Maybe unpopular questions

[CarolMN]

Why couldn’t you just avoid ROFR then by adding some ridiculous, hard to find yet virtually worthless non-cash compensation to your offer, like say an autographed Karlos Williams rookie card?

That strategy has been tried. Disney required a market-value cash equivalent be attached to such items.

IMO, no contract is worth that type of hassle or the expense of filing a lawsuit to circumvent ROFR. YMMV.

 

[CastAStone]

That strategy has been tried. Disney required a market-value cash equivalent be attached to such items.

IMO, no contract is worth that type of hassle or the expense of filing a lawsuit to circumvent ROFR. YMMV.

I figured it was too obvious of an idea for me to be the 1st to think of it, but I genuinely don’t understand where in what @hlhlaw07 posted that they would have the right to demand that. OTOH I’m not gonna pretend to understand the legal system for real estate.

PS thank you for the information!

 

[Grumpy Mouse]

"But it wouldn't help you if Disney wants to take the deal away from you. That's what Right of First Refusal means."

Yes, perfectly legal - I understand that. Is it ethical? Absolutely not. Disney gets free (as in uncompensated) contract investigation and negotiation services from unwitting buyers. And Florida law is written in such a way that transactional brokers don't really have to protect buyer's rights anyway. It's all good just as long as the resale companies continue to get their fat 8.5% commission checks - which is a ridiculous sum given that the entire process is internet-based now; I suspect there is very little - to no - physical leg work that must be done like traditional real estate transactions. This is a case of greedy pigs feeding at the Disney trough - and we all know whose rights are really being protected.

As for ROFR management by resale companies, ever hear of a statistical model? I know given our current circumstances that statistical models have gotten a bad rap (and some deservedly so), but if the data is not too complex - like trying to predict the growth of a pandemic - they can be a very useful predictor of future outcomes. I suspect there IS a 'rhyme or reason' to Disney's exercising of ROFR, that could be captured in a statistical model. So if resale companies want to better protect buyer's rights, I suggest they reach out to one of the local universities, department of Mathematics, and have them build a model (for a fee of course). You might even find a PhD candidate willing to take the project on for their dissertation. There certainly is enough data to build a decent model - and backtest it.

With a good model in hand, resale companies could offer buyers a probability of ROFR passage, with an uncertainty interval, BEFORE an offer was submitted. It won't be perfect, but it would be a heck of a lot better than the guessing game that occurs now. The buyer will feel they are making a more informed choice - and have a better understanding of the ROFR risk going in.

 

[JETSDAD]

"But it wouldn't help you if Disney wants to take the deal away from you. That's what Right of First Refusal means."

Yes, perfectly legal - I understand that. Is it ethical? Absolutely not. Disney gets free (as in uncompensated) contract investigation and negotiation services from unwitting buyers. And Florida law is written in such a way that transactional brokers don't really have to protect buyer's rights anyway. It's all good just as long as the resale companies continue to get their fat 8.5% commission checks - which is a ridiculous sum given that the entire process is internet-based now; I suspect there is very little - to no - physical leg work that must be done like traditional real estate transactions. This is a case of greedy pigs feeding at the Disney trough - and we all know whose rights are really being protected.

As for ROFR management by resale companies, ever hear of a statistical model? I know given our current circumstances that statistical models have gotten a bad rap (and some deservedly so), but if the data is not too complex - like trying to predict the growth of a pandemic - they can be a very useful predictor of future outcomes. I suspect there IS a 'rhyme or reason' to Disney's exercising of ROFR, that could be captured in a statistical model. So if resale companies want to better protect buyer's rights, I suggest they reach out to one of the local universities, department of Mathematics, and have them build a model (for a fee of course). You might even find a PhD candidate willing to take the project on for their dissertation. There certainly is enough data to build a decent model - and backtest it.

With a good model in hand, resale companies could offer buyers a probability of ROFR passage, with an uncertainty interval, BEFORE an offer was submitted. It won't be perfect, but it would be a heck of a lot better than the guessing game that occurs now. The buyer will feel they are making a more informed choice - and have a better understanding of the ROFR risk going in.

There is nothing unethical about a timeshare having a ROFR built into their contracts as a method to both buy back contracts and maintain a certain price level for the product.

