Need help re resale and dues reimbursement? Update-Thanks!

[Simba's Mom]

We're currently bidding on a resale with all points coming in August 2005 (UY Aug), no points banked. The seller wants reimbursement for dues paid. What I don't understand is that the realtor admitted that the seller pays his dues monthly. So I don't see why what there is to "reimburse". Our current offer is to just take over those monthly dues payments when we close. Isn't this all we have to do? I don't see where the seller has paid any dues that we're benefitting from. Help!

Well, it all passed as DH and I said. I'm guessing it was just something he was going to suggest, if we did, fine, if not, that's OK. Now, we're the soon to be owners of 210 OKW points (I hope!)

 

[CarolMN]

Of course you are right - so do you want to be right or do you want the contract?

Dues are negotiable on resales. Unless the seller agrees, it really doesn't matter that dues are paid by calendar year and that the seller "forgot" that Disney prorated his dues based on when in the year he bough. Technically, the dues he's paid or will pay until 8/1/2005 are for the 2004 points (which he used). He probably just thinks that since all the 2005 points are coming to you, that you should pay all of the 2005 dues .

Anyway - you can certainly try to negotiate something more to your liking. Seller can say yes or no. If you are not convinced this is the perfect contract and if you are not in a hurry to purchase, you can just wait for another contract. If you think he is set on you paying all of the 2005 dues, then it's back to my first question -

Do you want to be right and have no contract? Or do you want the contract even if you have to pay more than you think you should to get it?

Good luck!

 

[CarolMN]

I can't remember for sure - do dues have to be completely paid for the year in order to sell a contract or just be current? If it's the former, maybe the seller just wants you to pay "your share" of the 2005 dues at closing, because he will have to pay Disney at that time. Someone will more experience/better memory than me will have to help out on that part.

Best wishes -

 

[DVCconvert]

do dues have to be completely paid for the year in order to sell a contract or just be current?

I *think* it's just current. Isn't that a part of the estoppel work that the closing agent has to do to execute a closing?

 

[Caskbill]

If there are no 2004 points banked or available, then dues for the 2005 points don't begin until August 2005. The current owner has used all the 2004 points and should pay all those dues.

Remember, that for the dues paid during the calendar year 2005, for an August Use Year, 7/12ths of the dues are actually on 2004 UY points, and only 5/12ths of the dues are on 2005 UY points.

There is no reimbursement due at all. The seller is trying to get you to pay the dues on points they already used.

You might want to take a look at This Thread

And also look at This Thread

 

[Poorman]

Bill, I disagree. When you get your bill for the maint. fee's in December they are for the next year. If he has paid his dues for 7 months ,and hasn't used the points up ,they should be reimbursed. He is paying for this UY not last UY.
The buyer will get full use of the points, and the seller will have to pay the fee's before it is sold.

At least this is how I look at it.

 

[RobDoc]

... He is paying for this UY not last UY.
The buyer will get full use of the points, and the seller will have to pay the fee's before it is sold.

The maintenance fees are NOT based on Use Year, they are calendar year based. Since DVC always prorates the maintenance fees, it may be argued that the seller should also prorate them based on the days remaining in the calendar year. (If you purchase a Feb UY thru Disney on Dec. 31- you will get all current year points and will pay no maint. fees and will also get new points on Feb. 1 .) That issue is part of the PRE-sale negotiations and, IMO, should be included clearly in the offer to avoid potential confusion/disappointment at closing.

In this case, the dues will have to paid at closing (DVC won't likely allow the assumption of the monthly auto-debit payments). So, the real issue is what the buyer will pay for the maintenance fees and it will need to be included in the offer. If the offer on the table states that the buyer will assume payment of the dues (and the seller has accepted that), it would seem that the buyer will only owe the dues still outstanding for the year (they will still be owed at closing). If the seller did not accept that condition, then I would certainly want the dues issue clearly understood prior to closing.

