DVC T &C Personal Use - Only Thread to Discuss.

[Sandisw]

I'm not buying that we have the whole picture. The "up to the value of your annual dues" cap seems somewhat arbitrary and will vary from resort to resort when translated into rental fees. As some have said, in the not-to-distant future, you'll need to rent out 110% of your points just to pay for your dues at Vero Beach.

Plus, while there has always been a requirement to have a rental agreement in place, a person can put any rental rate they want on it, then collect a different amount. It's literally the biggest non-secret in California that people put down ridiculously low sales prices on private sale used car transactions, because the state charges sales tax based on the self-reported sales amount. I'd wager 90% of the used cars sold in CA between private parties, "sell" for $500 to$1,000. And that's under penalty of perjury and considered tax fraud subject to civil and criminal penalties. I've heard it jokingly said that California is the home of the $500 E Class.

If I provide a rental contract that states I charged $10 per point to rent, there is absolutely no way Disney can refute it. They can't subpoena my bank records, and even if they did ask for a copy of any electronic funds transfers, I get the rental money in two payments for $10 PP each and only provide one to Disney. They'll never be able to tell how much I received as all documentation is provided by me. I have a contract that says $10 PP, and I have a receipt for an electronic funds transfer for $10 PP. It's too easily gamed.

Disney isn't stupid and knows from experience that people are going to try to lie and cheat their way around anything that costs them or makes them money. I'm going to wager there's more brewing on the back end.

If DVC believes that you are in violation and contacts you, it will still be up to DVC to decide if you have proof to dispute their review.

If they feel that your actions don’t make sense, they can enforce the clause and force you to fight them.

They also know already who the big time players are.

For the average owner, if one needs/wants to rent, owners are being told that renting to offset your annual dues continues to be considered acceptable.

 

[lowlight]

The more I think about this, the less I like it, and I hope and believe that this isn't the actual enforcement standard.

If you take someone with a 4000 point contract-

1) Under the last known stated enforcement threshold (20 reservations per year), if that owner rented a week in early February at AKL in a RV Studio for 100 points per week, 20 reservations would be 2000 worth of points to rent, and they couldn't do any personal reservations above that limit so the rest of their points would be useless.
2) Under the suggested enforcement threshold (rental to recoup dues), if that owner rented a week in early February at AKL in a RV Studio for 100 points per week, at 19 per points which is about what AKL goes for, that's 2029 worth of points to rent. So you can actually rent more points with DVC's blessing now.
3) It will actually drive up demand for spec rentals from people who are just renting to pay for their vacations, as they will be the quickest way to recoup your dues. If you rent that week in early February at AKL in a RV for 100 points at 19 a point, that gets you $1900 towards your $38560 annual dues on 4000 AKL points. To hit the dues income cap, it will take 2029 worth of points. If you get a good spec rental week, say the AKL value for 69 points during this week, you can likely get 27/point, allowing you to hit the dues cap quicker, only using 1428 points, leaving you with an extra 600 points to use for your vacations.

Not to mention all the loopholes it opens up. And what incentive does DVC have to say "you can rent half your points" at this moment when nobody has any idea what the threshold is? From an enforcement standpoint, you want wiggle room and ambiguity, even if at some point you have to tell the owner what the pattern was that got them. None of this makes any sense now that I've thought about it, but maybe I'm not understanding and I hope someone points it out if so.

 

[Sandisw]

The more I think about this, the less I like it, and I hope and believe that this isn't the actual enforcement standard.

If you take someone with a 4000 point contract-

1) Under the last known stated enforcement threshold (20 reservations per year), if that owner rented a week in early February at AKL in a RV Studio for 100 points per week, 20 reservations would be 2000 worth of points to rent, and they couldn't do any personal reservations above that limit so the rest of their points would be useless.
2) Under the suggested enforcement threshold (rental to recoup dues), if that owner rented a week in early February at AKL in a RV Studio for 100 points per week, at 19 per points which is about what AKL goes for, that's 2029 worth of points to rent. So you can actually rent more points with DVC's blessing now.
3) It will actually drive up demand for spec rentals from people who are just renting to pay for their vacations, as they will be the quickest way to recoup your dues. If you rent that week in early February at AKL in a RV for 100 points at 19 a point, that gets you $1900 towards your $38560 annual dues on 4000 AKL points. To hit the dues income cap, it will take 2029 worth of points. If you get a good spec rental week, say the AKL value for 69 points during this week, you can likely get 27/point, allowing you to hit the dues cap quicker, only using 1428 points, leaving you with an extra 600 points to use for your vacations.