Even if you had an agency relationship with your own buyer representative it's not going to change the outcome. I'm not sure what you want an agent to tell you in order to avoid ROFR? Offer more money? Buy a contract at specific resorts even if they aren't the ones you want to own at? Buy a bigger contract than you can afford? But all of these you will then say that someone is just out for the money and not really taking care of the client. People have watched ROFR for many years and it is always changing.

I don't even see what the big deal is with having a contract taken back by ROFR anyways? Either you have a deal negotiated at a low price so Disney wants to take it back (in which case it's hard to argue that an agent did not look out for the buyer because if the broker said to offer more money then you're back to arguing how unethical they are) or there are other reasons at play in which case it makes no difference if the agent is working for the buyer or not because nobody knows Disney's agenda at that time. You're not out anything except a bit of time....you can write on another contract.

But in the end it appears that you simply do not like the process itself and want to argue everything to do with it no matter what people say. So go hire your mathematicians, put together a model (even though it will likely change by the time it is put together) and go sell that information to buyers so that they know what price, location, and size of contract they should buy in order to simply get it to pass ROFR.....I'm sure there's huge demand for that.

 

[CastAStone]

There is nothing unethical about a timeshare having a ROFR built into their contracts as a method to both buy back contracts and maintain a certain price level for the product.

Even if you had an agency relationship with your own buyer representative it's not going to change the outcome. I'm not sure what you want an agent to tell you in order to avoid ROFR? Offer more money? Buy a contract at specific resorts even if they aren't the ones you want to own at? Buy a bigger contract than you can afford? But all of these you will then say that someone is just out for the money and not really taking care of the client. People have watched ROFR for many years and it is always changing.

I don't even see what the big deal is with having a contract taken back by ROFR anyways? Either you have a deal negotiated at a low price so Disney wants to take it back (in which case it's hard to argue that an agent did not look out for the buyer because if the broker said to offer more money then you're back to arguing how unethical they are) or there are other reasons at play in which case it makes no difference if the agent is working for the buyer or not because nobody knows Disney's agenda at that time. You're not out anything except a bit of time....you can write on another contract.

But in the end it appears that you simply do not like the process itself and want to argue everything to do with it no matter what people say. So go hire your mathematicians, put together a model (even though it will likely change by the time it is put together) and go sell that information to buyers so that they know what price, location, and size of contract they should buy in order to simply get it to pass ROFR.....I'm sure there's huge demand for that.

I built a model it says buy from an international seller.

 

[bookwormde]

Maybe you have never purchased direct nor read the actual purchase agreement from DVD, but you have stated a lot as fact that is really a misinformed assumption on your part. The contract spells out ROFR really clear. There is no grey area built into the contract. Here is what the actual contract provides: (note the term purchaser refers to the original individual who purchased the contract direct from Disney, but you could easily switch that out with owner as it applies to all subsequent owners as well)

“Before purchaser may resell, transfer or assign purchaser’s ownership interest to a third party, Purchaser is required to offer it to DVD upon the same terms and conditions, including financing, as is offered by or to the third party. Accordingly, Purchaser must notify DVD in writing NO LESS THAN THIRTY (30) days in advance of the proposed closing date of Purchaser’s intent to sell and must include a copy of the proposed transaction reduced to writing in all respects. Upon receipt of such notice, DVD shall determine prior to the proposed closing date whether it wishes to exercise its right of first refusal. If DVD elects to exercise its right of first refusal, DVD shall notify Purchaser in writing of such election, and the purchase by DVD shall be closed on or before the proposed closing date. If DVD fails to notify Purchaser of its election to exercise its right of first refusal prior to the proposed closing date, Purchaser may proceed to close the transaction with the third party upon the original terms and conditions offered by or to the third party. DVD’s right of first refusal is a covenant that runs with the land and shall always be a requirement binding on any successor in title to Purchaser.”

*The bolding is mine as those are the parts that people always seem to not understand.

I am curious, what POS is this from (resort and date) The wording in the ones I have a slightly different, though functionally the same

I have an original OKW POS and you are correct in article XIII 13.1 does have the 30 day requirement for notification. This does not however set the ROFR window at 30 days instead it does default to the settlement date., I agree that variable would have been better wording "gray". My main point was that Disney does not have a specific window (number of days) beyond that so ROFR window is variable rather than fixed. Disney could also shorten the window by making a decision.

