DVC's right to Amend the POS

[RobDoc]

In researching a POS to find the exact language allowing/directing DVC to reallocate Point Charts for any/all DVC Resorts, I also found the provision allowing DVC to amend policy as they deem necessary. In light of recent discussion about the changes regarding resale contracts purchased after March 20, 2011, I thought it might be worthwhile providing that information here.

The following is from the 8/98 Component Site Public Offering Statement (POS) for Disney Vacation Club at Hilton Head Island. (Note: this is NOT the original POS for HH which was originally available in early 1995.)

From Exhibit "H" to the Master Deed, Section VII "Miscellaneous Provisions", subsection 7.2 "Amendment of this Agreement":

"DVCMC in it's sole discretion may change the terms and conditions of this Agreement and the Home Resort Rules and Regulations. These changes may affect an Owner's right to use, exchange and rent the Owner's Ownership Interest and impose obligations upon the use and enjoyment of the Ownership Interest and the appurtenant Club membership. Such changes many be made by DVCMC without the consent of any Club Member and may adversely affect a Club Member's rights and benefits and increase or decrease the Club Member's costs of ownership. Further, although DVCMC generally is required to make such changes in a manner which, in its reasonable business judgement, improves upon the quality and operation of the Vacation Ownership Plan and furthers the collective enjoyment of its benefits by the Club Members taken as a whole, such changes under some circumstances may not be to the advantage of some Club Members and could adversely affect their ability to secure reservations when and where they want them. Notice of any amendment shall be mailed by DVCMC to each Club Member or to the designated representative of each Multiple Club Member at the Club Member's or designated representative's last known mailing address prior to its effective date."

 

[CarolAnnC]

Very interesting, but not surprising. Just confirms what we all know - DVC is not a democracy, LOL.

Thanks for sharing, Doc!

 

[mouseaider]

opening up a can of worms ????

The replies should be interesting to read !

​

 

[wdrl]

The BLT Master Declaration of Condominium has the same clause in Exhibit "G", Section 7.2.

There are several places in the MDCs of each DVC resort where it is stated that DVCMC may make changes at its "sole, absolute, and unfettered discretion." With such language, it permits DVCMC to make a wide range of unilateral changes to our membership agreements. However, one area where DVCMC's powers seem limited is in regard to the Home Resort Period. In Exhibit "G", Section 4.2.b of BLT's MDC, it states

DVCMC reserves the right in its sole, absolute and unfettered discretion, to extend or decrease the Home Resort Priority Period; provided, however, in no event shall the Home Resort Priority Period be for a period of less than one (1) month prior to the period during which the other Club Members have the right to reserve that Vacation Home during the Use Day. (emphasis added)

This is the only section that I have seen DVCMC acknowledge that its ability to change the MDC is limited.

 

[dd08]

I may be waaaaay off-base here, but I suspect this is the (or 1 of 2) aspects of the POS that Dean's has alluded to before that he has a problem with and could be successfully challenged.

 

[bobbiwoz]

Should we be getting letters telling of the change in resale contracts' status?

 

[dzorn]

Should we be getting letters telling of the change in resale contracts' status?

Yep that is what I thought when I read it.

Denise in MI

 

[dianeschlicht]

Should we be getting letters telling of the change in resale contracts' status?

One would hope so.

 

[drusba]

You should not jump to conclusions when reading sections that seem to give unlimited power to a DVD entity. First, you have to determine exactly what it applies to. For example, the section Webmaster Doc cites does not relate to the ability of DVCMC to adjust points needed per day since those documents mentioned to which the clause refers don't deal with that issue.

When reading you must do so carefully to determine what Disney can actually change, what is required to make that change, and when it actually has the so-called unfettered discretion -- it is actuallly less than an untrained observer may believe and even then it cannot make changes that are against the best interests of the members as a whole and it cannot change recognized material rights, such as diluting the ownership interest by selling more point than what it would take to fill the resort for a year or your right to rent subject to conditions established when you purchased.

That does not necessarily mean Disney could not do what it did. The actual section on adjusting points allows it to make adjustments "in order to meet club members' needs and expectations as evidenced by fluctuations in Use Day demand at the Condominium experienced by DVCMC during a given calendar year." That does not give it unfettered discretion. Moreover, my personal view is that DVCMC plainly violated that section when it made the changes, but only as to BLT. Why? because when it made the changes, BLT had no experience upon which to base a change since it had not opened yet and thus DVCMC did not have the "evidence" of fluctuations in demand at BLT that it needed as a required condition to making the change. Any BLT member who had purchased on reliance on the original points charts given to them had a right to complain and would, at the very least, been entitled to rescind their sale agreement and get their money back, but then how many owners really wanted to do that.

As to the change for the Disney Collections and resales, that is really something that mainly falls outside the agreements because the Disney Collection is a perk and they can change or end perks. They would have faced some serious issues if they had tried to bar all previous resale purchasers without the grandfather clause not so much because of the timeshare agreements but because too many promo materials were out there and too many representations had been made that would have led anyone to believe resale purchasers were just as entitled as anyone else to use the Disney Collection. The more serious issue created by that change is that is a clear statement to the members that DVD will act against the interests of the existing members when it believes it will help it in sales. In other words, you should assume for the future that DVD is not your friend even if you might have incorrectly believed that earlier.

