New $500 Resale DVC Transfer Fee

[mkatsy]

“We tried to hide that fee in the Q & A and we would have gotten away with it too, if it weren’t for those kids and their dog” kudos to whoever found the change, after two years here it still blows my mind at what DVC considers professional behavior.

 

[Carouselofplanning]

It's an hobby of mine to remind the world what happened in 2019. DVC published a point chart that increased the lockoff premium and reallocated points across units.
The general consensus was that Disney has an army of lawyers, so it would certainly be legal and it would be futile to fight it.
And yet a handful of members fought it and the changes were rolled back.

So at least one of the following is true:
- Disney doesn't have an army of lawyers
- lawyers are not consulted for every decision
- the lawyers are incompetent
- the lawyers warn management of the risks of a certain decision but greedy management do it anyway

So thinking this fee is legal just because Disney has lots of lawyers is not wise.

100% this. Lawyers are not judges. They can only advise they cannot guarantee an outcome. They are often wrong or only get issues partially correct. And often clients ignore the advice that they are doing business on shaky legal ground based upon a risk-reward analysis. Breaking civil law isn’t a crime. That’s the red line they cannot touch (ie. Fraud, etc). But playing contract interpretation /management fee games? Depending on the executive’s risk appetite if they are wrong it’s arguably in play.

 

[Carouselofplanning]

"A tax" is exactly what I'm picturing it as. Disney knows there's a lucrative resale industry and they want their cut of it. Disney can't become their own resale broker, so this is the next best thing. And if it nudges some prospective resale buyers to go direct, even better.

While Disney might not volunteer the information relating to how much these transfers actually cost them (staffing, time, etc) it would come out in discovery if they end up getting sued over this, assuming there is a basis to sue. And then we would see - is this a money grab or an honest allocation of costs that have gotten out of control as the program has grown?

 

[airjay75]

I think they practically have to allow signed 2025 ROFR submitted contracts go through without the fee. Because technically the negotiation of who pays this fee is a modification of the contract. The contract that closes is different than what went to ROFR so Disney could arguably not honor the transaction as not having followed ROFR rules.

Maybe. Certainly hope you're right. But, there are things that can pop up in any contract for sale prior to closing that requires the contract to be amended or else fall apart. For example, say you're under contract to buy a house, but the county passes a law between contract signing and closing imposing a 1% transfer tax for all closings after X date, and your closing happens to be after the X date. I don't think the you can just tell the county they can go pound sand because you had a contract. But, most governmental entities that do such things tend to put the effective date of such taxes well into the future such as to avoid these sorts of issues. Perhaps Disney will do the same here. If not, just another example of this being a sloppy rollout with poor communication.

 

[Carouselofplanning]

Maybe. Certainly hope you're right. But, there are things that can pop up in any contract for sale prior to closing that requires the contract to be amended or else fall apart. For example, say you're under contract to buy a house, but the county passes a law between contract signing and closing imposing a 1% transfer tax for all closings after X date, and your closing happens to be after the X date. I don't think the you can just tell the county they can go pound sand because you had a contract. But, most governmental entities that do such things tend to put the effective date of such taxes well into the future such as to avoid these sorts of issues. Perhaps Disney will do the same here. If not, just another example of this being a sloppy rollout with poor communication.

No in that case you’re right - a modification/amendment for the fee is proper. But that deal isn’t subject to a ROFR.

I think the sloppy rollout suggests this is more of a “real estate guy” move instead of something being closely shepherded by legal.

 

[Brian Noble]

Sure this'll net them revenue but everything lately just keeps leaving sour tastes in more and more customer's mouths.

Resale buyers are not DVC customers. (I say that with a full chest as a resale buyer.) Retail buyers are, but most of those who buy retail will have no idea this fee exists, or why it might matter until they come to liquidate, at which point they are no longer Members. The few of us who are hybrid owners know, but you have to break a few eggs to make an omelette, etc. etc.

is this what a class action suit is done to address it? Still learning. Iʻm sure there are some attorneys that are willing to pick it up.

