Maintenance Fees question

[Firepath]

Prior to making an offer, I was discussing Maintenance Fees with a broker (well, actually an assistant to the broker). I was looking at an Oct UY contract with no 2012 points left. I mentioned that when I paid the MF in January, I would basically be paying 9 months of the seller's MF for points they'd already used. She insisted that wasn't true, than the MF I pay in January is for the points I'd get in October next year. From what I've read here, I know that if this was a direct sale, Disney would pro-rate and I'd only pay my 3 mos. of MF. She was so adamant (almost to the point of arguing with me) that now I'm questioning this. Am I right? I think I am.

 

[CarolMN]

Prior to making an offer, I was discussing Maintenance Fees with a broker (well, actually an assistant to the broker). I was looking at an Oct UY contract with no 2012 points left. I mentioned that when I paid the MF in January, I would basically be paying 9 months of the seller's MF for points they'd already used. She insisted that wasn't true, than the MF I pay in January is for the points I'd get in October next year. From what I've read here, I know that if this was a direct sale, Disney would pro-rate and I'd only pay my 3 mos. of MF. She was so adamant (almost to the point of arguing with me) that now I'm questioning this. Am I right? I think I am.

MF are charged for the calendar year. So for an October use year, the fees due in January 2013 cover 9 months of the 2012 use year and 3 months of the 2013 use year.

However, it really doesn't matter. For a resale contract, everything is negotiable. Offer what you are willing to pay and if the offer is refused, you can always look for another contract.

Stripped contracts are worth less than contracts with a full complement of points. The contract you describe has no current use year points (with an October use year, you would be in your 2011 use year) and no points coming for 2012. Unless the price is very favorable, my advice is to pass on this one.

Good luck!

 

[ELMC]

MF are charged for the calendar year. So for an October use year, the fees due in January 2013 cover 9 months of the 2012 use year and 3 months of the 2013 use year.

The problem is that, like the OP mentioned, you are going to have a hard time getting a broker to agree with this statement no matter how true it is.

 

[CarolMN]

The problem is that, like the OP mentioned, you are going to have a hard time getting a broker to agree with this statement no matter how true it is.

Absolutely true, which is why I added that it really doesn't matter since fees are negotiable for a resale.

As of course you know, it's the total out of pocket amount that really matters. A stripped contract will normally sell for less than a contract that has a full complement plus banked points.

 

[ELMC]

Absolutely true, which is why I added that it really doesn't matter since fees are negotiable for a resale.

As of course you know, it's the total out of pocket amount that really matters. A stripped contract will normally sell for less than a contract that has a full complement plus banked points.

Oh, I wasn't disagreeing with you, I was actually agreeing with you. Sorry for the confusion. The problem is (as you mentioned) that the value of a stripped contract is already so low that to deduct another $4 to compensate for the Jan '13 maintenance fees that you will have to pay but not get use of the points for will almost guarantee a rejection. But as you said, stripped contracts are probably something one should avoid anyway.

 

[Dean]

Prior to making an offer, I was discussing Maintenance Fees with a broker (well, actually an assistant to the broker). I was looking at an Oct UY contract with no 2012 points left. I mentioned that when I paid the MF in January, I would basically be paying 9 months of the seller's MF for points they'd already used. She insisted that wasn't true, than the MF I pay in January is for the points I'd get in October next year. From what I've read here, I know that if this was a direct sale, Disney would pro-rate and I'd only pay my 3 mos. of MF. She was so adamant (almost to the point of arguing with me) that now I'm questioning this. Am I right? I think I am.

You are correct, this is a common mistake that resale companies make. I think it stems from the "you get the week you pay the dues" philosophy. The problem is they really believe it and will be telling the seller what they told you.

 

[Rob S.]

You are correct, this is a common mistake that resale companies make. I think it stems from the "you get the week you pay the dues" philosophy. The problem is they really believe it and will be telling the seller what they told you.

I just purchased a Dec UY contract a few months ago and the broker was insisting that the 2012 dues were for the 2012 Use Year. I tried explaining that I my use year only had one month of 2012 but he would have no part of the conversation. I would have paid the amount that the points were listed for but I lowered my offer by $5 per point becuase I was being asked to pay the MF.

Other than that little fiasco on my initial call, everything else went smoothly.

