DVC Commercial Use Policy added to POS

[DVC Mike]

I know that our POS prohibits use of DVC for “commercial purposes”. However, I’ve never seen any definition of this in writing, or any statement in our POS regarding how any particular use might be classified as “commercial use”.

Well, DVC revised each resort’s Component Site Public Offering Statement at the end of 2007 to reflect the Commercial Use policy adopted by the Association. It describes the “Multiple Reservation Rule”.

POS Revisions Dated 12/31/2007

Commercial Use Policy. The Disney Vacation Club (DVC) Public Offering Statement makes it clear that DVC memberships are intended for personal vacation use. The Declaration of Condominium and the Membership Agreement for the Resort expressly limits the use of Ownership Interests to personal use and prohibits use for “commercial purposes,” – a pattern of rental activity or other occupancy by an Owner that the Board of the Association, in its reasonable discretion, could conclude constitutes a commercial enterprise or activity.

DVC Members may make as many reservations as they desire. However, if, in any 12-month period, a DVC Member desires to make more than 20 reservations, the DVC Member shall be required to establish, to the satisfaction of the Board, that all of the reservations made by the DVC Member in such 12-month period are for the use of accommodations by the DVC Member, the DVC Member’s family and/or the DVC Member’s friends (collectively, “Personal Use”), and not for commercial purposes. If, in any 12-month period in which a DVC Member attempts to make more than 20 reservations but is unable to establish, to the satisfaction of the Board, that all such reservations are for Personal Use and not for commercial purposes, all reservations in excess of the first 20 reservations shall be presumed to be the use of Vacation Accommodations for commercial purposes in violation of the Declaration and the Membership Agreement (the “Multiple Reservation Rule”).

Enforcement of this policy will be the responsibility of DVC Member Services as follows. For each reservation made by a DVC Member, Member Services shall determine, before confirming the reservation, the number of reservations made by such DVC Member which are occurring or have occurred in any rolling twelve-month period in which the reservation then being made will occur. If, as a result of Member Services’ review of the DVC Member’s reservation history, the reservation the DVC Member is then attempting to make violates the Multiple Reservation Rule and the DVC Member has not established, or cannot then establish that all of the DVC Member’s reservations, including the reservation then being made by the DVC Member, are for Personal Use, DVC Member Services will not honor or confirm the reservation and the DVC Member shall be advised that the reservation violates the Multiple Reservation Rule and the prohibition on use of Vacation Homes for commercial purposes. For reservations canceled for violating this policy, the cancellation shall be deemed to be a cancellation by the DVC Member and the provisions of the Home Resort Rules and Regulations relating to cancellations (including, without limitation, Sections 5(d), 13 and 14) shall apply.

The Association shall have the sole discretion to interpret this policy. Further, pursuant to the DVC Property Management Agreement and the DVC Membership Agreement for the Resort, the Association delegates the authority to interpret and enforce (through the Home Resort Reservation Component and the Home Resort Rules and Regulations) the policy to DVCMC as property manager for the resort.

This policy is not intended, and shall not be deemed, either (i) to constitute an exclusive act or statement by the Association regarding any breach of the commercial activity prohibitions set forth in the Declaration of Condominium and Membership Agreement, or (ii) to be an exhaustive list of all activities that shall be deemed to be commercial activity. Accordingly, the Association reserves the right to promulgate such additional rules or to take such additional actions or measures as it deems appropriate with respect to any breach of such prohibitions.

 

[JimMIA]

Interesting, Mike. Where did you get that?

I didn't know they could amend the POS after the fact. Is this for all resorts, or only for those they are still selling -- SSR and AKV?

Logically, it seems like once the "public offering" is finished (e.g. the sold out resorts), you couldn't go back and change the POS. I'm sure they could change their booking rules, but I don't see how they change the POS on a resort they stopped "offering" years ago. I'm just guessing, and I could easily be wrong.

In any event, the change sounds reasonable to me.

There will no doubt be a few DVC owners who legitimately book 20 ressies for themselves, their families, and friends, but I don't think those owners will have any real difficulty explaining their situations to MS, or DVC Legal.

My thought in reading this is their initial set of letters to owners with more than 20 ressies last year probably generated some "I'll sue you" responses, and they saw a need to tidy things up a bit. I'm sure they weren't surprised, nor would I expect DVC to be particularly concerned with the prospect of lawsuits. I'm sure they've done their legal research and are on firm ground.

 

[DebbieB]

Playing devils advocate, how do they establish who your "friends" are? I have friends in many states.

 

[DVC Mike]

Interesting, Mike. Where did you get that?

I didn't know they could amend the POS after the fact. Is this for all resorts, or only for those they are still selling -- SSR and AKV?