 

[JimMIA]

We're currently bidding on a resale with all points coming in August 2005 (UY Aug), no points banked. The seller wants reimbursement for dues paid. What I don't understand is that the realtor admitted that the seller pays his dues monthly. So I don't see why what there is to "reimburse". Our current offer is to just take over those monthly dues payments when we close. Isn't this all we have to do? I don't see where the seller has paid any dues that we're benefitting from. Help!

Well, it all passed as DH and I said. I'm guessing it was just something he was going to suggest, if we did, fine, if not, that's OK. Now, we're the soon to be owners of 210 OKW points (I hope!)

I guess I don't understand what your question is. Do you have a contract, and after signing a contract, the seller is asking you to pay more than agreed? Or is that just their asking position?

 

[JimMIA]

The maintenance fees are NOT based on Use Year, they are calendar year based. Since DVC always prorates the maintenance fees, it may be argued that the seller should also prorate them based on the days remaining in the calendar year. That issue is part of the PRE-sale negotiations and, IMO, should be included clearly in the offer to avoid potential confusion/disappointment at closing.

Like many issues, there are two ways (at least) of looking at this, but I agree with Doc. The dues are for maintenance, taxes, insurance, etc costs which are incurred on a calendar-year basis. You can argue it any way you want, but when our beloved DVC sends us a bill in December, it's for the following calendar-year's anticipated expenses -- like an escrow account on your home.

The only time I would take a different position would be if the seller had borrowed current year points. Then, I'd switch attitudes (a skill I learned from my lovely bride) and take the position that I ain't paying for dues on points they've used.

In the end, everything is negotiable - and there might even be a situation where you would want to pay the seller a higher per-point price in lieu of whatever to get over the ROFR threshhold. In the end, it may come down to what Carol asked -- do you want to be right...or do you want this contract?

 

[Poorman]

The maintenance fees are NOT based on Use Year, they are calendar year based. Since DVC always prorates the maintenance fees, it may be argued that the seller should also prorate them based on the days remaining in the calendar year. (If you purchase a Feb UY thru Disney on Dec. 31- you will get all current year points and will pay no maint. fees and will also get new points on Feb. 1 .) That issue is part of the PRE-sale negotiations and, IMO, should be included clearly in the offer to avoid potential confusion/disappointment at closing.

In this case, the dues will have to paid at closing (DVC won't likely allow the assumption of the monthly auto-debit payments). So, the real issue is what the buyer will pay for the maintenance fees and it will need to be included in the offer. If the offer on the table states that the buyer will assume payment of the dues (and the seller has accepted that), it would seem that the buyer will only owe the dues still outstanding for the year (they will still be owed at closing). If the seller did not accept that condition, then I would certainly want the dues issue clearly understood prior to closing.

Call me stupid, but if I have a December UY don't I have full use of my points for 12 months? How can you say I only have use of them for only one month? Just because it is in the 12th month of the calender year. I guess we people with December use year got screwed.

If I paid my dues in December, in full, for 2005 December UY points and I didn't use those points,I would certainly expect to be reimbursed for those points.

 

[RobDoc]

Call me stupid, but if I have a December UY don't I have full use of my points for 12 months? How can you say I only have use of them for only one month? Just because it is in the 12th month of the calender year. I guess we people with December use year got screwed.

If I paid my dues in December, in full, for 2005 December UY points and I didn't use those points,I would certainly expect to be reimbursed for those points.

YES, you will have a full 12 months to use your points - REGARDLESS of the Use Year. Utilization of points and payment of dues are two entirely separate DVC issues. (You do need to pay your dues to be able to use the points though!)

If you purchase a December Use Year from DVC on October 1, 2005 - you will get all 2004 points and will pay dues ONLY on the 3 remaining months in the year ... AND ... will still get all of your 2005 points on December 1, 2005 (and will owe a full year's dues in January, 2006).

