DVC plans to target commercial renters

[Genie+]

Not trying to argue this point any further but for those who (unwisely) take tax advice from internet strangers like myself, please note that federal and state governments consider profit to be pre-tax numbers.
I have also seen many posts throw out suggestions about what you can use to offset profit for a particular rental that would subject you to willful tax evasion penalties (e.g. saying your total cost of 2000 points is way more than your income from renting 200 points in one year)— this isn’t directed at @AstroBlasters but for those of you who are renting points (or considering it), definitely check with a CPA about what can and cannot be written off against the income.

I’m not sure how it impacts breakage profits, but Disney would be in a better position if they could buy points at $12-15 (a lot of what brokers are giving these days is $16 or less!) and sell it as OTUP for $20-25 (could probably get $25 at a few places if they started selling OTUP to owners before the 7m mark)…but also for owners, I think we’d be better off if Disney wasn’t targeting the same rooms, but potentially worse off if they are using the points to lock up holiday periods, etc. I’m honestly not sure how or when Disney can book with its own points.

If they can take a cut of all rentals, I think they would be better off than the status quo, and it appears they can’t stop a large chunk of rentals under the PoS, unless the renter has a pattern of activity that shows commercial purpose.

I think the reason why many who are lawyers on this thread gloss over it is that the language of commercial practice/commercial enterprise” itself doesn’t mean much more than “renting with the goal to make profit”— though I do think pattern of activity is probably significant and I think at least 99% of the people on this thread don’t think they will go after people who only very occasionally rent, even if picking rooms to maximize profit.

I think that is the crux of it— many of us don’t think (under a plain reading of PoS and FL statutes) that they need to change anything to crack down on people who routinely rent a material chunk of their points.

I don’t understand why that specific language would stop Disney from taking actions to give rentals lower priority (or just change the system to stop spec renting).

I’m not completely clear on what Disney can’t and can’t do to limit commercial activity, but it seems that, after stopping outright commercial enterprises, changing general rules to discourage spec renting (post booking name changes outside of a list of friends and family) would help a lot with curbing commercial practices (which are forbidden) without causing significant inconvenience to the membership at large. Like others, I often book a room for myself and add my family later— but they would all be on my F&F list so it wouldn’t be an issue.

Well said. All of it. That last part is where I think DVC can do something to curtail commercial use yet still leave the flexibility for personal use owners to rent.

We aren’t promised the highest potential price per point. That does not need to be protected as long as there are still avenues for renting excess points when the occasional need arises.

That’s what I liked about the Wyndham limit of 2 highest demand room/date per year. I don’t know if that could fly for DVC, just using as example. The owners can still do 2 high demand rentals per year, and rent until their heart is content otherwise. It’s reasonable. Even people relying on rental revenue can still make that work, like the people here saying they need to take a couple years off or help pay their own DVC use.

Commercial renters will be impacted in how much cream they can scoop out of the system. They won’t be able to grab the 3 nights at BC that just popped up at 5 months out if they already used limit of 2. They have an unfair advantage because they can pull whatever very high profit margin room shows up then find a use. Personal use doesn’t have 365 days a year they can make use of a reservation. It’s a different pattern of use. Most owners don’t play around with holding because it’s a pain in the… but commercial use laughs because they have plenty of reservations to help find something to absorb holding points. The bots and scrapers harm 11 months as well as whatever pops up after. They need the door not to hit ‘em in the…

Maybe DVC can define commercial as a percent of points used to date. 50% sounds reasonable to me. A new buyer can rent out 1.5 years of points if they also use 1.5 years of points. An owner who used their contract for 5 years can rent out the next 5 years. And everything in between. Then put the high demand rooms to a vote at those resorts. Do people want to limit 2 reservations not in owner’s name per year (and remember it is just certain rooms/dates, which is a fraction of the inventory)?

 

[Sykes]

The term commercial purpose is definitely defined. It’s been posted already by a few of us. I’ll post again at the bottom.

It states that commercial purpose “includes a pattern of rental activity or occupancy by an Owner that the board, in its reasonable discretion, could conclude constitutes a commercial enterprise or practice”.

...