Logically, it seems like once the "public offering" is finished (e.g. the sold out resorts), you couldn't go back and change the POS. I'm sure they could change their booking rules, but I don't see how they change the POS on a resort they stopped "offering" years ago. I'm just guessing, and I could easily be wrong.

On the contrary, DVC reserves the right to unilaterally amend the POS and Component Site POS whenever they want. It says so in the POS.

I got this in the paperwork I received for a recent add-on at VWL, which is certainly not a new resort they are actively selling.

All of the POS and Component Site POS have a "Revised" date on them.

If they have additional revisions, they include additional addendums.

 

[LisaS]

I got this in the paperwork I received for a recent add-on at VWL, which is certainly not a new resort they are actively selling.

I remember when I got my AKV paperwork back in February, the word "rent" was noticeably absent from whatever paragraph it appeared in in the paperwork I have for my earlier contracts (at BWV and VWL). I'm curious if it has also been removed from the new paperwork for your VWL add-on. I'm sorry I can't be more specific about where it appears but it's that paragraph that is often quoted here on the boards when the subject of renting comes up.

 

[drusba]

On the contrary, DVC reserves the right to unilaterally amend the POS and Component Site POS whenever they want. It says so in the POS.
I got this in the paperwork I received for a recent add-on at VWL, which is certainly not a new resort they are actively selling.
All of the POS and Component Site POS have a "Revised" date on them.
If they have additional revisions, they include additional addendums.

DVC does not have an unfettered right to unilaterally amend and have it apply retroactively to existing owners. As the documents say, and as the law requires, it cannot make changes that materially alter the rights of members granted when they purchased. For example, there is no way DVC can just double the number of points everyone needs to reserve a room all times of year. Moreover, by state law, it cannot eliminate a right to rent.

What it can do is provide reasonable restrictions to the right to rent if such restrictions are made in the documents a member receives at the time he purchases. In this instance, there has always been a restriction against using the ownership for "commerical purposes." However, that ambiguous term was never defined. In such cases, DVC can attempt to provide riules that explain the term. In this case it has created a rebuttable presumption that reserving more than 20 times a year shows you are using the ownerhip for commercial purposes. Could that withstand a legal challenge asserting it is an improper change to exisitng member's rights? Possibly but you should not assume it is a foregone conclusion. You should also not assume that simply because DVC has a lot of lawyers to look at this, it must be acting ocrrectly. These are the kind of rules where DVC sat down and tried to come up with an objective test to deal with what would likely be construed as being for a commerical purpose -- someone being in the business of renting points. As I am familiar with lawyers and have actually dealt with Disney lawyers, I am quite certain that the lawyer's letter giving DVC the opinion that its new restrictions were proper came with the caveat that said "but a court could hold otherwise."

 

[DVC92]

DVC does not have an unfettered right to unilaterally amend and have it apply retroactively to existing owners.

IMHO DVC believes they have the right to unilaterally alter anything they so choose. Taking the OKW extension as an example, OKW contracts, the POS, the Master Declaration, etc. all stated the termination date to be 2042. However, DVC unilaterally changed it. There are some things they probably won't alter for fear of losing future sales, but they truly believe they have the right.

 

[Chuck S]

A reminder that the topic of this thread is the new POS language, and its possible implications (good and bad) on Members.

Thanks

 

[FLYNZ4]

It seems to me that a more reasonable policy would be to limit the number of reservations to the size of the account. As people decide to purchase more points... then it would seem logical that their use would increase.

/Jim

 

[simpilotswife]

 

[Dean]

A few random thoughts.

• This seems to be a reasonable policy and is very similar to what we've heard for a while. The exception is nothing over 20 if you rent rather than only self use over 20.
• I wonder if linked or similar reservatoins on a given trip will be treated as a single reservation or multiple for this purpose. I'm guessing it's counted as multiple.
• While DVC doesn't have unfettered ability to change the POS, they do have the ability to make changes in many areas. This would be one of those as it's a reasonable policy, is simply a definition for wording there already (which they needed) and does not harm the members IMO.
• I noted the wording said 12 months, not UY, so I'm assuming it's a running 12 month period.
• By definition, any stay with any remuneration of any type, including friends who buy you a meal, would be a rental. Obviously they may not know about these type as easily as they would a more formal rental.
• A single "rental" would trigger this rule no matter how much lower than market rates the "price" was.
• A formal definition was needed and long overdue.

 

[DVC Mike]

I remember when I got my AKV paperwork back in February, the word "rent" was noticeably absent from whatever paragraph it appeared in in the paperwork I have for my earlier contracts (at BWV and VWL). I'm curious if it has also been removed from the new paperwork for your VWL add-on. I'm sorry I can't be more specific about where it appears but it's that paragraph that is often quoted here on the boards when the subject of renting comes up.

