Mutually cancelable DVC resale purchase contract

[bookwormde]

Mutually cancelable DVC resale purchase contract

I have a question if anyone has ever written a sales contract, which was cancelable by either party before settlement.

With DVC’s buy back spree, and quite a number of contracts (particularly large ones) that are well below ROFR but are not moving. I thought this might be a way to “help” those who are willing to let there points go below ROFR. If DVC did not exercise ROFR the purchaser could then make their decision whether to buy the contract or cancel after Disney had made there decision.

I know this would in some cases make-work for nothing (if all parties ended up not wanting to complete the transaction but as long as DVC is ROFRing at a high rate might be beneficial to at least some involved)

Wondering what Jason’s thoughts are in this area.

bookwormde

 

[SSR]

I know this would in some cases make-work for nothing

Which is why it won't work, unfortunately. Brokers don't/can't work for nothing/free.

 

[BWV Dreamin]

Both parties can always cancel the agreement at any time as it stands now. What will happen is that commission will be due from whomever cancels the agreement. That payment is specifically explained and once the agreement is signed by both parties is enforcable. How? If not voluntarily then thru litigation.
I am failing to follow the logic as to why anyone would want to do this? If it passes ROFR, why would one cancel?

 

[bookwormde]

Yes but if DVC buys back or in the end the purchaser decides to take the contract they can make out on a high enough percentage to make it worthwile.

I have experaince in the commercial development world and these types of agreements are relitively common if they are for a short period of time. The realtor agrees to no fee if canceled on the spec that it might go through.

bookwormde

 

[PSC]

Wouldn't Disney also see the mutual cancel provision of the contract and "catch on" that this is a technique to trick them into exercising ROFR when the buyer has no intention of completing the sale?

 

[Dean]

Mutually cancelable DVC resale purchase contract

I have a question if anyone has ever written a sales contract, which was cancelable by either party before settlement.

With DVC’s buy back spree, and quite a number of contracts (particularly large ones) that are well below ROFR but are not moving. I thought this might be a way to “help” those who are willing to let there points go below ROFR. If DVC did not exercise ROFR the purchaser could then make their decision whether to buy the contract or cancel after Disney had made there decision.

I know this would in some cases make-work for nothing (if all parties ended up not wanting to complete the transaction but as long as DVC is ROFRing at a high rate might be beneficial to at least some involved)

Wondering what Jason’s thoughts are in this area.

bookwormde

Setting it up with the intent of not selling but only to activate the ROFR would be illegal in FL from what I've been told plus I'm sure any reasonable broker would avoid such a situation as well. The buyer can legally cancel within 10 days without obligation and in some situations (closing doesn't occur in specified time for example) one or either party could cancel. You could come to a mutual agreement after ROFR, say if the buyer lost their job. As noted, in some of these situations a broker would still be due the commission though collecting it beyond the deposit might be another matter.

 

[drusba]

If you go through a broker, you are never going to find one that would be crazy enough to latch on to a mutually cancellable contract if Disney does not exercise ROFR unless the broker is guaranteed its commission if cancellation occurs, i.e., someone is going to have to pay that commission.

If I were a seller, I would never agree to it either. If I desire to sell and am willing to do so for $X, I won't care whether Disney buys it for that price or the buyer does as long as one of them does and thus I have no reason to agree to let the buyer have a free out if Disney passes on ROFR.

 

[CarolMN]

...(snip)......If I were a seller, I would never agree to it either. If I desire to sell and am willing to do so for $X, I won't care whether Disney buys it for that price or the buyer does as long as one of them does and thus I have no reason to agree to let the buyer have a free out if Disney passes on ROFR.

My thoughts exactly! What possible benefit could there be to the seller?

 

[Dean]

My thoughts exactly! What possible benefit could there be to the seller?

Possible benefits would include the manipulation of ROFR issues, esp if this is a shill buyer and the chance to cancel if the market prices change or if your personal situation changes. I would agree that no broker would knowingly participate.

 

[disneynutz]

Disney must approve the language and terms of all sales contracts. If they don't like what they see, they kick it back to the Broker for changes or corrections.

They take into consideration the amount of points, UY, price, dues, closing costs and who is paying for what.

Bill

 

[Dean]

Disney must approve the language and terms of all sales contracts. If they don't like what they see, they kick it back to the Broker for changes or corrections.

They take into consideration the amount of points, UY, price, dues, closing costs and who is paying for what.

Bill

That's not necessarily correct. They will require that the requisites are there as you mentioned but they can't dictate the terms. They could not prevent one from language as in this thread for example. However, they could go after anyone who they felt were manipulating ROFR illegally.

 

[disneynutz]

That's not necessarily correct. They will require that the requisites are there as you mentioned but they can't dictate the terms. They could not prevent one from language as in this thread for example. However, they could go after anyone who they felt were manipulating ROFR illegally.

I have been told by one of our Brokers that Disney kicked back one of out contracts back because they didn't like the wording. I also know that they supply examples of contracts that meet their requirements.

Bill

 

[Dean]

I have been told by one of our Brokers that Disney kicked back one of out contracts back because they didn't like the wording. I also know that they supply examples of contracts that meet their requirements.

