How do I purchase a contract from a friend

[alwechsler]

A friend who has a Disney contract and does not use it wants to sell it to me. I already own a couple of contracts, but I bought them from resale brokers. How do we go about doing this? Does anyone know about the realistic buy back numbers as of now? I know they are buying back a lot of them. This is a 330 pt Old Key West with 100 pts banked from last year.

I would appreciate any input.

Thanks in advance!

 

[Dean]

You need a valid contract signed by both parties. It must have a value on it. Indications are that the buy back price may be up around $72 pp. Of course you could make a private deal with your friend to ensure it'd go through. You then send it do DVC Member Administration by snail mail or fax. I can give you the fax number if you want, just email me directly. Once you'd got DVC's approval, you must then get a deed, have it signed by all parties, have it recorded and send a copy to DVC. The deed before the recording is usually enough from what I'm hearing. Deed prep and recording from Voigt and Voigt has gone up to $300 for a 3 page deed. You could also do a quit claim deed I suppose. You might even be able to do the deed yourself using the old one as a template and check with Orange County for the actual recording fees and send it to them.

 

[alwechsler]

I am not sure that I understand what you mean. Could explain further?

Thanks!

 

[Dean]

OK, let me try again. I'm going to get pretty basic so forgive me if I come across in a way I don't intend.

Your friend wants to sell you their DVC points. You two need to produce a contract, it can be very simple, look back at your two previous ones when you bought before, I presume from a resale broker. All it needs to state is the parties, who's selling what to who and have signitures and the dates. Make sure all parties sign it. Divorces and the like can complicate matters signficantly. As it turns out there needs to be a selling price or value on this for the committee to consider it. Once you have the contract, just fax or send it to DVC Member Administration.

After that you wait up to 30 days to hear back from DVC. If they decide to excercise theri Right of First Refusal, they buy it and you're out of luck but your friend is in the same position he would be financially if you bought it. If they give their apporval, the deal can go through. That means that you would then need to have a deed prepared, signed, notarized and sent to Orange Co for recording with the proper fees. DVC would also need to get a copy of the deed to change the ownership over.

You and your friend should know that once a determination is made they will cancel any pending reservations regardless of who's name their in. You also need to be aware of the price unless you don't care if DVC buys it back. You could always put a price of $72-75 per point and then your friend could rebate back to you the difference in that and your agreed upon price. Obviously that's a little questionable but it's done all the time.

Your friend must be a member in good standing. That means not behind on any payments or fees. He will also have to pay it off at some point if there's a loan attached but I'm not sure at what point this has to happen for the deal to go forward. I'd assume the issue is important either when it's submitted to DVC or before they'll change the ownership.

As for getting the deed done, you could have a closing company do the entire thing just like with most resales through a broker or ask them to do as much or little as you need. A full closing will likely be close to $500, just deed and recording along with the signitures is around $280-300. Companies I'd consider are Voigt and Voigt, Sunbelt Title (I think they're still around), Holland and Knight, Timeshare Closing service and First
American. The latter 3 were recommended by DVC to me but I've used the first 2 and they were fine.

Does this answer your question better?

 

[Cruelladeville]

Does your friend own the contract outright--you can't assume the contract if he's still paying on the contract to Disney. You cannot assume the mortgage on the contract, but you can get other financing, and pay off Disney. It just makes things a little more complicated if there is still a balance owing.

 

[JVL1018]

I just bought a 25 point add on from a friend,,we agreed on a price..but put a higher price in the actual contract on the off chance Disney would buy it back. I would've paid the higher price, but my friend was very generous(she was selling all her BWV to buy BCV)
My BIL is an attorney here in NJ, so he drew up all the paperwork(for free ).
My lawyer called Disney to doublecheck what they wanted the contract to say, and they gave him all the info they needed. He drew it up, we both signed, I gave a check to my friend, and right now the contract is siiting around in FL waiting to be recorded. It went very well.

 

[FredS]

I think it might be money well spent to pay for a professional to handle this transaction. Real estate gets tricky and far too often problems with title and other legalities can rear their ugly head.

Perhaps with a very small contract I'd be willing to risk it, but I think it might be a wise expenditure of $200-300.

And I hate to sound preachy, but I think it is important to respond to the post about lying about the true sales price. While it is acceptable to put a lesser cash amount and add some language about "and other valuable consideration" to some type of contracts, to put a sales price on a contract which is fraudulently inflated to defeat Disney's right of first refusal is illegal. I just don't want someone to read the earlier post and think that other posters here, such as myself, all think that is appropriate. In most states attorneys take oaths vowing to not knowingly participate in such activities which violate the law.