I'm at work now, so I don't have access to the POS documents, but the latest Site Component POS that I have are all dated 12/06 (for VWL, BCV and BWV) and 2/07 (for AKV). The first three are very similar, but I thought the AKV one had more information on renting, not less.

There were more motifications that I didn't type in (fingers got tired), where they modified the common "For Personal Use" section. They added text to clearly exempt DVC from the "commercial use" rule; that is, only DVC can be a commercial renter of DVC units.

Thus, this rule accomplishes two things - 1) it helps to stop commercial renters and speculative bookings, and 2) protects Disney from competition as it tries to rent our rooms via CRO when members trade out and utilize the Disney Collection.

I'm hoping the motivation behind the rule was more #1 than #2...

 

[DVC Mike]

Since I don't make 20 reservations per year, and I also don't rent out my points, this particular rule has absolutely no effect on me.

I don't think the average DVC member makes 20 reservations per year.

 

[TisBit]

I dooubt that this rule will ever apply to me. I am sure that there are people that make numerous reservations a year and probably even for a specific period (i.e. call and book 3 studios for Christmas at 11 months in the hopes of renting them).

I don't think they necessarily 'changed the rules' on us, but didn't the original POS's always say 'no commercial renting as determined by the boars'? Sounds like they are just trying to find a way of defining it.

The only other thing that I noticed is that it is not about actual completed trips, but just reservations, so even people that make numerous reservations and cancel them can reach their 20 limit? Again, I never foresee making that many reservations, but I could definitely see some people hitting that cap if they aren't careful, especially if they have a large contract.

 

[boettj]

My DW and I rent every other year. And the only purpose for renting is to cover the maintenance fees. However, this year, we gave point to two of my brother-n-laws and rented out 2 sets. According to the new POS which came yesterday in the new Vacation Planning Guide, I should be fine.

However, what about someone who has 500 points? Renting to cover you maintenance fees could require several rentals. Both of my rentals were for small amounts of points each.

Just my two cents as we are working on amassing more points overtime. Our purpose is to increase the size room we can stay at. Not to rent them out.

Though renting in our off year was part of the draw to DVC. $752 maintenance fees are extremely steep. Our other two timeshares are in the $300 range. Comparing the two timeshare groups is like comparing apples to oranges.

Thank DVCMike.

 

[Dean]

My DW and I rent every other year. And the only purpose for renting is to cover the maintenance fees. However, this year, we gave point to two of my brother-n-laws and rented out 2 sets. According to the new POS which came yesterday in the new Vacation Planning Guide, I should be fine.

However, what about someone who has 500 points? Renting to cover you maintenance fees could require several rentals. Both of my rentals were for small amounts of points each.

Just my two cents as we are working on amassing more points overtime. Our purpose is to increase the size room we can stay at. Not to rent them out.

Though renting in our off year was part of the draw to DVC. $752 maintenance fees are extremely steep. Our other two timeshares are in the $300 range. Comparing the two timeshare groups is like comparing apples to oranges.

Thank DVCMike.

A studio for 5 nights avoiding weekends will be 40 points or more per each reservation. 500 points would only allow 12 such rentals without banking or borrowing. Of course if you wanted to rent you'd just do larger units or higher price options to use more points per single rental.

I would be VERY surprised if cancelled reservations were counted as was suggested above. Regardless, this should be interesting and will likely fall under the "careful what you wish for" category for some.

 

[neoDonald]

Just curious. Is booking day by day considered different reservations or do they consider this modification of one reservation?

 

[JimMIA]

The only other thing that I noticed is that it is not about actual completed trips, but just reservations, so even people that make numerous reservations and cancel them can reach their 20 limit? Again, I never foresee making that many reservations, but I could definitely see some people hitting that cap if they aren't careful, especially if they have a large contract.

That's an important point.

We don't have that large a contract, but between myself and my two adult daughters, we took 11 actual trips last UY. There were a few false starts in there, so we probably had 15 or so ressies. And that's just ressies by the owners of the contracts -- we don't rent, and we only took friends with us on one trip and they were in the same villa.

I can see corporate accounts and some larger family accounts having more than 20 ressies, but I don't think those folks will have any difficulty explaining things to DVC's satisfaction. The chronologies of speculative rentals will be easy to spot and differientiate from regular ressies most of the time.

 

[DebbieB]

Just curious. Is booking day by day considered different reservations or do they consider this modification of one reservation?

It is modifying one reservation. In the end, the reservation looks the same as if you made it all at once.

 

[dianeschlicht]

You know, it occurs to me that what WE count as one reservation can acually be multiple ones in the eyes of DVC. For example: we often will start out in a two bedroom and downsize to a 1 bedroom after guests leave. I wonder if that is considered one reservation or two? We also have folks who split their stay to avoid weekends. That would definitely be considered two. I can see 2 trips being as many as 6 reservations depending on how it is done.