But the contract specifically uses that it includes the pattern of activity and IMO, what ever they decide must include that as part of the criteria…

That is not a definition, that is an illustration. They are VERY different things in a contract. You are interpreting it as constraining Disney, which it absolutely does not do. Instead, it illustrates an example of what they consider to be violating the personal use restriction, and then it explicitly gives Disney absolute discretion (within the bounds of reasonableness) to define what constitutes commercial activity.

The prohibition is on any use at all that is not personal use, with an explicit additional callout to anything that would constitute commercial activity. They then say that "a pattern of rental activity [........]" would fall within that prohibition, but they do not constrain themselves by saying that a pattern of activity is required to violate the broader prohibition on commercial activity and non-personal use.

 

[Nabas]

Why would they allow something for so long if it was improper, when it is their job to manage and enforce the contract? Then thought about it from DVC’s angle. Could they just say they didn’t need to act unless/until it became an issue? ie- they didn’t enforce prior because it had little negative impact and not worth the resources or risking a cure worse than disease.

DVC rental sites have existed for a long time. For many years, these seemed to mostly act as intermediaries between DVC members renting excess points and renters. IMO, these transactions are consistent with the spirit of rentals allowed by the POS.

However, "confirmed reservations" (a.k.a. spec renting) has really gotten out-of-control post COVID. Allegedly, a handful of former Disney employees have been part of business entities acquiring large numbers of DVC points for rent or encouraging DVC members to book rooms on speculation. Disproportionally, it appears these business entities are targeting the most in-demand (i.e. high margin) rooms.

In summary, the apparent brazen violation of the "personal use" clause seems to be a relatively recent phenomenon.

 

[Sandisw]

That is not a definition, that is an illustration. They are VERY different things in a contract. You are interpreting it as constraining Disney, which it absolutely does not do. Instead, it illustrates an example of what they consider to be violating the personal use restriction, and then it explicitly gives Disney absolute discretion (within the bounds of reasonableness) to define what constitutes commercial activity.

The prohibition is on any use at all that is not personal use, with an explicit additional callout to anything that would constitute commercial activity. They then say that "a pattern of rental activity [........]" would fall within that prohibition, but they do not constrain themselves by saying that a pattern of activity is required to violate the broader prohibition on commercial activity and non-personal use.

And again, personal use is defined in the contract as use by owners, guests and renters. It is not only use by owners. It even says “as defined in this declaration”. Posted below

Lawyers have weighed in and as I said, I go by their analysis and DVC is limited to stopping owners who show a pattern of activity that constitutes a commercial enterprise or practice, not for renting when it doesn’t constitute that.

We can agree to disagree but since this language is in the declaration as well, it can not be changed by DVC without a vote of owners.

And, if it was to be an example, it would have added the words “includes, but is not limited to” which then makes it wide open.

Take a look of how they changed the language in the CFW documents. They didn’t do that for fun.

They did it so the contract expressly gave them more power to limit rentals and since that was written after the new 2021 statute listed earlier, it was needed in order for them to define it more specifically.

Which they can not do.

ETA: Here is the offical definition of “personal use”.

 

[Sandisw]

Well said. All of it. That last part is where I think DVC can do something to curtail commercial use yet still leave the flexibility for personal use owners to rent.

We aren’t promised the highest potential price per point. That does not need to be protected as long as there are still avenues for renting excess points when the occasional need arises.

That’s what I liked about the Wyndham limit of 2 highest demand room/date per year. I don’t know if that could fly for DVC, just using as example. The owners can still do 2 high demand rentals per year, and rent until their heart is content otherwise. It’s reasonable. Even people relying on rental revenue can still make that work, like the people here saying they need to take a couple years off or help pay their own DVC use.

Commercial renters will be impacted in how much cream they can scoop out of the system. They won’t be able to grab the 3 nights at BC that just popped up at 5 months out if they already used limit of 2. They have an unfair advantage because they can pull whatever very high profit margin room shows up then find a use. Personal use doesn’t have 365 days a year they can make use of a reservation. It’s a different pattern of use. Most owners don’t play around with holding because it’s a pain in the… but commercial use laughs because they have plenty of reservations to help find something to absorb holding points. The bots and scrapers harm 11 months as well as whatever pops up after. They need the door not to hit ‘em in the…

Maybe DVC can define commercial as a percent of points used to date. 50% sounds reasonable to me. A new buyer can rent out 1.5 years of points if they also use 1.5 years of points. An owner who used their contract for 5 years can rent out the next 5 years. And everything in between. Then put the high demand rooms to a vote at those resorts. Do people want to limit 2 reservations not in owner’s name per year (and remember it is just certain rooms/dates, which is a fraction of the inventory)?