Not to mention all the loopholes it opens up. And what incentive does DVC have to say "you can rent half your points" at this moment when nobody has any idea what the threshold is? From an enforcement standpoint, you want wiggle room and ambiguity, even if at some point you have to tell the owner what the pattern was that got them. None of this makes any sense now that I've thought about it, but maybe I'm not understanding and I hope someone points it out if so.

It simply means that DVC is advising owners, who are asking, what they will be allowed to do under the terms of the contract.

And that is renting to offset dues and if they feel the activity on your account appears to be commercial, then you will be flagged.

This has been allowed for years and all DVC is doing is enhancing the enforcement of policies that exist.

I do know that I am no longer the only one who has been told this..beyond what has been reported here.

What incentive does DVC have to instruct their MS supervisors to outright lie to owners? It’s recorded and TBH, the amount of information that was shaed and the details, it was clear she had approval to say what she did.

Ill be discussing directly with those who are responsible at DVC for providing me with the requested policy the POS says exists.

But, hey, if people have concerns about what owners are being told, they definitely should be contacting DVC and talking to the supervisors directly to get their own answers!

 

[DonMacGregor]

If DVC believes that you are in violation and contacts you, it will still be up to DVC to decide if you have proof to dispute their review.

Then the requirement for documentation (rental agreement, proof of payment), and the "up to your dues amount" cap become moot, because ultimately, DVC can potentially decide that your written "proof" doesn't satisfy their unwritten requirements, and you're back to an invisible renting threshold.

Hypothetically, if you say you rented the points for $10 each, you have a contract that states you will receive $10 per point, and you provide a receipt from your bank for a funds transfer equal to $10 PP, and Disney STILL doesn't believe you (which they would be smart not to), then Disney is left to say "Well, you've given us all of this "proof" that on paper supports your $10 PP rental, but we still don't believe you so we're cancelling the reservation." And THAT puts Disney is a worse position than they are in now, where they haven't given anyone a roadmap to game the system.

The more concrete and transparent you make the process, the fewer variables a cheat needs to worry about, and the easier it is to game the system.

 

[RamblinWreck]

Pretty silly to consider any amount of rental income in excess of dues, in any year, commercial use.

In order to make owning DVC points profitable, you’d have to rent significantly more than that.

 

[lowlight]

It simply means that DVC is advising owners, who are asking, what they will be allowed to do under the terms of the contract.

And that is renting to offset dues and if they feel the activity on your account appears to be commercial, then you will be flagged.

This has been allowed for years and all DVC is doing is enhancing the enforcement of policies that exist.

I do know that I am no longer the only one who has been told this..beyond what has been reported here.

What incentive does DVC have to instruct their MS supervisors to outright lie to owners? It’s recorded and TBH, the amount of information that was shaed and the details, it was clear she had approval to say what she did.

Ill be discussing directly with those who are responsible at DVC for providing me with the requested policy the POS says exists.

But, hey, if people have concerns about what owners are being told, they definitely should be contacting DVC and talking to the supervisors directly to get their own answers!

I'm not saying the information you were given was wrong, though I do hope it was. I'm saying if this is the enforcement threshold they've decided on, they've screwed the pooch. Renting to offset dues has officially, on the record, been allowed for years? Must have missed that.

 

[Sandisw]

Then the requirement for documentation (rental agreement, proof of payment), and the "up to your dues amount" cap become moot, because ultimately, DVC can potentially decide that your written "proof" doesn't satisfy their unwritten requirements, and you're back to an invisible renting threshold.