 

[drusba]

If you are looking at a contract that has no points until October 2013, you can formulate an offer that gives you a discount for maintenance fees in two parts. You can insist that seller cover all 2012 fees (this year's). That can be done as part of the closing. The broker and seller really cannot cut a deal that has the seller actually paying 9 months of the 2013 dues because that would mean the seller has to pay something after the closing since those do not become due and exact amount will not be known until December of this year. Instead, you should estimate what you think will be the likely dues for 2013 and then deduct portion you think seller should absorb in the price per point that you offer (meaning take a discount for it). You don't even have to tell the broker that is what you have done in determining an offer if you want to avoid the argument over what the dues apply to.

 

[belias21]

OK, so now I'm starting to get really confused....

I'm buying a stripped contract with an August UY (so no points until 8/2013). I'm not paying any MF up front, but was told that I'd be paying them in January of 2013. Based on what I'm hearing now, am I being screwed?

Also, based on what I'm reading on this thread stripped contracts are unfavorable. Unless I'm blatantly missing something, if I have no travel plans until late next year is it really a problem? I mean, if a contract was loaded and I got points now, I'd certainly consider an earlier trip but I went in to this knowing my next travel date won't be until November 2013 (which is why I'm trying to get this done before December so I can book at 11 months out).

As always - you guys rock... I'm learning a lot here.

 

[ELMC]

OK, so now I'm starting to get really confused....

I'm buying a stripped contract with an August UY (so no points until 8/2013). I'm not paying any MF up front, but was told that I'd be paying them in January of 2013. Based on what I'm hearing now, am I being screwed?

I wouldn't go that far, but you are paying fees for points that you are not going to get to use. But like a previous poster said, you are not going to be able to get reimbursed for 2013 fees, so if you paid a lower price then you can look at it like you got a discount based on that.

Also, based on what I'm reading on this thread stripped contracts are unfavorable. Unless I'm blatantly missing something, if I have no travel plans until late next year is it really a problem? I mean, if a contract was loaded and I got points now, I'd certainly consider an earlier trip but I went in to this knowing my next travel date won't be until November 2013 (which is why I'm trying to get this done before December so I can book at 11 months out).

As always - you guys rock... I'm learning a lot here.

Stripped contracts are unfavorable because typically speaking, their price is not reflective of their worth as compared to loaded contracts. A lot of people will tell you that if you pay a few thousand dollars extra on your purchase, over the course of 30 years it doesn't matter. I disagree. I think that is a poor justification because the money you are paying for a contract you are paying NOW, not over 30 years. Even if you didn't have a trip planned, you could rent out the banked points to reduce your overall buy in cost. Some people like stripped contracts because they match up well with future travel plans. The key in buying a stripped contract is to get a low enough price to make it equal in value to a loaded contract (which is very difficult to do).

In the grand scheme of things you need to remember that there is a spectrum of savings when buying resale. Only one person can get the best deal ever...everyone else paid "too much" as compared to that deal. But the fact remains that you are still saving a bundle over buying direct. So even if you didn't save as much as the next guy, you can still take solace in that.

 

[drusba]

OK, so now I'm starting to get really confused....

I'm buying a stripped contract with an August UY (so no points until 8/2013). I'm not paying any MF up front, but was told that I'd be paying them in January of 2013. Based on what I'm hearing now, am I being screwed?

Also, based on what I'm reading on this thread stripped contracts are unfavorable. Unless I'm blatantly missing something, if I have no travel plans until late next year is it really a problem? I mean, if a contract was loaded and I got points now, I'd certainly consider an earlier trip but I went in to this knowing my next travel date won't be until November 2013 (which is why I'm trying to get this done before December so I can book at 11 months out).

As always - you guys rock... I'm learning a lot here.

Stripped contracts are not necessarily unfavorable particularly if you do not intend to travel until after the next use year's points come out. What is unfavorable is to pay a price per point that would be the same as you would pay if you got a contract with current use year points available.

It is normal and inevitable that you will pay the 2013 dues if you are purchasing now. The issue is not whether you should pay them but whether you should be compensated by the seller for a share via some discount in the sale price per point. The issue boils down to: how much are you paying per point and if you feel it is ultimately fair when taking into account that the contract is stripped and you will paying dues for half a year when there are no current points to use, then it is fine.

 

[Dean]

I just purchased a Dec UY contract a few months ago and the broker was insisting that the 2012 dues were for the 2012 Use Year. I tried explaining that I my use year only had one month of 2012 but he would have no part of the conversation. I would have paid the amount that the points were listed for but I lowered my offer by $5 per point becuase I was being asked to pay the MF.

Other than that little fiasco on my initial call, everything else went smoothly.