There is a clause in the DVC membership agreement that says the owner gets to set their own terms and conditions.

I do not think DVc can tell an owner how much to charge based on that clause.

 

[Sykes]

And, if it was to be an example, it would have added the words “includes, but is not limited to” which then makes it wide open.

"Includes, but is not limited to" is generally considered to be the same as "includes". Black’s Law Dictionary defines include as: “To contain as a part of something. The participle including typically indicates a partial list (the plaintiff asserted five tort claims, including slander and libel).” Some drafters choose to include "but not limited to" to eliminate any ambiguity, but the plurality of courts have determined that "includes" defines an illustrative list rather than an exhaustive one.

As a general rule, if your interpretation of a contract requires re-defining the plain meaning of words, like "commercial" and "includes", then you're probably interpreting it incorrectly.

 

[Sandisw]

"Includes, but is not limited to" is generally considered to be the same as "includes". Black’s Law Dictionary defines include as: “To contain as a part of something. The participle including typically indicates a partial list (the plaintiff asserted five tort claims, including slander and libel).” Some drafters choose to include "but not limited to" to eliminate any ambiguity, but the plurality of courts have determined that "includes" defines an illustrative list rather than an exhaustive one.

As a general rule, if your interpretation of a contract requires re-defining the plain meaning of words, like "commercial" and "includes", then you're probably interpreting it incorrectly.

I do not believe I am interpreting anything but stating what the words actually say. The give us a definition of the term “commercial purpose”

You seem to think it’s not a definition but just an example and I am simply pointing out that no where in the contract does it even allude to that being an example.

My point is that because it says “includes” then that reason can’t be taken out by DVC and no longer used.

They can certainly add more requirements but I do not believe, that they can ignore the words “pattern of rental activity” and replace them with something else.

For example, I do not think the have the authority to change it to say “commercial purpose includes people who rent rooms prior to 7 months that the board can reasonable conclude constitutes a commercial enterprise or practice.

I also do not think they can remove those last two terms and pretend they don’t exist. That would IMO, and others who I have seen analyze over the years, constitute a material change to the contract. .

As I posted abve, the personal use clause of the declaration applies to owners, guests and renters. It does not differentiate between us.

So an owner can book rooms for themselves or renters for personal use as much as they want, unless DVC decides what the owner is doing constitutes a commercial enterprise practice.

 

[Sykes]

You seem to think it’s not a definition but just an example and I am simply pointing out that no where in the contract does it even allude to that being an example.

“Includes” precedes an illustrative list. Always (unless something else explicitly changes it). If they had intended to constrain themselves they would have used “is” or “is defined as” or something similar instead of “includes”.

 

[Genie+]

There is a clause in the DVC membership agreement that says the owner gets to set their own terms and conditions.

I do not think DVc can tell an owner how much to charge based on that clause.

That’s not what I mean.

We are not promised to get maximum potential value from renting. They make that pretty clear especially around decisions DVC and Disney makes. So renting would/could still be upheld even if something dampened that max profit potential. For example, if somehow the commercial enforcement resulted in me ending up with $2pp or $5pp less than my previous $pp rental average, so be it. I couldn’t argue their decision is hurting my ability to maximize $pp.

 

[Sandisw]

That’s not what I mean.

We are not promised to get maximum potential value from renting. They make that pretty clear especially around decisions DVC and Disney makes. So renting would/could still be upheld even if something dampened that max profit potential. For example, if somehow the commercial enforcement resulted in me ending up with $2pp or $5pp less than my previous $pp rental average, so be it. I couldn’t argue their decision is hurting my ability to maximize $pp.

Ahhh,,,I got you know. Correct…DVC can enforce the commercial purpose clause for those they feel constitute a commercial enterprise or practice regardless of how it impacts a personal profit.

 

[Sandisw]

“Includes” precedes an illustrative list. Always (unless something else explicitly changes it). If they had intended to constrain themselves they would have used “is” or “is defined as” or something similar instead of “includes”.