Hypothetically, if you say you rented the points for $10 each, you have a contract that states you will receive $10 per point, and you provide a receipt from your bank for a funds transfer equal to $10 PP, and Disney STILL doesn't believe you (which they would be smart not to), then Disney is left to say "Well, you've given us all of this "proof" that on paper supports your $10 PP rental, but we still don't believe you so we're cancelling the reservation." And THAT puts Disney is a worse position than they are in now, where they haven't given anyone a roadmap to game the system.

The more concrete and transparent you make the process, the fewer variables a cheat needs to worry about, and the easier it is to game the system.

I was referring to situations where DVC may feel that the actions of owners appear to be untruthful which is what you said.

I am sure that DVC has thought of how to enforce this when they see have doubts that the owners are trying to scam.



Let’s be real, nothing DVC does is going to stop the most hard line cheaters out there.

IMO, it’s a common sense approach that balances the rights of owners and makes it much harder for owners to be part of multiple memberships controlling thousands of points and renting the bulk of them for more than dues.

As said, people who have concerns should talk to DVC directly but I am confident I was given accurate information as to what owners will be allowed to do.

 

[mkatsy]

The brokers don’t pay any taxes on your behalf. You are responsible for that. You get a check for the amount and a 1099 at the end of the year, except for David’s who doesn’t issue one for the amount they paid you.

It’s like how I get paid as an independent contract for my job. I get paid my commission and it’s my responsibility to pay taxes owed.

No different then owners who rent on their own,,,they get paid a set rate and any taxes owed are their responsibility.

Does the broker remit the 6% sales tax on the transaction for you? If they do … the amount you get paid + the sales tax remitted on your behalf = gross revenue ( sales tax is your debt to the state. If the broker pays your debt, it’s the same as paying you)

 

[Sandisw]

I'm not saying the information you were given was wrong, though I do hope it was. I'm saying if this is the enforcement threshold they've decided on, they've screwed the pooch. Renting to offset dues has officially, on the record, been allowed for years? Must have missed that.

Yes, owners have been told that directly, especially by guides.

And, owners who have been doing it have been allowed to do it.

That’s the thing…DVC doesn’t volunteer information they want vague, but when directlly asked? Many times you can get them to be clearer.

At this point, I am happy with the answer so far and hope I can further confirmation when DVC contacts me in response to my written request!

 

[Sandisw]

Does the broker remit the 6% sales tax on the transaction for you? If they do … the amount you get paid + the sales tax remitted on your behalf = gross revenue ( sales tax is your debt to the state. If the broker pays your debt, it’s the same as paying you)

Nothing in the contract discusses sales tax at all and from the way I understand it, you, as the owner are responsible for paying any and all taxes that are owed on rentals.

No different than if you are an owner renting on your own.

Many owners, at least from what I have read, don’t actually pay FL that specific tax.

When I did rent via a broker, no such info existed in the contract I had. It just listed the number of points I was renting, the price I would be paid, and the payout amounts.

It was $11/point and that was it. If they were paying something on an owners behalf that is owed to that state, I’d have to guess they’d have to provide that to an owner so they have proof it’s been paid.

 

[mkatsy]

Nothing in the contract discusses sales tax at all and from the way I understand it, you, as the owner are responsible for paying those taxes that are owed on rentals.

No different than if you are an owner renting on your own.

Most owners, at least from what I have read, don’t actually pay FL that specific tax.

It’s not enforced at this level. Understandably they focus their limited resources on individuals with multi million dollar tax debts, and shockingly there is no shortage of those folks to keep them busy. So then the gross is exactly as you explained it.

 

[Sandisw]

It’s not enforced at this level. Understandably they focus their limited resources on individuals with multi million dollar tax debts, and shockingly there is no shortage of those folks to keep them busy. So then the gross is exactly as you explained it.

I am sure that is why they don’t bother owners. Lol

I can definitely see DVC making it simple and using an average rental rate when deciding how it looks and take it from there but as I said, the supervisor had no idea how an owner’s account could be flagged.

It’s always been on a owner to follow the rules of the contract.

I have a hunch that the number of owners even renting to offset all dues is probably low and those who do rent, it truly is occasionally.

That leaves the big time players and for all we know, they have been warned already and that moving forward they know they are being watched.

I personally think this is going to be much harder for owners to rent to the degree that it’s worth it, even if they try to lie and cheat with fake rental agreements.

