Maintenance fees owed when buying

[jenntish]

We are getting to the contract phase of buying (finally!), and I was wondering if WE (as the buyers) are supposed to pay the 2006 Mt. Fees if the Use Year is December. There are no banked points and we would bet 150 points come 12/06. Do WE pay the MF or do the sellers???

 

[Blue&Gold]

Payment of dues are one of the negotiable items in the contract. Generally, buyers pay dues on unused points for 2 reasons--1st to help get the contract past ROFR, and 2nd because it "makes sense." Sellers will often "eat" the dues on banked or "distressed" points, but see no reason to do so on future points.

To your specific question, the Dec 06 "use year" runs from Dec 06-Dec 07. Since you will likely own the contract well in advance of this December, and you will be the one using those points for reservations, it follows that you reimburse the seller for 06 fees. DVC collects dues on a calendar year basis, but distributes points on a use year basis.

 

[Chuck S]

Fees/dues have nothing to do with use year, they are based upon a calendar year. As Blue&Gold stated, on a resale offer they are completely negotiable.

 

[Caskbill]

While maintenance fees are based on the calendar year and not the use year, there is a way to determine who should pay fees when not all points are going to be available for the sale.

Disney prorates fees based on how many months are left in the calendar year. You can do the same for a resale contract. In your case, you would only have 1-month of usage of the points during 2006, so you should only reimburse the seller for 1/12th of the 2006 fees they paid in January.

Another way to look at it is this, using a December Use Year. 2005 points are good from Dec 1, 2005 through Nov 30th, 2006. Thus 11/12ths of the 2005 points occur within the 2006 calendar year. So in January of 2006, when the calendar year 2006 fees are paid, you can prorate 11/12ths of the fees as applicable to the 2005 use year points, and 1/12th of the fees applicable to the 2006 use year points.

Suppose the person originally bought the contract Dec 1st 2005. They would have paid only 1-months worth of fees. That being for Dec 2005. In Jan 2006 they pay a full year's fees, so their total now is 13 months worth of fees they have paid. Now, they use ALL their 2005 Use Year points. If they ask you to pay all the fiscal 2006 fees, it would turn out that they got a full use year's worth of points, and only paid 1-month fees, and you would be paying 11/12ths of the fees on those 2005 points that they already used.

Many people seem to think that the fees paid in January are for that year's use year. They are NOT. Do like Disney does for a new purchase, and prorate the fees between buyer and seller based on how many calendar months of the year apply to specific Use Year months.

Hope this helps.

 

[Dean]

I'd agree with the above. The neutral position is that one should pay a prorated amount of the fees for the use year. In the December example, that'd be 1/12 of the yearly fees if ALL the points are available for Dec but none until then. And actually have the seller reimburse for a portion or all of the next years fees if less than the full allotment is available. If there are extra points currently, then one has to decide how much those points are worth to them and it generally comes down to how useable they are to the buyer.

The unfortunate thing is that some resale company's incorrectly take the stance that you get this years points you pay this years fees. So you should add an appropriate clause to the contract if this is an important point in your deal. Regardless, look at the overall deal and decide how that works out for you rather than one specific issue.