One simple question is all that is required. What would the dues be if this contract were bought directly from DVC. That is the one and only way to reasonably judge the neutral position on dues. In this situation, that'd be 1 month of 2012 dues assuming all 2012 points and no 2011 points. Banked points are normally ignored in such calculations. The dues paid on direct purchases are not incentives, they arrive at the amounts based on their formula of calendar year basis, not UY basis.

OK, so now I'm starting to get really confused....

I'm buying a stripped contract with an August UY (so no points until 8/2013). I'm not paying any MF up front, but was told that I'd be paying them in January of 2013. Based on what I'm hearing now, am I being screwed?

Also, based on what I'm reading on this thread stripped contracts are unfavorable. Unless I'm blatantly missing something, if I have no travel plans until late next year is it really a problem? I mean, if a contract was loaded and I got points now, I'd certainly consider an earlier trip but I went in to this knowing my next travel date won't be until November 2013 (which is why I'm trying to get this done before December so I can book at 11 months out).

As always - you guys rock... I'm learning a lot here.

In this case you're overpaying by 7 months of dues. You'll have to decide if the overall deal is worth that extra expense. I have no problem with stripped contracts if priced accordingly but generally don't see enough savings for most of them to justify them over other similar listings with a good supply of points. I think the difference for DVC over many timeshare is that there is a liquidity to the points in that you can easily rent them in most cases.

 

[belias21]

In this case you're overpaying by 7 months of dues. You'll have to decide if the overall deal is worth that extra expense. I have no problem with stripped contracts if priced accordingly but generally don't see enough savings for most of them to justify them over other similar listings with a good supply of points. I think the difference for DVC over many timeshare is that there is a liquidity to the points in that you can easily rent them in most cases.

Well unfortunately I'm too far along now to change anything with the contract. Guess I'll suck it up- no biggie. The per point price was low. Providing Disney waives ROFR I'll be in good shape.

On the liquidity of DVC, that's a great point I hadn't really factored in. I'll definitely keep that in mind next go 'round.

 

[Sandisw]

MF's really are about covering the expenses for running the resort for that calendar year and that is why they are all paid at the same time, in January, regardless of UY.

I get that some think it's about the points, but IMO, it's about when you become an owner and the number of points is more for determining your share of those costs.

So, if you are buying in 2012, then technically, you should be responsible from that day until end of the year, which is how Disney does it. The big difference, though, is that Disney always gives current UY points and resale contracts do not.

The only time it is different with Disney is when a new resort opens and you and then they start when it actually opens and not the day you buy.

If I were buying now, it's 2012, and August. The most I'd pay for 2012 MF's would be 4 months, even if I was getting all 2012 points. If I wasn't, then I might ask the seller to pay. Last year when i bought, I asked the seller to pay all 2011 UY dues, even though I got them all. It had nothing to do with not getting 2010 UY points, even though that was the UY I was in for the December contract. I still would not have paid, even if there had been 2010 UY points.

Now, if someone is not getting their 2013 UY points, then I'd negotiate a credit on those as well. But, since it's about calendar year, I think if you are getting 2013 UY points and buying in 2012, then yes, I would expect to pay all of those 2013 dues.

For example, if I bought a June UY contract today with no 2012 UY points but all 2013 points, I'd be willing to pay all 2013 dues. However, if it were May of 2013 and I was buying this same June contract, I would only offer 7 months of 2013 dues because I would not have owned it for the first 5 months.

As already mentioned though, with resale, everything is negotiable.

 

[KAT4DISNEY]

The only time it is different with Disney is when a new resort opens and you and then they start when it actually opens and not the day you buy........................For example, if I bought a June UY contract today with no 2012 UY points but all 2013 points, I'd be willing to pay all 2013 dues. However, if it were May of 2013 and I was buying this same June contract, I would only offer 7 months of 2013 dues because I would not have owned it for the first 5 months.

As already mentioned though, with resale, everything is negotiable.

There have been cases in the past that DVC did not have current points to sell - like when Jambo was selling out and a few people have reported it recently as well with some purchases.

In this instance Disney also would not ask for dues until the date you receive them - ie, in your example June 2013 and would prorate. The way they state it is you will pay dues from the following 3 options (and I'm not quoting so I may miss a word or two): The date of contract (if you are receiving current points), the date the resort opens (in the case that it has not yet) or the date you receive your first points (in your example June 2013).

 

[Dean]

DVC charges dues from the later of the date you sign the contract, the first day of the UY you get the first points or when the "unit" comes online if it's later than the start of the UY and later than the date you sign. Normally this is only an issue for new or phased resorts.