Bill

I know what they'll try to do but as long as it meets the requirements of FL law and covers the required criteria, they can't change the contract. They also try at times to instill requirements not included in the agreement including to get the seller on ROFR to agree to not discuss the sale price. That's from someone who's called their bluff previously.

 

[CarolMN]

Possible benefits would include the manipulation of ROFR issues, esp if this is a shill buyer and the chance to cancel if the market prices change or if your personal situation changes. .......

Well that's unethical to say the least. Honestly! Some people's kids!!!

 

[Dean]

Well that's unethical to say the least. Honestly! Some people's kids!!!

It is (shill buyer), and illegal, but that was the subject of this thread which is why I included it.

 

[bookwormde]

Hi I am back.

Disney does not have the right to control the terms of a sales contract. There a certain items, which must be stated such as, point status, liens, and status of maintenance and special assessments which they will kick the contract back for, but beyond the they must review and decide on ROFR for any contract brought before them or loose their ROFR rights, even if you are paying with a non-cash commodity (take a silly example of mowing the person’s lawn for the nest 20 years they have to make their decision whether to match the offer).

The sales agreement would only be considered invalid if there was no potential intent to execute (even 1 in 1000 is adequate) or the person lacked the financial capability to execute. And in any case it would be invalid not “illegal”.

Yes Disney might “catch on” to mutually cancelable clause and let them go through but that would open the door to people putting in just to increase the chances that DVC would pass.

I will be interested to see if/what Jason has to say since he is far more knowledgeable than any of us.

Form my memory of reading of FL timeshare law it is actually very simple, a timeshare who has an ROFR clause had the right to purchase the contract for the same terms. Of course they might be able say that they are inheriting the terms and claim an ability to can cancel after exercising ROFR.

As I said these types of agreements are very common in the commercial real estate world, but then again who ever said the real estate world was completely ethical. DVC and to a more egregious extent other timeshare sellers sell contracts that they know are only worth some significantly reduce value once they are sold (for DVC this may be 60% of what it is sold for but for others they are virtually worthless) it is legal but if we are talking ethics where does that stand.

This was intended as an intellectual exercise, but if I did do it some time in the future (assuming a broker would find it proper and adequately profitable) it would be with the intent, if the situation were “right” to pick up a contract, but only if my situation, the price and status of the contract met my needs at the moment.

If you were wondering the reason behind this “exercise” it is that with other timeshare that have ROFR rights, and the market price have fallen obviously below ROFR levels that no one will even make an offer on those contracts, and the timeshare does not have a default repurchase price so the contracts to a great extent become unmarketable. While this only happens in a few cases so far with DVC, if DVC pushes up the ROFR level of say SSR to 75 or 80 and there are 500 contracts available at 65 to 70 DVC has in effect made those contracts for all practical purposes unmarketable (at least for a long period of time).

Here is the definition of a shrill for those who are interested.

http://en.wikipedia.org/wiki/Shill

bookwormde

 

[CarolMN]

It is (shill buyer), and illegal, but that was the subject of this thread which is why I included it.

Thanks for the education and the reminder that there are lots of dishonest people out there.

 

[Jason@dvcstore]

Mutually cancelable DVC resale purchase contract

I have a question if anyone has ever written a sales contract, which was cancelable by either party before settlement.

With DVC’s buy back spree, and quite a number of contracts (particularly large ones) that are well below ROFR but are not moving. I thought this might be a way to “help” those who are willing to let there points go below ROFR. If DVC did not exercise ROFR the purchaser could then make their decision whether to buy the contract or cancel after Disney had made there decision.

I know this would in some cases make-work for nothing (if all parties ended up not wanting to complete the transaction but as long as DVC is ROFRing at a high rate might be beneficial to at least some involved)

Wondering what Jason’s thoughts are in this area.

bookwormde

This is a tough thread to respond to and I am not sure I have given it enough thought. Despite that I am continuing to type my response.

I have been involved in numerous transactions at The Timeshare Store, Inc.® and one transaction comes to mind. I had a buyer present an offer to the seller and part of the offer was that the buyer was going to put down a $0 deposit. I presented this offer to the seller and I clearly let the seller know that if the buyer was to cancel 45 days from now then they wouldn't be forfeiting any money. The seller, therefore, would not be compensated and would have to put the property back on the market. This transaction, however, did complete. The buyer returned final documents along with final funds and the file closed.

If the buyers intent, however, in this scenario was to cancel after Disney waived on their ROFR then they would be doing so without forfeiting any money.

The risk would be on the sellers. If for some reason they have a listing that doesn't seem to be moving you may find a seller willing to take that chance.

I hope that makes sense.

Jason

 

[DebbieB]

Couldn't this also work against the buyer? If the seller gets a better offer, they can cancel.

 

[Jason@dvcstore]

Couldn't this also work against the buyer? If the seller gets a better offer, they can cancel.

At The Timeshare Store, Inc.® when a buyer and a seller come to an agreement the property is marked "sale pending" and no other party can purchase the property at that time.

Jason