DVC plans to target commercial renters

[tx911]

Imagine being assigned social media duty and having to read through these 92 pages. That's a job for the new guy.

Hilarious.
He can just read the first few pages. The rest are a continual rehash of the same ideas.

 

[Sandisw]

Imagine being assigned social media duty and having to read through these 92 pages. That's a job for the new guy.

It’s probably this…”who wants to share something before we start?” CM…me! Look what these crazy DiS boards members said now…as they all laugh and fall off their chairs!

 

[Sandisw]

Well said, as usual.

Only when DVC provides clarity, can both sides know for sure.

Can we now please close this thread before it reaches 100 pages?

I think Ill give it a bit more to see if anyone decides to make speculations about whether the transfer rules could mean anything or if people want to shift to the new language in CFW, etc.

If not, then we will close it down and I’ll open a new one when or if we get something from DVC on the topic of this or walking!

 

[nalababybear]

Today. Renting is okay. Commercial enterprise is not.

Definition and enforcement by Disney to date has been unseen.

Tomorrow. Unknown. Up to Disney to change the rules

The best analogy I've seen is the street vendor at venues. Some venue goers are happy they are there and serve a purpose. While others find them annoying and illegal. And the venue owners tolerate them.

Now if the street vendor puts up a neon light popup and really starts impacting venue concessions, I'm sure a call will be made to take down that vendor.

Disney won't be bothered to get small fry. They can't be bothered to ROFR contracts they can flip for easy 20% earnings, yet some believe here they will expend energy policing small contracts?

Ok.

 

[Nabas]

And I think the biggest thing one can gleam from this thread, including the DVC people reading it…I am sure they are..waving here!…is that “a pattern of rental activity that the board, in their reasonable discretion, can conclude you are a commercial enterprise or practice” means a lot of different things to a lot of owners and what actual actions an owner is taking turns them into an owner who is in violation of that.

Yogman v. Parrott has a robust analysis of "commercial enterprise". Quoting in part:

We next consider whether defendants' rental activity constitutes a “commercial enterprise.”  “Commercial” means, as relevant, “occupied with or engaged in commerce * * * [;]  related to or dealing with commerce.”  Id. at 456.   “Commerce,” in turn, means “the exchange or buying and selling of commodities esp. on a large scale”; but it also can mean “dealings of any kind.”   Ibid.  “Commercial” also can mean “having profit as the primary aim.”   Ibid. “Enterprise” can mean “VENTURE, UNDERTAKING, [OR] PROJECT”; “a business organization:  FIRM [OR] COMPANY”; or, simply, “any systematic purposeful activity.”  Id. at 757.​

​

If a “commercial enterprise” is any undertaking or systematic purposeful activity involving business dealings of any kind, then the covenant covers defendants' use of the property, because the short-term vacation rentals systematically and purposefully generate revenue from arm's-length transactions.   On the other hand, if a “commercial enterprise” requires a business organization that has profit as its primary aim, then the covenant does not cover defendants' use, [emphasis added] because the facts shown do not demonstrate that defendants are a business organization or that they have profit as their primary aim (as would be true, for example, of a bed-and-breakfast business).   Because of the different possible meanings of “commercial enterprise,” this portion of the restrictive covenant also is ambiguous. [emphasis added]​

Since the DVC POS specifically calls out a "pattern of rental activity", the POS clearly is intended to cover renting. However, what constitutes a commercial enterprise of renting remains vague (i.e. "ambiguous"). Therefore, per Yogman v. Parrott, the maxim of "strict construction of restrictive covenants" applies. Therefore, we must interpret "commercial enterprise" in its least restrictive form, namely a "business organization that has profit as its primary aim".

 

[Sandisw]

Yogman v. Parrott has a robust analysis of "commercial enterprise". Quoting in part:

We next consider whether defendants' rental activity constitutes a “commercial enterprise.”  “Commercial” means, as relevant, “occupied with or engaged in commerce * * * [;]  related to or dealing with commerce.”  Id. at 456.   “Commerce,” in turn, means “the exchange or buying and selling of commodities esp. on a large scale”; but it also can mean “dealings of any kind.”   Ibid.  “Commercial” also can mean “having profit as the primary aim.”   Ibid. “Enterprise” can mean “VENTURE, UNDERTAKING, [OR] PROJECT”; “a business organization:  FIRM [OR] COMPANY”; or, simply, “any systematic purposeful activity.”  Id. at 757.​

