Legal issues/delinquent dues and ROFR

[mwwagner]

Anybody familiar with the legal/financial intricacies of DVC and ROFR?

I have a contract that, from a price standpoint, is too good to be true. I am buying form a company with very mixed reviews online but after much research I decided I could mitigate the risk of getting "ripped off" (via credit card buyer's protection) and was willing to put up with many potential headaches that result from dealing with what many describe as extreme negligence at this company to take a shot at a GREAT deal.

So my question is this, are there legal issues or perhaps delinquency issues relative to MF's that might make passing ROFR feasible despite a very low purchase price?

Could the company get POA on a contract or get "an option" to buy a contract that is delinquent in fees and then put it up for sale and just execute the contract if they find someone to buy at a price above the amount the give the onwer and disney in back fees? (IE- flip the contract) This type of thing takes place quite frequently with houses and foreclosures and I'm just wondering if this type of creative arrangement (or any other arrangement) could produce a GREAT price that gets past DVC ROFR?

I guess I'm asking if any of the veterans know of certain legal or delinquency issues that might produce surprise ROFR waivers (can you tell I really want to pass ROFR on this one )??

TIA for any input!

 

[CarolMN]

AFAIK, all loans must be satisfied and annual fees must be current and paid thru the calendar year before closing can occur.

If the loan or fees are sufficiently behind, Disney will just foreclose. I do not think a scenario such as you describe is likely or even very profitable for a third party. YMMV.

 

[JimMIA]

I believe Carol is right.

There are lots of legal and financial issues that can complicate a closing, but I don't think any of those make any difference to Disney. If they exercise ROFR, they are simply taking your place as the purchaser at $57 per point.

If the seller is upside down in their loan or behind in their dues, they will have to pay in or there will be no closing. Disney is certainly not going to waive any deficiency to let them out of their financial obligation.

 

[mwwagner]

I believe Carol is right.

There are lots of legal and financial issues that can complicate a closing, but I don't think any of those make any difference to Disney. If they exercise ROFR, they are simply taking your place as the purchaser at $57 per point.

If the seller is upside down in their loan or behind in their dues, they will have to pay in or there will be no closing. Disney is certainly not going to waive any deficiency to let them out of their financial obligation.

I agree Disney wouldn't waive anything. I've just not seen any "distressed" contracts for sale so I thought perhaps agents/resellers had some process to present a clean contract for sale and then "clean it" once under contract.

for example, a distressed seller approaches an agent and says I am 2 years behind on dues and can't pay them. I just want out. The agent or reseller then says, OK i will agree to an "option to buy" this from you for say $2000 within the next 2 months and I will pay those fees if I exercise my option. Seller says YES. Agent/reseller markets and sells property to me for $57 pp ($8600). Escrow company takes money and submits for ROFR. IF it passes, dues are paid out of escrow, seller is paid $2000 out of escrow and agent makes $4000+ profit. I know this may sound like a stretch if you've never heard of this sort of thing but I promise it happens all the time in traditional real estate (taxes instead of dues).

I'm kinda grasping at straws but I'm just trying to wrap my head around why someone would agree to sell so far below market. They would have to be distressed in some way and I was hoping that distress might bolster my chances to slide thorugh ROFR.....Thanks for the insights and letting me talk/type thorugh this as I struggle to understand. I guess these mental acrobatics are my way of dealing with the torment of waiting

 

[supersnoop]

In the negotiations, who is paying the delinquent dues? Some one is on the hook for them.

 

[mwwagner]

In the negotiations, who is paying the delinquent dues? Some one is on the hook for them.

The above was a hypothetical example. Just trying to illustrate how an agent or reseller could "present a clean contract for sale" and only expend the money to "clean it" only after that had a contract to sell it....

I don't know that my contract had any of this going on. I am guaranteed a clean title with 2015 MF being my first (also 2015 being my first points).

 

[CMouser]

I am currently in rofr and I asked my broker if the seller owed any maint fees for 2014 and she stated it doesn't matter because any owed maint fees and late fees will come out if the proceeds from the sale. Is that true?

 

[disneynutz]

I am currently in rofr and I asked my broker if the seller owed any maint fees for 2014 and she stated it doesn't matter because any owed maint fees and late fees will come out if the proceeds from the sale. Is that true?

Disney provides the broker with the status of the contract. Any monies owed must be paid prior to closing.

Bill

 

[CMouser]

So when she stated it would come out if the proceeds at closing that is not correct ? I am assuming that everything has to be paid before they receive our check ? I am so confused ?

 

[supersnoop]

So when she stated it would come out if the proceeds at closing that is not correct ? I am assuming that everything has to be paid before they receive our check ? I am so confused ?

It's just like closing on a house. The closer figures out who is owed what, and pays everyone. The seller doesn't get any money until everyone else is made whole. If there were dues and/or a mortgage outstanding, the seller might even have to bring money to the table, not walk away with any.

 

[Dean]

Anybody familiar with the legal/financial intricacies of DVC and ROFR?

I have a contract that, from a price standpoint, is too good to be true. I am buying form a company with very mixed reviews online but after much research I decided I could mitigate the risk of getting "ripped off" (via credit card buyer's protection) and was willing to put up with many potential headaches that result from dealing with what many describe as extreme negligence at this company to take a shot at a GREAT deal.

So my question is this, are there legal issues or perhaps delinquency issues relative to MF's that might make passing ROFR feasible despite a very low purchase price?

Could the company get POA on a contract or get "an option" to buy a contract that is delinquent in fees and then put it up for sale and just execute the contract if they find someone to buy at a price above the amount the give the onwer and disney in back fees? (IE- flip the contract) This type of thing takes place quite frequently with houses and foreclosures and I'm just wondering if this type of creative arrangement (or any other arrangement) could produce a GREAT price that gets past DVC ROFR?

I guess I'm asking if any of the veterans know of certain legal or delinquency issues that might produce surprise ROFR waivers (can you tell I really want to pass ROFR on this one )??

TIA for any input!

As noted, basically the contract would have to be made whole to close OR DVC would not change the registration over to your name OR if they did, they'd require and fees to be paid by the new owner. However, there is one situation that in the past has caused them to sign off on ROFR at a price below their cutoff. That situation is when there is a foreclosure and they are the party doing so. I know it's happened in the past at least twice, once to the point where a broker I know was upset with them and called DVD to check on it, it was 8% below the floor at the time on ROFR and when ROFR was very active before it slowed down with the economy.