I think I see what you are getting at but do you think then DVC has the authority to change that clause in the contract and remove that definition or illustration and replace it with something else and it not be seen as a material change?

My understanding is they can not and with the new 2021 statute, even if they asked owners to vote to amend, owners are not bound by certain new rules if they didn’t approve them.

 

[Genie+]

And, if it was to be an example, it would have added the words “includes, but is not limited to” which then makes it wide open.

DH and I got a good laugh the first time we read this below. Not sure if it applies here or not. It is hilarious if nothing else



2. Interpretation. Where the context so indicates, a word in the singular form shall include the plural. The term "include" and similar terms (e.g., includes, including, included, comprises, comprising, such as, e.g., including but not limited to, including without limitation, and for example), when used as part of a phrase including one or more specific items, are not words of limitation and are not to be construed as being limited to only the listed items. Whenever the consent or approval of DVC Operator, Member Services, or DVD is referred to in this Agreement or the taking of any action under these Rules and Regulations is subject to the consent or approval of DVC Operator, Member Services, or DVD, it shall mean DVC Operator's, Member Services', or DVD's prior written approval to be given or withheld in its discretion. Further, any references to the use, exercise, or grant of the right of a DVC Operator's, Member Services', or DVD's discretion as set forth in these Rules and Regulations shall mean DVC Operator's, Member Services', or DVD's sole, absolute, and unfettered discretion to the exclusion of any other person unless specifically provided otherwise. No provision of these Rules and Regulations shall be construed against the DVC Operator because the DVC Operator provided for the drafting of these Rules and Regulations. The use of headings, captions, and numbers in these Rules and Regulations are solely for the convenience of


16


identifying and indexing the various provisions of these Rules and Regulations and shall in no event be considered otherwise in construing or interpreting any provision of these Rules and Regulations.

 

[Sandisw]

DH and I got a good laugh the first time we read this below. Not sure if it applies here or not. It is hilarious if nothing else



2. Interpretation. Where the context so indicates, a word in the singular form shall include the plural. The term "include" and similar terms (e.g., includes, including, included, comprises, comprising, such as, e.g., including but not limited to, including without limitation, and for example), when used as part of a phrase including one or more specific items, are not words of limitation and are not to be construed as being limited to only the listed items. Whenever the consent or approval of DVC Operator, Member Services, or DVD is referred to in this Agreement or the taking of any action under these Rules and Regulations is subject to the consent or approval of DVC Operator, Member Services, or DVD, it shall mean DVC Operator's, Member Services', or DVD's prior written approval to be given or withheld in its discretion. Further, any references to the use, exercise, or grant of the right of a DVC Operator's, Member Services', or DVD's discretion as set forth in these Rules and Regulations shall mean DVC Operator's, Member Services', or DVD's sole, absolute, and unfettered discretion to the exclusion of any other person unless specifically provided otherwise. No provision of these Rules and Regulations shall be construed against the DVC Operator because the DVC Operator provided for the drafting of these Rules and Regulations. The use of headings, captions, and numbers in these Rules and Regulations are solely for the convenience of


16


identifying and indexing the various provisions of these Rules and Regulations and shall in no event be considered otherwise in construing or interpreting any provision of these Rules and Regulations.

Actually it does and it certainly does change the way I have been defining “includes” included in that clause. See, this is why it’s good that people find other aspects of the contract.

But, I still contend that they can not completely change that clause to say something different that has nothing to do with what is written.

And that people implying that personal use excludes renters is not accurate.

 

[Sykes]

I think I see what you are getting at but do you think then DVC has the authority to change that clause in the contract and remove that definition or illustration and replace it with something else and it not be seen as a material change?

My understanding is they can not and with the new 2021 statute, even if they do, owners are not bound by new more limiting rules for renting.

Because the actual prohibition is on all commercial activity, and in later clauses Disney is very explicit about giving themselves fairly broad discretion in interpreting what constitutes commercial activity, I don't think that expanding that definition would represent a material change in the contract. I DO think that they would have trouble doing the inverse (suddenly saying "oops, we've decided that 'pattern of rental activity [.....]' no longer constitutes commercial activity").

To be fair, that's also a practical necessity. It would be unreasonable to expect Disney to precisely predict what a reasonable person would consider to be commercial activity 50 years in the future. For all we know, we could all be using AI and NFTs to swap points around in 20 years (probably not). So reasonable members would want Disney to be able to adapt to the changing environment.