​

If a “commercial enterprise” is any undertaking or systematic purposeful activity involving business dealings of any kind, then the covenant covers defendants' use of the property, because the short-term vacation rentals systematically and purposefully generate revenue from arm's-length transactions.   On the other hand, if a “commercial enterprise” requires a business organization that has profit as its primary aim, then the covenant does not cover defendants' use, [emphasis added] because the facts shown do not demonstrate that defendants are a business organization or that they have profit as their primary aim (as would be true, for example, of a bed-and-breakfast business).   Because of the different possible meanings of “commercial enterprise,” this portion of the restrictive covenant also is ambiguous. [emphasis added]​

Since the DVC POS specifically calls out a "pattern of rental activity", the POS clearly is intended to cover renting. However, what constitutes a commercial enterprise of renting remains vague (i.e. "ambiguous"). Therefore, per Yogman v. Parrott, the maxim of "strict construction of restrictive covenants" applies. Therefore, we must interpret "commercial enterprise" in its least restrictive form, namely a "business organization that has profit as its primary aim".

Thank you! IMO I think something like this is what will temper any changes that DVC does or even adds to the enforcement of renting out as a business.

What I wonder if what they are shoring up are ways to go after those who have created multiple memberships as a way around it

LLCs seem like an easy thing to stop because it’s so clear…it’s the large point owners who got creative that could be why they needed to add more resources to the team.

We shall see

 

[Nabas]

Thank you! IMO I think something like this is what will temper any changes that DVC does or even adds to the enforcement of renting out as a business.

What I wonder if what they are shoring up are ways to go after those who have created multiple memberships as a way around it

LLCs seem like an easy thing to stop because it’s so clear…it’s the large point owners who got creative that could be why they needed to add more resources to the team.

We shall see

IMO, people who buy extra points to cover their DVC costs are safe, even if they make a little extra profit on the side. Their primary goal is covering their DVC costs, not profit. This probably covers nearly everyone who rents points using Dis.

At the other end, LLCs are “business organizations” that typically “have profit as their primary aim”. They likely are in violation of the POS.

I find it interesting how Yogman v. Parrott seemed to draw an apparent line between “arm's-length transactions” and the example of a “bed-and-breakfast”.

 

[Sandisw]

IMO, people who buy extra points to cover their DVC costs are safe, even if they make a little extra profit on the side. Their primary goal is covering their DVC costs, not profit. This probably covers nearly everyone who rents points using Dis.

At the other end, LLCs are “business organizations” that typically “have profit as their primary aim”. They likely are in violation of the POS.

I find it interesting how Yogman v. Parrott seemed to draw an apparent line between “arm's-length transactions” and the example of a “bed-and-breakfast”.

My guess is that DVC wants it to be seen that way too.

I would think they want to have the product be seen as a flexible and cost effective way to do Disney.

The connection to bed and breakfast was interesting. And, when reading the whole case, it was fascinating in the way they went through all three steps when it came to determining the decision when the contract and terms tare written in an ambiguous way.

Which, if you apply to DVC, it seems owners should have the benefit of the least restrictive application of commercial enterprise.

I agree that we should be looking at enforcement in cases that contracts were clearly bought for the sole purpose of renting.

 

[Sandisw]

Let's keep the conversation in the appropriate light. Posts were deleted that serve no purpose. We all need to remember that DVC is the only one who determines what is and is not a violation of the contract.

Having said that, the best thing about this community is we do allow people to share their opinions of what they think it should be....and we should all assume best intent when people post opinions, even if they didn't use the IMO!

If anyone is like me and enjoys reading case law...I know....the one linked today by @Nabas is a very good one....

 

[davidhr]

It’s probably this…”who wants to share something before we start?” CM…me! Look what these crazy DiS boards members said now…as they all laugh and fall off their chairs!

I work an extremely popular company with lots of fans. I can confirm we read what people are saying and laugh about how wrong they are (and they’re the overwhelmingly majority of the time). So Disney might be doing the same

 

[Brian Noble]

I will once again throw out a warning that few seem to be listening to: There are several different standards that might matter. One standard is the result of a fully-adjudicated court case for someone's very specific situation. One might be quite confident that, if they got to that point, they'd prevail.