If you purchased a Dec UY contract from DVC on December 1, 2005 - you'd pay only 1 month's (1/12) maintenance fees for that (2005) calendar year. If you were able to use those points in December and sell the contract before December 31, you will not pay more than the one month of dues already mentioned. The new owner would then have to pay the next years dues in January, 2006 , even though they will not get any points until December 1, 2006. (The new owner would be able to borrow those points for a stay prior to December 1.)

 

[JudithM]

Simba's Mom, congratulations on your OKW purchase!! I know you & your husband really enjoy OKW!!

 

[Dean]

Call me stupid, but if I have a December UY don't I have full use of my points for 12 months? How can you say I only have use of them for only one month? Just because it is in the 12th month of the calender year. I guess we people with December use year got screwed.

If I paid my dues in December, in full, for 2005 December UY points and I didn't use those points,I would certainly expect to be reimbursed for those points.

Your Jan payment is for 11 months of 2004 points and 1 month of 2005 points given the Dec Use Year example. Having said that, that's not how most brokers do things. They are stuck in the old weeks approach of if you get the week, you pay the dues. It's 100% wrong, but that's the way they approach it. In this case, the correct neutral dues reimbursement is 5/12 of this years dues. Of course the contract may have altered the obligation of the OP. The fact you pay them monthly really means nothing other than you'd have to pay them off before DVC will do the transfer. I'm not sure if they'll give ROFR with dues pending, but I suspect they will pending the completion and deed.

To drive home the point, assuming you had a Feb Use year and got all your points Feb of 2041, you'd have a full years dues in 2041 and 1 month in 2042. If you had a Dec use year, you'd likely only have 11 months of dues in 2041 and none 2042. Of course they're going to have to prorate or lottery or some similar issue at the end and thus everyone's dues will likely be scaled back.

 

[T.E. Yeary]

We're currently bidding on a resale with all points coming in August 2005 (UY Aug), no points banked. The seller wants reimbursement for dues paid. What I don't understand is that the realtor admitted that the seller pays his dues monthly. So I don't see why what there is to "reimburse". Our current offer is to just take over those monthly dues payments when we close. Isn't this all we have to do? I don't see where the seller has paid any dues that we're benefitting from. Help!

Well, it all passed as DH and I said. I'm guessing it was just something he was going to suggest, if we did, fine, if not, that's OK. Now, we're the soon to be owners of 210 OKW points (I hope!)

My head is spinning, I can imagine that most of you are getting just as confused as I am.

Here goes: The contract being purchased has the full allocation of '05 points coming with it. Let's assume that the seller paid his full amount of fees on the due date January '05. Since he used none of the points and paid for them, he deserves to be reimbursed the full amount he paid, regardless of his use year.

That said, let's assume, the seller owns an August use year, he pays his dues monthly, and sells in May. He still owes Disney the full amount even though he's only paid 5 of 12 installments. When the title company closes the deal, they take the full amount of reimbursement, from the buyer, for the '05 points and gives the seller back the 5 payments he made and gives Disney the remaining 7 payments. All dues are paid, Disney is happy, seller is reimbursed for the amount he paid, he is happy. Buyer gets his entire amount of points for the '05 year and saved money on his entire purchase and he is happy. Don't you think this is a fair and equitable solution?

Alot of this confusion has come about because when purchasers buy directly from Disney, their dues are prorated, as one of the incentives to purchase from them. If they purchase in May, for an August use year with a full '05 point allotment, they only pay for 7 months of the annual '05 dues. This sweetens the deal, but has NOTHING to do with the future payment of dues. The full amount is then due in January for everyone.

The Public Offering Statement for SSR, which I consulted, reinforces that dues are paid on a calendar year, which runs January thru December. Dues are to be paid in January '05 for '05 point allotment. This is true for all use year assignments.

This is sure to bring on an even livelier discussion, but ONLY a Disney authority figure or Disney published information, should be used to dispute what I have written or to convince me otherwise. I would be devastated to think that 11 years and 4,000 DVC Resales later, we have been wrong in our explanation concerning payment of dues.