 

[Dean]

Each section of each POS has it's own set of parameters for changes. They are all similar but not identical. A quick summary would say that DVC can do most anything they want with a few exceptions, esp if it doesn't clearly hurt the overall membership. When it comes to reservations, they can do literally anything; the same applies to the multisite POS and use of the "club" by members. There are limitations in some areas though such as they degree of reallocation in a year or the amount fees can go up in a year. Even then there are ways around it as the 2 year reallocation suggests. What they can't do is to take away benefits for home resort use that would be a detriment to the membership as a whole without having members themselves vote on them. The limits are centered on home resort usage. They also have a fiduciary responsibility to the membership for which they run a risk for both financially and potentially criminally.

 

[Chuck S]

Should we be getting letters telling of the change in resale contracts' status?

I don't think it is legally required. While the exchanges are part of the current DVC program, there is nothing in the POS that I am aware of that say we can transfer anything, other that our own resort ownership, to someone else.

In other words, since we don't legally "own" the ability to exchange, as the exchange options can change at any time for all owners, we can not sell the right to exchange to subsequent buyers. So in legal speak they are not restricting our right to sell, or other wise restricting current members.

 

[TisBit]

Should we be getting letters telling of the change in resale contracts' status?

I don't believe that will be an issue if ever challenged. If DVC had made the changes retroactive to previous resales, then yes you would have to be notified, but this change does not affect the membership as a whole or any existing member, but rather it only affects members that will buy later....when the change has already been put in place and the restrictions should be in the new contract.

That does not necessarily mean Disney could not do what it did. The actual section on adjusting points allows it to make adjustments "in order to meet club members' needs and expectations as evidenced by fluctuations in Use Day demand at the Condominium experienced by DVCMC during a given calendar year." That does not give it unfettered discretion. Moreover, my personal view is that DVCMC plainly violated that section when it made the changes, but only as to BLT. Why? because when it made the changes, BLT had no experience upon which to base a change since it had not opened yet and thus DVCMC did not have the "evidence" of fluctuations in demand at BLT that it needed as a required condition to making the change. Any BLT member who had purchased on reliance on the original points charts given to them had a right to complain and would, at the very least, been entitled to rescind their sale agreement and get their money back, but then how many owners really wanted to do that.

I believe what DVC would argues is that the POS does not require that they analyze bookings at only one resort. So DVC would say that based on the bookings of all the resorts in that area (WDW), they could easily deduce that out if all 6 of the resorts at WDW had the same booking trend, it is safe to say that BLT would have the same booking trends.....and it would be legally able to adjust its points value.

I think a better argument from BLT owners in a challenge would be more of a false advertising or bait and switch allegation. The challenge would basically say that the BLT points charts were published and used in the sales of BLT, with DVC knowing that they were going to change those point values in a short amount of time. DVC should have published the "end result" point charts for that new resort, prior to selling it.

 

[bookwormde]

POS has always been just a snapshot in time to allow buyers (from DVD) at that time to know what they are buying (at that moment). DVC can make any opperating changes that are allowed under FL timeshare regulations.

bookwormde

 

[DebbieB]

I got a message at work yesterday from Disney and it said to call them regarding a change in my membership. So I called them back and all it was that my guide retired (Susie Farnsworth) and my new guide wanted to introduce herself (try to sell me points...........). It's amazing that they don't have good communication on items that really affect my membership....

 

[kapeman]

In other words, you should assume for the future that DVD is not your friend even if you might have incorrectly believed that earlier.

QFT

Excellent analysis.

 

[BeccaG]

Further, although DVCMC generally is required to make such changes in a manner which, in its reasonable business judgement, improves upon the quality and operation of the Vacation Ownership Plan and furthers the collective enjoyment of its benefits by the Club Members taken as a whole..[/i]

I'm not looking for a fight, but I wonder what DVCM would say regarding the changes for resale purchasers in light of the above clause. I;m not sure how this change benefits me, a direct purchaser at all. Thoughts?

 

[Dean]

I'm not looking for a fight, but I wonder what DVCM would say regarding the changes for resale purchasers in light of the above clause. I;m not sure how this change benefits me, a direct purchaser at all. Thoughts?

It has no meaning since those options are no contractual. The POS deals with operation of a resort, the multi site POS deals with operation of the club. The add ons are additional benefits offered and with the written (fine print) notice that they can be altered or removed at any time and without notice.

I don't have the HH POS but for the WDW resorts that I've seen the POS, this language only directly refers to the "membership agreement" (club membership) and "Rules and Regulations", found in the multi site POS, not all sections of the POS. Other sections have their own amendment wording which generally is not as open and provides slightly more protection for the membership than do the areas that this refers to. These provisions are c/w both Marriott and Bluegreen documents as well, esp Marriott.

 

[RobDoc]

I'm not looking for a fight, but I wonder what DVCM would say regarding the changes for resale purchasers in light of the above clause. I;m not sure how this change benefits me, a direct purchaser at all. Thoughts?