And Disney is still constrained as a fiduciary. They still have to do what they believe is in the best interests of the membership as a whole, and they still have to follow the broader mandates in the contract. I just don't think that the commercial activity illustration constrains them that much at all. And I think that there is a whole lot of room there and within the requirements of the 2021 statute for them to make some adjustments.

(I should also reiterate that I don't actually personally think that big changes are coming--I think that they will tactically go after the big fish and maybe the intermediaries. Imagine how much damage they could do to the rental market by suing the big intermediaries out of existence and forcing all renting to be person-to-person.)

 

[Sandisw]

Because the actual prohibition is on all commercial activity, and in later clauses Disney is very explicit about giving themselves fairly broad discretion in interpreting what constitutes commercial activity, I don't think that expanding that definition would represent a material change in the contract. I DO think that they would have trouble doing the inverse (suddenly saying "oops, we've decided that 'pattern of rental activity [.....]' no longer constitutes commercial activity").

To be fair, that's also a practical necessity. It would be unreasonable to expect Disney to precisely predict what a reasonable person would consider to be commercial activity 50 years in the future. For all we know, we could all be using AI and NFTs to swap points around in 20 years (probably not). So reasonable members would want Disney to be able to adapt to the changing environment.

And Disney is still constrained as a fiduciary. They still have to do what they believe is in the best interests of the membership as a whole, and they still have to follow the broader mandates in the contract. I just don't think that the commercial activity illustration constrains them that much at all. And I think that there is a whole lot of room there and within the requirements of the 2021 statute for them to make some adjustments.

(I should also reiterate that I don't actually personally think that big changes are coming--I think that they will tactically go after the big fish and maybe the intermediaries.)

Can you please point me to the parts of the contract that uses the terms commercial activity?

I only ask because I do not see that and it was suggested that the actual terms he used.

I only see commercial purpose in relation to commercial enterprise/practice.

Since the word commercial has been used to by others to define all renting, it would be helpful to have the contract clauses that help to differentiate because I am not seeing anything to that nature.

And I do agree with you in the sense that they will go after those who are commercial enterprises but I think that will be it.

I do not expect them to put in rules that don connect to having that pattern and be tied to commercial enterprise because I have not yet found language to the contrary.

 

[lowlight]

That is not a definition, that is an illustration. They are VERY different things in a contract. You are interpreting it as constraining Disney, which it absolutely does not do. Instead, it illustrates an example of what they consider to be violating the personal use restriction, and then it explicitly gives Disney absolute discretion (within the bounds of reasonableness) to define what constitutes commercial activity.

Yes, this is the same argument I made in the thread with walking. Inclusive vs exclusive. They aren’t going to define 80 ways something can be against the rules. This is the rule- anything else is against this rule.

 

[Sykes]

Can you please point me to the parts of the contract that use the terms commercial activity?

I only ask because I do not see that. I only see it in relation to commercial enterprise/practice. And I am one who does think words matter.

I think it's the same section you've been referring to, I just interpret it to have a broader mandate than you. It might be easier for me to express my position by breaking it down a bit more ...

Except as set forth above, use of Vacation Homes and recreational facilities for commercial purposes or any purposes other than the personal use described in this Declaration is expressly prohibited,

IMO, this clause is doing most of the work. It's an extremely broad restriction. If I understand your position correctly, you are interpreting it to mainly be trying to prohibit people from running businesses out of their DVC villas (e.g. you can't open your own Bibbidi Bobbidi Boutique in your VGF 2BR). But then ...

"Commercial purpose" includes a pattern of rental activity or other occupancy by an Owner that the Board, in its reasonable discretion, could conclude constitutes a commercial enterprise or practice.

... makes it clear that certain types of rental activity can indeed be considered a commercial practice, so we know for sure that it's not just what happens inside the villa that matters but also how you rent, and ...

From time to time, to the extent that the board determines that use is occurring that is for a commercial purpose, the Board may in its sole and absolute discretion, adopt policies to provide what constitutes a commercial enterprise, practice or purpose.

... the board gets broad discretion to determine what types of rentals and other activities constitute commercial practices.

