A.
The Rental Restrictions
Every
DVC Resort at WDW is a condominium resort except the new CFW. Those resorts' Declarations, other than CFW, provide that members have a right to rent except that the association can prevent a member from renting if if it makes a reasonable conclusion that the member has engaged in a pattern of rental activity that shows a member is acting as a "commercial enterprise," a legal term that means some person or entity is in the "business" of doing something.
There is a further restriction on corporations or other business entities that are members, in that such corporations or business entities are limited to allowing use of the resort rooms and recreational parts of the resort to owners, directors, officers or employees of such corporation or business entity.
Those terms have never been amended. In 2006, DVC did put out an interpretative guideline which said that, if a member exceeds 20 reservations in any use year, a presumption will be created that the member is violating the commercial purpose clause and any reservations over 20 will not be allowed unless the member shows that the member has not violated the rental restriction.
That rule itself was subject to question legally, but was not questioned because it is likely someone who is doing more than 20 reservations in a given use year is violating the rental restriction provided in the Declarations.
So, essentially, the rental provisions in the declarations, other than CFW, allow rentals for members seeking to offset dues and possibly make a little profit, rent reservations they can no longer personally use, rent to friends and family, rent during a use year they cannot go to Disney because of work or medical issues, or other rentals that do not amount to showing a member is in the business of doing rentals. Moreover, DVC could limit any members who are corporations such as limited liability corporations, partnerships or other group agreements to do reservations, from renting to anyone other than owners, directors, officers, or employees of those business entities.
B.
The CFW Rule Changes
Many members, including on these boards, want rentals to either stop or be further restricted. Many suggestions have arisen, such as to do away with rental rights or limit rentals to times when there is not high demand, to a low number of rentals per member, to just friends or family, to being allowed to be made only well past the 11-month out rule, and others that would essentially further restrict the number of times and when a member could rent.
With CFW, DVD has in fact, created far more onerous restrictions. It now has new rules, which among others, state a member can be found in violation of the commercial purpose restrictions simply by any finding that the member has engaged in "frequent" reservations for rental,
or just frequent reservations for persons other than the member and the members family,
or frequent use of rental sites or rental agencies. And there is no longer any reasonableness standard for finding a violation, but instead DVCM and BTVC are given the "sole" power to make a determination of a violation. As written, a member could be found as violating the restrictions solely upon a finding that the member has made "frequent" reservations for persons other than the member or member's family, and DVCM and BVTC get to decide what is meant by "frequent." In other words, the way the new rules are written, DVCM could, for example, find you have violated the new restrictions by doing nothing more than making three reservations for persons other than yourself or family members, and you would have no right to challenge that finding.
C.
Effect on Pre-CFW Resorts
Those new rules should not be applied to owners of the DVC Resorts at WDW other than CFW. In fact, most of the suggested changes that many members have made in the past also cannot be added to the pre-CFW resorts. That is because Florida Statute §718.110(13) essentially limits rental restrictions to those contained in the original declarations for a condominium resort, because any changes made thereafter that could be construed to further limit the number of times or period of times when a member/owner can do rentals requires the actual vote of the owners, and even if there is a vote which results in adopting new restrictions, all members who voted against the new restrictions would not have to obey them.
CFW is not subject to that statute since it was created under the trust section of the timeshare estate definition and not under the condominium section. It is subject only to a statute, §720.306(h) that relates to associations that control rental of units other than condominiums. Those associations are also prohibited, absent a vote of the owners, from creating new rental restrictions than those provided in the original declarations, but that prohibition only applies to rentals that are for a six-month or greater time period, i.e., DVC can create all kinds of new rental restrictions applicable to members who own CFW because the rentals would generally be for shorter periods than six months.
DVD's creation of the CFW rules are designed to have an impact on its problems not the members. What it wants to do is go after rentals in general via the new rules and reduce the number of rentals, and the use of outside agencies and others to do rentals, i.e., its incentive is to generally decrease the competition for room rentals.
The reason members want further restrictions is the belief that members that have become professional renters are using the reservation system and walking to prevent other members from getting hard to get rooms, including rooms at hard to get times. One problem with that concern is that, even if rentals were completely eliminated, the ability of non-renting members to get hard to get rooms, or rooms at hard to get times, would likely not significantly improve. Eliminate rentals and those rooms will still be difficult to get at 11-months out. Moreover, eliminating rentals would probably have little to no impact on getting rooms at 7-months out.
D.
Acts That Could Reduce Professional Renting Without Creating Any New Rental Restrictions
One thing I seldom see is any member that is against renting suggesting solutions that could possibly significantly reduce professional renters from seizing, via walking, hard to get rooms, or rooms at hard to get times. An example of something often suggested is that members be prohibited from modifying a reservation made at 11-months out until sometime well past 11-months out, at which time getting a needed modification may no longer be possible. Such a suggestion would adversely impact members who are not renting from doing needed modifications, e.g., a member learns that a change in work schedule requires changing the arrival date.
I have noted before two possible suggestions that require no new rental restrictions but could have a major impact on limiting professional renters from carrying on their business, but will not necessarily make it easier to get hard to get rooms or rooms at hard to get times because even eliminating rentals entirely would likely not accomplish that. I assume there may be other potential solutions that could adversely affect professional renters, which I have not thought of yet, which would not require creating any new rental restrictions.
One possible change I have previously mentioned is one that could easily do away with walking as we know it by simply adopting an old rule that existed until June 2008. The reservation rule before then was that a member could reserve a room at 11/7 months out from date of departure from the DVC Resort room. For example, today, March 24, a member could make a reservation with a departure date of Feb 24, 2024. That reservation would not cover the night of Feb 24 or any date thereafter. An attempt to walk that reservation to a later date would require the member to daily modify the reservation to add the night of the existing check-out date, and when doing so the member would be competing with other members seeking that date, i.e., to do any walk, a member would have to get lucky every day of the walking period to get the room.
A second change would simply require members to inform DVC that a reservation is a rental. The POS documents point out that any rentals are supposed to be done with written contracts that contain provisions informing the lessee that the lessee will be subject to all the DVC rules applicable to occupying a room or using recreational facilities. What DVC could potentially do is adopt a new rule that simply says a member needs to provide a copy of the rental agreement for any reservation done as a rental so it can assure that required terms exist informing the renter about being subjected to any occupancy rules, and if the member fails to provide that rental agreement, and DVC learns of that failure, the reservation will be cancelled.
Getting such agreements would provide information to DVC from which it could determine whether a member is violating the commercial purpose rules. Of course, one's first thought might be that the renting member would just ignore the requirement and not tell the lessee about the requirement. But the professional renter would be taking a significant risk in doing that, because if DVC actually otherwise learns the reservation is a rental and cancels the reservation, the member could potentially be sued by the the lessee for fraud and face both compensatory and punitive damages. In essence to avoid a potential future disaster, the professional renter would need to inform any lessee of the requirement and that it will be followed, but doing so would mean DVC will accumulate the information it needs to determine whether the member is violating the existing rental restrictions.