I am a little surprised that sales contracts do not include a no earlier than 30 day from Disney notification closing along with the standard no later than clause. This would likely stop Disney from going beyond the 30 days, or at least they would be at risk of having the contract sold before they issued a decision

 

[hlhlaw07]

I am curious, what POS is this from (resort and date) The wording in the ones I have a slightly different, though functionally the same

I have an original OKW POS and you are correct in article XIII 13.1 does have the 30 day requirement for notification. This does not however set the ROFR window at 30 days instead it does default to the settlement date., I agree that variable would have been better wording "gray". My main point was that Disney does not have a specific window (number of days) beyond that so ROFR window is variable rather than fixed. Disney could also shorten the window by making a decision.

I am a little surprised that sales contracts do not include a no earlier than 30 day from Disney notification closing along with the standard no later than clause. This would likely stop Disney from going beyond the 30 days, or at least they would be at risk of having the contract sold before they issued a decision

That language is not from a POS. It is straight out of the purchase agreement with Disney. When you buy direct you specifically agree to this as it is in the purchase agreement (aka the “sales contract”). Just because resale brokers don’t put this language in their resale contracts doesn’t mean it is not applicable to to those contracts. As you will see in the last sentence of the quoted provision, ROFR is a covenant that runs with the land, so that provision applies to all subsequent transactions regarding the property interest.

 

[hlhlaw07]

This would likely stop Disney from going beyond the 30 days, or at least they would be at risk of having the contract sold before they issued a decision

Also, it is very simple to stop Disney from going beyond 30 days. All you have to do is schedule closing 30 days out rather than the 60 days that most brokers’ contracts provide.

 

[lovin'fl]

I have been around since I bought in 2009 and I can tell you there is no real consistent pattern for ROFR over the years.

Trends happen, and we use that as a guide, but sometimes, lower prices get through and higher ones get taken.

There is no formula a broker can use to help a buyer in securing a contract to pass ROFR.

It is part of buying DVC...you hope your deal is not something Disney wants at the moment .

This and its why we call it the ROFR monkey.

 

[bookwormde]

Why couldn’t you just avoid ROFR then by adding some ridiculous, hard to find yet virtually worthless non-cash compensation to your offer, like say an autographed Karlos Williams rookie card?

I am guessing that this is part of why DVD does not do ROFR on closely held transfers.

While I am guessing brokers would not want to get involved, but since the ROFR requires the same terms and conditions by DVD it would not be hard to make ROFR not worth there trouble. x dollars and right to a future DVC stay would also be an interesting "condition"

 

[bookwormde]

That language is not from a POS. It is straight out of the purchase agreement with Disney. When you buy direct you specifically agree to this as it is in the purchase agreement (aka the “sales contract”). Just because resale brokers don’t put this language in their resale contracts doesn’t mean it is not applicable to to those contracts. As you will see in the last sentence of the quoted provision, ROFR is a covenant that runs with the land, so that provision applies to all subsequent transactions regarding the property interest.

yes since this is material to the value, brokers/owners are required to advise the buyer of this covenant in perpetuity.

 

[bookwormde]

Also, it is very simple to stop Disney from going beyond 30 days. All you have to do is schedule closing 30 days out rather than the 60 days that most brokers’ contracts provide.

A quick fixed settlement date can create issues, but is the simplest

 

[miTnosnhoJ]

So... we are just beginning the process to purchase our first DVC timeshare. The seller has accepted our offer and we (electronically) signed the contract today. Now apparently the fun begins with this ROFR nonsense.

1) According to contract, Disney has 30 days to exercise (or waive) their ROFR. Yet many - including those on this board - are waiting far longer, up to 50 days, for Disney to exercise/waive this right. Most ROFR's are pretty clear; if the company doesn't exercise this right in the allotted time, they by default waive the right. How, legally, is Disney getting away with this violation?

2) If Disney does exercise their ROFR and assumes the terms of the contract, the seller obviously still gets paid, but does the agent, who apparently acts as a 'transactional broker' for BOTH buyer and seller, still get paid? If so, how has the state of Florida allowed this to be legal, given that the rights of the buyer clearly were not served, or protected. In fact, under this scenario, what incentive does the buyer's agent have at all to ensure their buyer (and not Disney) gets the desired property?

