family there now, I can tell you they got the effects of quite a few hurricanes last year.

It's been a while since HHI has had anything of note.

 

[Dean]

I'm confused by this statement - who does own the resorts if not DIsney?

My understanding is that Disney owns the resorts (as well as the land they sit on), and that we DVC members have a deeded interest in a lease -one that expires in either 2042 or 2054, depending on the resort.

If that is true, Disney could sell the resort subject to the lease, right? I know that buildings here are often sold even though there are tenants/leases. The new building owner just "takes over" the lease - the leaseholders still have the same rights.

Best wishes -

P.S. I am not a lawyer and don't have a real estate license in either Florida or Minnesota.

Like any other lease hold, the structures are owned by the owners (members) and the land is under lease. It reverts back at the designated time. If that were not the case, DVC could not sell the memberships and we would not have a deed.

 

[Dean]

Certainly not trying to argue with you (because this is a trivial issue anyhow) but I'll go with the stats from the meteorologists.

Having lived in Orlando for 10 yrs. and with family there now, I can tell you they got the effects of quite a few hurricanes last year.

It's been a while since HHI has had anything of note.

Your choice of course, and we're not arguing, only discussing LOL. While WDW may be as likely to feel effects, it's not in the same risk scenario for being wiped out. 40-50 miles inland is a long want for that situation. And HH is more at risk than Savannah due to it's position and location. IF you'd have looked at those statistics prior to the last couple of years, they would have looked much differently. No one can predict where hurricanes are going to hit and with only a hundred years or so of real data, I doubt it's statistically significant enough to make any real predictions for the specific areas in question. But let me pose this to you. Assume the risk of a resort being totally wiped out was the same for all the DVC resorts, do you really think that DVC would be as likely to rebuild VB and HH as the on property resorts? I don't, as a matter of fact I'd guess the chance of rebuilding to be about zero if HH or VB were totally destroyed.

 

[hoopsrob]

Assume the risk of a resort being totally wiped out was the same for all the DVC resorts, do you really think that DVC would be as likely to rebuild VB and HH as the on property resorts? I don't, as a matter of fact I'd guess the chance of rebuilding to be about zero if HH or VB were totally destroyed.

No I don't think they would rebuild. I agree with you 100%.

And if an on-site property got totally wiped out, I believe (like you do) that
they would absolutely rebuild.

Let's just hope for all the time!