Will some of those controlling thousands of points try?

Probably…but I have to believe DVC, since it took 6 months to add the check box updates, has plans in place to catch as many as they can.

 

[Cyberc1978]

I appreciate all the information that @Sandisw have collected.

I will have it in mind in my future DVC endeavors and as I’ve said before I will continue to do whatever I have done. If DVC believes I’m in breach they will reach out and I will get in line.

 

[theww228]

First of all, a giant thank you to Sandisw for digging into all of this trying to sort it out as factually as possible and keeping everyone informed.

Only time will tell, but the way I see it is that they will look for half of your points to be in your name or names of regulars (folks that have a pattern of traveling on your points, this would be relatives and close friends). If the number of points used outside of this is over half it will create a flag and someone will manually review the file. If they see 6 reservations for every Disney race made in the names of different people every time and all name changes, it will start to give indications of renting if the points are more than half. To this point if an owner has a couple of people that rent from them constantly I think it won’t count toward the flag since they are repeat guests. Does it solve everything? No. Does it give a reasonable method to the madness? Maybe…. Only time will tell.

 

[DougEMG]

Renting to cover dues sounds like it should roughly be allowing you to rent half your points before your account is looked at. I would think that a commercial renters is trying to rent out all their points so this does seem like a reasonable first test so to speak. It will be interesting to see if they also keep that old 20 reservation rule as well. It also does allow them to cover what salespeople have said to people buying about renting to help pay for dues.

I wish though that us international owners could use our points to buy annual passes.

 

[HyperspaceMountainPilot]

So yes, I agree with the advice to ensure that income stays below dues, but can’t imagine a world where DVC are actually looking at the detail of each rental agreement.

I agree that income below dues is probably the minimum you need to avoid being at risk of some sort of enforcement action. I would be surprised if Disney is going to take any sort of claim (even with a purported contract) that you rented your points at a studio at $15/pt on a marathon weekend—even in the very unlikely event it’s true!

It’s on the owner to make sure they follow the rules and if they are flagged, support to DVC's satisfaction that they didn't earn income beyond dues....

I think Sandi is correct here, and is why I would not want to get anywhere close to the line. Assuming Sandi’s intel is correct, my rule of thumb is that the owner should be on the reservation (and actually show up, lol) at least 70% of the time—though if you’re renting very low profitability rooms, it’s probably easier to prove that you’re not in it for profit even if you rent half (or more) of your points. Keep in mind, Disney will see where you used your points and they have a very good idea of the rack rate for the rooms, so, for example, you’d probably need compelling evidence to explain to Disney why you spec rented a BW studio for $90 a night.

Just because you don’t scan your phone or magic band to open a door doesn’t necessarily mean you weren’t there.

I think you might be surprised to see all the ways Disney can prove you weren’t where you said you were…but more likely, it would be on you to prove you were there first.

Sorry, but this idea is grounded in nothing that DVC has done or said or what they have a responsibility to do.

This is not about the hotel division because in a way, this new policy could increase rentals because owners who are using their points will rent for less just to not let them expire.

This seems like a real risk to me, and I suspect Disney has considered it as well, and we will learn more details over time designed to stop this practice (or its fraudulent cousin— writing a contract for $5/pt but actually renting it at $25/pt).

I'm not buying that we have the whole picture. The "up to the value of your annual dues" cap seems somewhat arbitrary and will vary from resort to resort when translated into rental fees. As some have said, in the not-to-distant future, you'll need to rent out 110% of your points just to pay for your dues at Vero Beach.
<snipped>
Disney isn't stupid and knows from experience that people are going to try to lie and cheat their way around anything that costs them or makes them money. I'm going to wager there's more brewing on the back end.

Agree with everything you said. I was just telling a friend that I thought the policy Sandi announced was pretty generous but I would not skirt the line too closely or assume that Disney will take my word for it on rental valuations. I also think the last thing Disney wants is for DVCRM to have even more points to offer for prime studio reservations more cheaply, and the “no more income than dues” would potentially increase the rental market—unless Disney believes/knows that an enormous percentage of total DVC points are owned by exclusively commercial renters—in which case we should expect to see a lot more contracts coming on the market.