 

[Dean]

Originally posted by FredS
I think it might be money well spent to pay for a professional to handle this transaction. Real estate gets tricky and far too often problems with title and other legalities can rear their ugly head.

Perhaps with a very small contract I'd be willing to risk it, but I think it might be a wise expenditure of $200-300.

And I hate to sound preachy, but I think it is important to respond to the post about lying about the true sales price. While it is acceptable to put a lesser cash amount and add some language about "and other valuable consideration" to some type of contracts, to put a sales price on a contract which is fraudulently inflated to defeat Disney's right of first refusal is illegal. I just don't want someone to read the earlier post and think that other posters here, such as myself, all think that is appropriate. In most states attorneys take oaths vowing to not knowingly participate in such activities which violate the law.

To get any real protection you'd need to spend more like $650 or so with a full closing and title insurance. As to your other comment, I don't know about the legality and mentioned it because it's done all the time. I too have some question about the ethics, so don't shoot the messenger. I can tell you that DVC won't sign off without a price on the "other valuable considerations". There are ways around this to make it technically legal but the ethics would still be in question. I can tell you I know of this type of issue even when sales have gone through a broker and closing agent, for what it's worth.

 

[FredS]

Originally posted by Dean
To get any real protection you'd need to spend more like $650 or so with a full closing and title insurance. As to your other comment, I don't know about the legality and mentioned it because it's done all the time. I too have some question about the ethics, so don't shoot the messenger. I can tell you that DVC won't sign off without a price on the "other valuable considerations". There are ways around this to make it technically legal but the ethics would still be in question. I can tell you I know of this type of issue even when sales have gone through a broker and closing agent, for what it's worth.

I closed through a well-known and respected resale real estate company and paid $400 for all closing costs, including title insurance. I would assume it could be done even a bit cheaper, since I did not "shop around" for these services.

Also, I am saying that on certain types of contracts, such as those conveying property between family members where there is no issue of ROFR it is common to put some notation of "other valuable consideration" since a contract, in most areas, must have "valuable consideration" to BE a contract. I am distinguishing that type of contract from one such as these wherein DVC has a right of first refusal. It is clearly fraud to put an inflated, untrue figure on the contract to defeat DVC's ROFR.

 

[Dean]

Originally posted by FredS
I closed through a well-known and respected resale real estate company and paid $400 for all closing costs, including title insurance. I would assume it could be done even a bit cheaper, since I did not "shop around" for these services.

I haven't heard of a DVC closing less than about $450 without title insurance in quite a while. I don't think you'll have much luck closing for $400 with title insurance unless you do much of the work yourself. As for the pricing, I can tell you that DVC will not give their waiver of a right of first refusal unless you put a $$ value on the "other valuable considerations". I will say again that "rebates" of purchases are done not that uncommonly when friends and family are transferring ownership of DVC and at times in other situations. I'll leave the legalities and ethics up to others as it doesn't affect me personally one way or the other. There are however many variations of this type of activity. It's not just cash rebates but many times other property, vehicles and the like.

 

[JVL1018]

Originally posted by FredS

And I hate to sound preachy, but I think it is important to respond to the post about lying about the true sales price. While it is acceptable to put a lesser cash amount and add some language about "and other valuable consideration" to some type of contracts, to put a sales price on a contract which is fraudulently inflated to defeat Disney's right of first refusal is illegal. I just don't want someone to read the earlier post and think that other posters here, such as myself, all think that is appropriate. In most states attorneys take oaths vowing to not knowingly participate in such activities which violate the law.

.
We didn't use any escrow or anything, so my BIL never saw the amount of the check, now I'm feeling really bad about the fact that I could have gotten him in trouble.
It truly never crossed my mind that it would be wrong, as my friend got about the same amount of $$ in the end as she would have if I had paid the couple of dollars more per point stated in the contract. She was going to pay the fees to record it and all that, but after she told me how much she wanted the check for, I took care of that, so she ended up with about the same amount of $$, as she would have if she had taken the full amount, and then paid for the costs associated with recordeing the deed.
If I'm ever lucky enough to add on again, I won't make the same mistake..thanks for correcting me!!

 

[FredS]

Originally posted by Dean
As for the pricing, I can tell you that DVC will not give their waiver of a right of first refusal unless you put a $$ value on the "other valuable considerations".

Of course DVC must have a true dollar figure! Again, I was specifically distinguishing DVC contracts from others which can, without violating any laws, not specifically address the true amount, if any, which was paid for the property referenced in the contract.

I was trying to show the difference between this type of contract, with a third-party having the right of first refusal, thus a right to the true terms of the proposed sales, as to other contracts the poster might have seen or been involved in where it was not illegal, unethical or anything else "bad" to not put the complete and accurate terms.