Another standard is what DVC decides to do. DVC has first-mover advantage; they get to start the process with any individual owner. That can be anywhere from sending a letter saying "Hey, we're paying attention" up to and including freezing an account and cancelling all pending reservations. Once Disney makes its move, the owner gets to decide how to respond.

This might be resolved quickly, with a phone call to the right person. Or, it might take a lot of time and money to get to the fully-adjudicated result. Which path it takes is also up to Disney. If they decide they want to fight you, you can bet they will make it as expensive as they possibly can until and unless you either win or go away*. The very last thing they want is for it to be known that they will back down if you push, because that gives everyone doing this license to push.

Now, realistically, they aren't going to go to that much trouble for a garden variety owner that is renting a stay here and there. They probably aren't going to do that for an owner renting out X% of their points every year, though it probably depends at least a little on the value of X. But I would be VERY CAREFUL about assuming that any particular ownership path cannot be labeled "commercial use" because of this or that opinion about what the governing documents and case law happen to say.

To put it another way: I've worked with a lot of BigLaw firms as a technical expert. I've had the opportunity to work closely with our general counsel's office on several matters. I've retained a few lawyers for my own needs. I can't remember any of them saying that they knew, for sure, how something would ultimately turn out. They always make it clear that they are laying out the odds, and that their job is to understand what their client's risk profile is and make suggestions for the best range of likely outcomes within that risk profile.

-------
*: There is one other outcome. You might have a really good argument, and be wiling to fight them for long enough that it appears that it could actually end up before a judge. At that point, Disney might well settle, but I would bet my last Mickeybar that settling would include a non-disclosure clause. No one else will know.

 

[nalababybear]

I will once again throw out a warning that few seem to be listening to: There are several different standards that might matter. One standard is the result of a fully-adjudicated court case for someone's very specific situation. One might be quite confident that, if they got to that point, they'd prevail.

Another standard is what DVC decides to do. DVC has first-mover advantage; they get to start the process with any individual owner. That can be anywhere from sending a letter saying "Hey, we're paying attention" up to and including freezing an account and cancelling all pending reservations. Once Disney makes its move, the owner gets to decide how to respond.

This might be resolved quickly, with a phone call to the right person. Or, it might take a lot of time and money to get to the fully-adjudicated result. Which path it takes is also up to Disney. If they decide they want to fight you, you can bet they will make it as expensive as they possibly can until and unless you either win or go away*. The very last thing they want is for it to be known that they will back down if you push, because that gives everyone doing this license to push.

Now, realistically, they aren't going to go to that much trouble for a garden variety owner that is renting a stay here and there. They probably aren't going to do that for an owner renting out X% of their points every year, though it probably depends at least a little on the value of X. But I would be VERY CAREFUL about assuming that any particular ownership path cannot be labeled "commercial use" because of this or that opinion about what the governing documents and case law happen to say.

To put it another way: I've worked with a lot of BigLaw firms as a technical expert. I've had the opportunity to work closely with our general counsel's office on several matters. I've retained a few lawyers for my own needs. I can't remember any of them saying that they knew, for sure, how something would ultimately turn out. They always make it clear that they are laying out the odds, and that their job is to understand what their client's risk profile is and make suggestions for the best range of likely outcomes within that risk profile.

-------
*: There is one other outcome. You might have a really good argument, and be wiling to fight them for long enough that it appears that it could actually end up before a judge. At that point, Disney might well settle, but I would bet my last Mickeybar that settling would include a non-disclosure clause. No one else will know.

Tl;dr version.
Disney is Loki.
We are earthlings meant to be subjugated.

Some have avenger level aspirations, most of us are just larping

 

[Brian Noble]

That, plus: Most of us want to live in a black-and-white world, despite the fact that everything is just a shade of gray.

 

[tx911]

That, plus: Most of us want to live in a black-and-white world, despite the fact that everything is just a shade of gray.

I think there's like 50 shades of gray.

 

[Brian Noble]

Only if you're fortunate.

 

[Chuck S]

This Thread has pretty much run it's course and has degraded from the topic to personal attacks and responses. A few more posts have been deleted.

This thread is now closed.

 

[Genie+]

Ooh do I get the last word?

 

[Tatebeck]

Or do I?

Edit: Noooooooooooooooooooo

 

[Judique]

My last word: thanks to all who contributed in a responsible and knowledgeable manner using good communication skills.
Thanks to Sandi for all her thoughtful responses.