Yes in theory, but no in practice. The "class" (more importantly, the total damage to the class) is too small to be worth much for anyone to take it pro bono. So that means some owner(s) would have to pony up the cash to challenge it. Have fun storming the castle!

It should be in the contract who will pay it.

And if it is not, then it is a matter for the parties to the contract to negotiate---and Disney is not a party to the contract. Few contracts can anticipate all possible contingencies.

Just one more step closer to becoming a regular timeshare

From where I sit, it always was. The idea that it was "special" or "different" was nothing more than a pixie-dust fueld Reality Distortion Field.

The general consensus was that Disney has an army of lawyers, so it would certainly be legal and it would be futile to fight it.

I don't think this is quite right. Almost no one thought it was reasonable, because there was no justification for 1BRs to increase in points. The language allowing rebalancing was grounded in the idea that doing so was to address imabalances in demand, but 1BRs were the last to book throughout the system. Raising the points required for 1BRs made zero sense. What's more, at least some of us thought the lockoff premium was bogus to begin with. Frankly, I'm a little surprised that they were able to get the original OKW governing documents through the approval process, because the original point chart manufactures breakage out of thin air. The other contemporaneous point system (Wyndham) is set up such that a studio + 1BR equals a lockoff in points, though Marriott followed Disney's lead with their later product. So, in Wyndham's case, booking a lockoff sometimes requires more points than booking a dedicated 2BR.

I'm usually on the Disney Apologist end of the spectrum, and even I thought the increase in lockoff premium was unjustifiable.

The other part of those charts (the move to seven seasons and use of a favorable-to-Disney Base Year) was a little more subtle, but that also seemed to directly contradict the provision that a Residential Unit's points remain constant, and I'm pretty sure I'm on record saying so. This is despite the fact that it seems to me that they've violated that provision in at least a handful of places, with the Treehouses being the most notorious. They were originally marketed and sold as "the same as a 2BR" and then changed post facto.

But it is true that I also thought (and still think) that if Disney wanted to go to the mattresses, they might well have been able to starve out the owners before the owners got to what was a likely favorable judgement in court. And, Disney has a reputation for going to the mattresses---see, for example, the suit brought by the DAS crowd. Instead, Disney blinked, and in this case I think they blinked because those charts were so ridiculous that any fool could see they were dumb. As evidence: I thought they were dumb, and I am definitely a fool.

This is a very different kettle of fish. It's payment for a clear service that has significant precedent in the industry. What's more, I suspect the average "not-directly-invested" person, when told that Disney charges a fee of several hundred dollars to transfer a contract from one person to another would say: Well, sure, it makes sense that you'd charge someone to do that.

It could, but what happens if the buyer never logs in or pays the fee? Who "owns" the points?

My guess: The buyer owns the underlying deed, because it was filed with the county. The points travel with the deed (there is langauge saying they cannot be separated), so the buyer also "owns" the points. But the points are unusable becuase there is an outstanding unpaid fee on the account, and they are not worth anything in and of themselves (again via language in the governing documents). This is no different, in principle, from not paying your Dues--eventually your account is locked, and if you let it go long enough, Disney will foreclose.

 

[airjay75]

No in that case you’re right - a modification/amendment for the fee is proper. But that deal isn’t subject to a ROFR.

Yeah, I guess the question is what exactly is confirmed or approved during the ROFR process. I suppose you can argue that DVD has affirmatively approved the contract/transfer as is and so they have implicitly become a party to the contract. I tend to think of ROFR, though, as DVD simply declining to step into the buyer's shoes. As a practical matter, for any ROFRs between now and the end of the year, if they do plan on charging the $500 fee if the closing occurs after 1/1, they'd be smart to inform anyone passing ROFR about the fee. I guess we'll see.