Sincerely,
Thomas E. Yeary (Tom)
Owner/Broker
The Timeshare Store, Inc.

 

[CarolMN]

IMHO - while it makes for an interesting discussion, it doesn't really matter for a resale how dues are calculated/paid (practically speaking, of course). This item is completely negotiable between seller and buyer. I could happily argue for either position.

To me - what matters in a resale is what the two parties can agree to. The buyer can make an offer or not. The seller can accept the buyer's offer (subject to ROFR) or not.

If this item becomes a "deal breaker", then there won't be a sale. Period. Doesn't matter who was right!

To repeat, each party to the negotiation has to decide - is it more important for me to be "right" on a particular issue or is it more important to complete the transaction. There are lots of ways to structure a resale. I think most everyone will agree both sides should consider the whole picture - not just one item.

Best wishes -

P.S.

It appears that Simba's Mom has modified her original post - that may be what is making this particular thread confusing. It now looks like the seller's request to be reimbursed for 2005 dues was just that - a request that was not included in the original agreement. Prior to that, it seemed to me as though she and her DH were still in the negotiating stage. I apologize if I have misinterpreted.

 

[T.E. Yeary]

Carol, you are correct in saying everything is negotiable in a resale contract. Anyone can pay dues.

I was commenting because there seemed to be some perception errors in calculations of the dues. That was the main issue I was trying to address. The errors I'm referring to, were not originated by the buyer, but by a previous poster on this board. It was of great concern to me because of my business and the people I represent. I therefore took the time to check out the facts, to the best of my ability, before I made a post on this board.

The issue I was referring to was about how the dues were calculated, with some earlier posts that were not correct.

It is sad when a new or prospective purchaser looks to this board for advice and is given inaccurate information. That is the only reason I made a public post because when someone spouts off as being "the ultimate authority", without doing the proper research, it can be very damaging to many, many people.

Sincerely,
Tom

 

[CarolMN]

Carol, you are correct in saying everything is negotiable in a resale contract. Anyone can pay dues.

I was commenting because there seemed to be some perception errors in calculations of the dues. That was the main issue I was trying to address. The errors I'm referring to, were not originated by the buyer, but by a previous poster on this board. It was of great concern to me because of my business and the people I represent. I therefore took the time to check out the facts, to the best of my ability, before I made a post on this board.

The issue I was referring to was about how the dues were calculated, with some earlier posts that were not correct.

It is sad when a new or prospective purchaser looks to this board for advice and is given inaccurate information. That is the only reason I made a public post because when someone spouts off as being "the ultimate authority", without doing the proper research, it can be very damaging to many, many people.

Sincerely,
Tom

No argument from me.

I think prospective sellers & purchasers do themselves damage if they just focus on one aspect of the deal - rather than look at the net proceeds or cost of the overall deal.

Best wishes -

 

[Dean]

Alot of this confusion has come about because when purchasers buy directly from Disney, their dues are prorated, as one of the incentives to purchase from them. If they purchase in May, for an August use year with a full '05 point allotment, they only pay for 7 months of the annual '05 dues. This sweetens the deal, but has NOTHING to do with the future payment of dues. The full amount is then due in January for everyone.

The Public Offering Statement for SSR, which I consulted, reinforces that dues are paid on a calendar year, which runs January thru December. Dues are to be paid in January '05 for '05 point allotment. This is true for all use year assignments.

That is the rub Tom, the dues paid in January are for the Calendar year, not a prepayment for the 2005 use year. You can't have it both ways. If you as a broker or the closing company is telling clients they must pay the entire year if they get the full points when the use year comes around, you are overcharging them. In every place you can find, the dues are stated to be paid on a calendar year basis. DVC reinforces this issue when they only charge you dues from when you buy OR the use year, whichever comes LAST. Yes, even on years when they charge dues the first year, they don't start them until you actually get points. Thus if you bought this year without the special promotion and got say a Dec UY, you'd only pay dues from 1 Dec, only one month dues this year. Here is a response to another broker sent from DVC Member Accounting to that broker and forwarded to me.