If you read the quote in its entirety the policy is stated:

"Further, although DVCMC generally is required to make such changes in a manner which, in its reasonable business judgement, improves upon the quality and operation of the Vacation Ownership Plan and furthers the collective enjoyment of its benefits by the Club Members taken as a whole, such changes under some circumstances may not be to the advantage of some Club Members and could adversely affect their ability to secure reservations when and where they want them."

As Dean already noted, this references the Home Resort Rules and Regulations.

 

[Lil' Grumpy]

actually , this makes sense. some of the reasons can be found here
& the rise of resales. not resales per say, but those intending to
start a " point for rent" business, or those using "large number" of
points outside their home resorts, & a cheap way to do cruises.
[buying resales points instead of direct.]

dvc need to set limits & redirect back to the original meanings for
buying dvc direct. [ going by what we were told by the guides ].
dvc have employees that depends on their incomes so i can see the
need for making changes.

i have read how many "original" members , expressed how things are
going south and no longer feel special. they blame dvc greed, but there
are other factors and other types of greed.

i'll tell you why as a member , i am against all these using dvc
that are not members. the vandalism & those who do not
belong in a family resort. [ i am in the "people business" too &
it isn't difficult to recognize inappropriate behaviors especially
if one listens to the exchanges.]

also there are other factors. why would disney drive owners away when
they also support the parks' incomes? what gripe can a resale owner
have if they are forced to book @ their home resort? [ who buys an
used car & expect show-room quality? ] also i wonder what types of
people staling the shower heads & air mattresses? { confirmed by
blt workers.}

the more i learned about dvc, the more i can see how dvc can change
their rules to keep up with their ever-changing owners. for an example,
there should be a limit on owners that are renting out their points
more than once every 2 years. why should owners using dvc, pay
for "wear & tear" of those just renting?

once i got my family in the room. i spent some time exploring & interacting.
some talked about how their travel agents got them their rooms. disney
is using their rooms besides for dvc ownership. however, there are
"ethics" to the ways they manage these properties. if they are using
our dues to fix or maintain dvc property-where the "wear & tear"
are not from owners- or those they are giving away rooms, it is
the same same as stealing. blt is supposed to be for blt owners, dvc
owners, & their families. the room we had on the first floor had
major damages from vandalism-disney should be held responsible
not owners- since they allowed the guilty party to get by with these
damages. if dvc management think they can just "stick" these bills
on dvc owners , or used dues for bonuses, parties, then i would
think those "charges" would be illegal no matter how they change
their current rules.

the easiest way i know to break one's trust is to break your word.

 

[Chuck S]

actually , this makes sense. some of the reasons can be found here
& the rise of resales. not resales per say, but those intending to
start a " point for rent" business, or those using "large number" of
points outside their home resorts, & a cheap way to do cruises.
[buying resales points instead of direct.]

dvc need to set limits & redirect back to the original meanings for
buying dvc direct. [ going by what we were told by the guides ].
dvc have employees that depends on their incomes so i can see the
need for making changes.

i have read how many "original" members , expressed how things are
going south and no longer feel special. they blame dvc greed, but there
are other factors and other types of greed.

i'll tell you why as a member , i am against all these using dvc
that are not members. the vandalism & those who do not
belong in a family resort. [ i am in the "people business" too &
it isn't difficult to recognize inappropriate behaviors especially
if one listens to the exchanges.]

also there are other factors. why would disney drive owners away when
they also support the parks' incomes? what gripe can a resale owner
have if they are forced to book @ their home resort? [ who buys an
used car & expect show-room quality? ] also i wonder what types of
people staling the shower heads & air mattresses? { confirmed by
blt workers.}

the more i learned about dvc, the more i can see how dvc can change
their rules to keep up with their ever-changing owners. for an example,
there should be a limit on owners that are renting out their points
more than once every 2 years. why should owners using dvc, pay
for "wear & tear" of those just renting?

once i got my family in the room. i spent some time exploring & interacting.
some talked about how their travel agents got them their rooms. disney
is using their rooms besides for dvc ownership. however, there are
"ethics" to the ways they manage these properties. if they are using
our dues to fix or maintain dvc property-where the "wear & tear"
are not from owners- or those they are giving away rooms, it is
the same same as stealing. blt is supposed to be for blt owners, dvc
owners, & their families. the room we had on the first floor had
major damages from vandalism-disney should be held responsible
not owners- since they allowed the guilty party to get by with these
damages. if dvc management think they can just "stick" these bills
on dvc owners , or used dues for bonuses, parties, then i would
think those "charges" would be illegal no matter how they change
their current rules.

the easiest way i know to break one's trust is to break your word.

Let us suppose that what you say is true, though I personally see no evidence that cash guests cause more damage on average than a DVC owner or their personal rentals. Disney actually retains a pretty small percentage of ownership in a sold out resort. Most of the cash reservations in the system become available because an owner has opted to use points outside the DVC system of resorts. So technically, it is a DVC Owners reservation. Why should Disney be held responsible for what is really a DVC Owner reservation? Disney rented the unit for DVC to offset the cost of the trade.