Thanks for any insights that might be provided; I realize these questions might not be too 'popular'.

I would really re-think your decision to buy DVC. If you are this upset with the process now, it is not going to be an enjoyable for you in the long run. The people who thrive in the DVC ecosystem are those that seek to understand all the rules and nuances, and then learn to use them to their benefit. These boards can help you surf on top of the rules like a ninja. But if you are going to wish for different rules, you are just asking for heartbreak, and who needs that in their life?

 

[Fred M]

I'm not sure what you want an agent to tell you in order to avoid ROFR?

"Buy direct."

 

[taaren]

I have seen it, but you have to specifically ask for it. There was a stretch last year where Disney started taking around 50+ days on ROFR and there was someone on the board that negotiated a 30 day close into their contract (can’t remember who). After I lost a contract to Disney after 54 days that person gave me the idea to make my offers contingent on a 30 day close. When I asked the broker about it, they were willing to write the contract up that way. So it’s not unheard, nor is it impossible. But it also isn’t in their standard contract.

This is a great idea. Thanks for posting about it. I may request this if I decide to try to pick up another VGC contract rather than buy DLH.

 

[heynowirv]

A broker cannot do anything about that. Without looking, I can tell you those ROFR contracts were 2042 OKW. Disney have a specific legal reason to want to recapture those.

If you bid on OKW, and it is 2042, likelihood is good it gets taken. no broker can fix that for you even if you are willing to pay near-direct pricing for the contract. And you should not be willing to do that, as direct gets you 2057 expiry. There are not a lot of 2057 contracts in resale, so that is also a barrier.

The only thing a broker could tell you is "maybe you don't want OKW? How about a nice BWV contract?"

We'll find out soon we are selling a 75 point OKW 2042 contract. Went to ROFR today.

 

[_auroraborealis_]

We'll find out soon we are selling a 75 point OKW 2042 contract. Went to ROFR today.

You will be fine. Disney have basically ceased ROFR with everyone on furlough. It doesn't sound like they are staffing up next week either.

 

[CastAStone]

It doesn't sound like they are staffing up next week either.

The opposite was reported here earlier this week - did I miss something?

 

[crisi]

I would really re-think your decision to buy DVC. If you are this upset with the process now, it is not going to be an enjoyable for you in the long run. The people who thrive in the DVC ecosystem are those that seek to understand all the rules and nuances, and then learn to use them to their benefit. These boards can help you surf on top of the rules like a ninja. But if you are going to wish for different rules, you are just asking for heartbreak, and who needs that in their life?

THIS. Run, run now. DVC is a good fit for plenty of people. You, however are about to make a horrible purchase.

 

[Noah_t]

Thanks for your replies. Interesting about the first question, my broker insisted Disney had a 30 day ROFR - and implied they (Disney) were the 'hold up' in the process. You seem to be implying this is a broker issue.

As to the second, that's a load of nonsense. For many years, and in many states, review of transactions found that seller's rights were being preserved - because after all they were the ones compensating the agents - but buyer's rights were being trampled on. So the laws were changed to specially address the preservation of buyer's rights in real estate transactions. That is not the case here - and in my mind a huge red flag. The agent simply has no incentive to ensure a favorable outcome for the buyer - because they get compensated either way. And this jives well with the amount of time (or lack thereof) agents spend addressing ROFR. Looking at the various companies engaged in DVC resale, cursory lip service is spent on the subject, but not really the kind of information that could help a buyer successfully navigate ROFR. Why? Because the agent gets paid either way. If the Florida real estate commission ruled to suspend - or significantly reduce - the commission in the event Disney exercised ROFR, you'd see a lot more 'active' ROFR management by these resale companies.

I agree totally with this. This system is set up so that only the seller really has any effective representation. Its not at all in a DVC realtors interest to find a fair value for the contract. They have no incentive to help a buyer find a better price. I dont blame the DVC realtors for this and in fact there are some pretty decent people I have met. But then I have also come up against realtors who try to insult me because they feel my offer is too low. I have yet to come across a realtor who will say that DVC prices have, will or should drop because its totally against their interests. Its really incumbent on you the buyer to know this and act accordingly.