I think we agree that Disney doesn't intend to restrict all renting--there's too much language in the contracts that would be rendered meaningless if that was the case. But I do think that Disney has broad discretion to determine a) what constitutes commercial renting, and b) how to best implement controls to combat commercial renting, as long as 1) a hypothetical "reasonable person" would agree with their definition of commercial (or a violation of the personal use restriction), and 2) they do it in a way that aligns with the best interests of the membership.

That is to say that I think that the line of what constitutes "renting for a commercial purpose" is intentionally vague and is mostly Disney's to draw as they see fit.

 

[Sandisw]

I think it's the same clause you've been referring to, I just interpret it to have a broader mandate than you. It might be easier for me to express my position by breaking it down a bit more ...

IMO, this clause is doing most of the work. It's an extremely broad restriction. If I understand your position correctly, you are interpreting it to mainly be trying to prohibit people from running businesses out of their DVC villas (e.g. you can't open your own Bibbidi Bobbidi Boutique in your VGF 2BR). But then ...

... makes it clear that certain types of rental activity can indeed be considered a commercial practice, so we know for sure that it's not just what happens inside the villa that matters but also how you rent, and ...

... the board gets broad discretion to determine what types of rentals and other activities constitute commercial practices.

I think we agree that Disney doesn't intend to restrict all renting--there's too much language in the contracts that would be rendered meaningless if that was the case. But I do think that Disney has broad discretion to determine a) what constitutes commercial renting, and b) how to best implement controls to combat commercial renting, as long as 1) a hypothetical "reasonable person" would agree with their definition of commercial, and 2) they do it in a way that aligns with the best interests of the membership.

That is to say that I think that the line of what constitutes "renting for a commercial purpose" is intentionally vague and is mostly Disney's to draw as they see fit.

I don’t interpret that clause to mainly mean what happens in the room but that is part of it based on the statement “occupancy by an owner…” so it’s covering both ways personal use csn be definitely.

I just want to add that the SSR POS does say that the board as adopted a definition and it’s on file with the what association.

I intend to request it as an SSR owner. It certainly states they have one. If it has been changed or eliminated, then they should be able to tell me that.

ETA: at least we do agree that the rules needs to be reasonable and be able to support a commerical purpose.

IMO, restricting what rooms can be rented, how you rent, and where you find a renter would not be reasonable ways to define commercial enterprise, practice or purpose.

Here is what clause.

 

[Sandisw]

Yes, this is the same argument I made in the thread with walking. Inclusive vs exclusive. They aren’t going to define 80 ways something can be against the rules. This is the rule- anything else is against this rule.

Actually, when it comes to walking, and the terms of the DVC membership agreement, they do have to include the limitations in the home resort rules and regulations.

It states that the HRR have to include both the procedure and limitations cancellations and other things. This is SSR.

So, that language does indeed need to be included per what the DVC membership agreement states.

 

[HyperspaceMountainPilot]

I think it's the same section you've been referring to, I just interpret it to have a broader mandate than you. It might be easier for me to express my position by breaking it down a bit more ...

IMO, this clause is doing most of the work. It's an extremely broad restriction. If I understand your position correctly, you are interpreting it to mainly be trying to prohibit people from running businesses out of their DVC villas (e.g. you can't open your own Bibbidi Bobbidi Boutique in your VGF 2BR). But then ...

... makes it clear that certain types of rental activity can indeed be considered a commercial practice, so we know for sure that it's not just what happens inside the villa that matters but also how you rent, and ...

... the board gets broad discretion to determine what types of rentals and other activities constitute commercial practices.

I think we agree that Disney doesn't intend to restrict all renting--there's too much language in the contracts that would be rendered meaningless if that was the case. But I do think that Disney has broad discretion to determine a) what constitutes commercial renting, and b) how to best implement controls to combat commercial renting, as long as 1) a hypothetical "reasonable person" would agree with their definition of commercial (or a violation of the personal use restriction), and 2) they do it in a way that aligns with the best interests of the membership.

That is to say that I think that the line of what constitutes "renting for a commercial purpose" is intentionally vague and is mostly Disney's to draw as they see fit.

I enthusiastically agree with all of this and I owe you a huge favor because I think summarizing what I wanted to say so clearly has finally given me peace to move on from arguing semantics and contractual concepts on this thread.