MFs on Stripped Contracts

[ammo]

I realize that practically everything is negotiable when buying resale contracts, including the payment of MFs. My question is about the actual mechanics.

So... assuming you buy a stripped contract (e.g., no points coming in the current year and next year's points have all been borrowed) and the seller agrees to pay MFs on the borrowed points. How is the buyer protected from receiving a bill next year for MFs on the borrowed points? Is this cash that would be held back from the seller, do DVCers pay MFs in advance for borrowed points (obviously I have never borrowed), other options? I appreciate any thoughts from people with experience or knowledge of this.

 

[CarolMN]

If seller agrees to pay dues on borrowed points, the dues are estimated at closing and seller pays buyer that amount as part of closing settlement. Buyer pays Disney when billed.

If closing is late in the calendar year, someone must pay remaining dues for the year plus next year's dues at closing. The "someone" is negotiable.

 

[ammo]

Perfect. Thanks Carol.

 

[Ruttangel]

the balance of MF’s form part of the final contract amount so it should show as a deducted amount

 

[Great3]

The amount is credited to the buyer at closing (subtract from the amount that is due to seller). This should be stated in the contract the exact amount to be credited. DVC will only bill the current owner, but it all evens out, in that you paid less to the seller at closing (Agreed amount - agreed MF credit).

Great3

 

[EYL]

It's interesting to read this... Wouldn't it then be possible that the seller could shortchange the buyer if the exact MF's for the next calendar year is still unknown and, when the time comes, Disney increases the MF's by a higher amount? I understand that the difference could be inconsequential, but still possible...?

 

[Sandisw]

It's interesting to read this... Wouldn't it then be possible that the seller could shortchange the buyer if the exact MF's for the next calendar year is still unknown and, when the time comes, Disney increases the MF's by a higher amount? I understand that the difference could be inconsequential, but still possible...?

Yes, the are going to be reimbursed at the current rate, assuming something different isn’t negotiated.

 

[EYL]

Yes, the are going to be reimbursed at the current rate, assuming something different isn’t negotiated.

Thank you! I'm thinking about adding on when I see a good deal. Those stripped contracts with "cannot close until [date]" offers the best $/point but I'd have to be wary about this.

 

[Sandisw]

Thank you! I'm thinking about adding on when I see a good deal. Those stripped contracts with "cannot close until [date]" offers the best $/point but I'd have to be wary about this.

I have sold 2 contracts with the can’t close by date. I also bought one that way. They were great because in all cases, payment was delayed which allowed the buyers to get what they want without having to have the cash or financing immedicately.

As with any resale, just be sure you take it all in consideration when making your offer!

 

[blluefaerie]

I would hire an attorney for the process. That way the contract is correct. You are protected from nasty surprises and your purchase should hold its value.

 

[Sandisw]

I would hire an attorney for the process. That way the contract is correct. You are protected from nasty surprises and your purchase should hold its value.

Im confused. An attorney for what?

 

[blluefaerie]

Hi I would hire an attorney to review the contract between buyer and seller and if there are weak points I would have it changed.
There must be a way to ensure you get the points you purchased so no guessing and worrying .

 

[Sandisw]

Hi I would hire an attorney to review the contract between buyer and seller and if there are weak points I would have it changed.
There must be a way to ensure you get the points you purchased so no guessing and worrying .

The paperwork is very clear when you buy. It’s all spelled out and in a few spots to make sure it states what you are buying and it should match what was listed.

its also included in the closing documents too. So, as long as someone reads it carefully, both at the beginning and end, they will Know if there are problems.