No, they pay a full year of dues. 12 months from January 1 to December 31 for every year and all years thereafter. The only time they would have paid a partial year is the year they bought from us because we prorated the dues for that year from the day they purchased through 12-31. The dues were still based on calendar year which is 12 months. They are NEVER assessed based on Use Year. Just forget about their Use Year and points, that has absolutely nothing to do with dues.

 

[JimC]

IMHO - while it makes for an interesting discussion, it doesn't really matter for a resale how dues are calculated/paid (practically speaking, of course). This item is completely negotiable between seller and buyer. I could happily argue for either position.

To me - what matters in a resale is what the two parties can agree to. The buyer can make an offer or not. The seller can accept the buyer's offer (subject to ROFR) or not.

If this item becomes a "deal breaker", then there won't be a sale. Period. Doesn't matter who was right!...

And this is where using a good broker can be valuable. If they know the product and can explain the product to buyers and sellers (both of whom may not have completely accurate knowledge); then they might be able to get and keep the deal centered on the value of the proposition rather than the principle of a single component.

 

[Poorman]

T.E. Yeary
The Timeshare Store, Inc




Join Date: Jul 2003
Location: Orlando, FL
Posts: 28 DVC Annual dues!

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Let's see if we can clear up the confusion about annual dues at DVC.

Quoting directly from the SSR condominium association regulations, under the heading of 2004 Estimated Annual Dues Assessment, the paragraph reads as follows: "The estimated Annual Dues for the year January 1, 2004 through December 31, 2004 are $3.8005 per Vacation Point which is comprised of the estimated Annual Operating Budget ($2.5542 per Vacation Point), the estimated Annual Capital Reserves Budget ($0.4672 per Vacation Point) and the estimated Ad Valorem Taxes ($0.7791 per Vacation Point). Total amount of Annual Dues paid by a Purchaser or Owner is determined by Multiplying the total number of Vacation Points represented by the ownership interest purchased by $3.8005. For example, if the ownership interest is represented by 230 Vacation Points, the estimated Annual Dues would be $874.12."

If you notice, "Annual" is mentioned six (6) times. You don't see anything about what use year you own. You say, "but Disney prorates the dues when you buy from them". Yes they do, and they used to give you 30 days right of rescission also, even though the Florida State law only gives you 10 days, but what does that have to do with the price of tea in China as we say. Disney gives you incentives to purchase from them and they can do whatever they want to. Lets say that you are a seller with an August use year and you always pay your annual dues in January as soon as Disney sends you the bill. However, in March your spouse dies and you do not want your DVC contract anymore and decide to sell. You haven't borrowed or used any of the 2005 points so the buyer has the full year to use the Sept. 2005 points or bank them into 2006. What's to prorate? Personally, I'm not going to pay for the buyers 2005 vacation, which is what would happen if I did not get reimbursed for the dues. In my opinion, whoever uses the points should be responsible for the dues. On the other hand, if I had only paid for 5 or 6 months of annual dues, I would only expect the buyer to reimburse me for the 5 or 6 months that I had actually paid, it is DISNEY that wants the remainder of the annual dues paid upfront, as they won't let a new buyer set up a monthly account until the beginning of the next year.

It works the same way in regular timesharing. For example, lets say you own a fixed week 46 in the Courts at Vistana Resort. In May 2005 you decide to sell. The Thanksgiving week is available to your buyer who wants to celebrate Thanksgiving at Disney with his family. Again, whoever uses the week pays the dues. Can you negotiate? Of course you can. Timesharing is different from buying a home. For example, if the seller had lived in the house or rented it out for 6 months, I would expect him to pay 6 months of real estate taxes. However, with points at DVC, the fair thing is whoever uses the points pays the annual dues.

If anyone still has issues with how to calculate dues owed, please send a PM and I will be more than happy to go into it at length.

Sincerely,
Thomas E. Yeary (Tom)
Owner/Broker