New $500 Resale DVC Transfer Fee

[SL6827]

I got asked the other day about me stating a lot of negative aspects of Disney and wanted to know if I really felt like they were always trying to screw over thier customers.

Yes, yes I do.

 

[VGCgroupie]

I got asked the other day about me stating a lot of negative aspects of Disney and wanted to know if I really felt like they were always trying to screw over thier customers.

Yes, yes I do.

Do you own DVC?

 

[RivShore]

Just curious on how $2.5Mn is 1% of gross annual revenue. $250Mn annual revenue is too low even for just DVC sales.

A quick search came up with $250M in DVC annual revenue but if they are selling about 2M points a year, your right, it should be higher, like $500M+.

 

[Sandisw]

A quick search came up with $250M in DVC annual revenue but if they are selling about 2M points a year, your right, it should be higher, like $500M+.

DVCMC revenue does not include anything from sales

That is DVD. I belive that the revenue DVCM gets is the 12% fee, the rental income from DVC rooms sold for cash, OTU points, and money collected from breakage, above and what is given to owners and BVTC.

And, any fees that would get from DVD to handle administrative work they do.

 

[SL6827]

Do you own DVC?

I used to. No longer though.

 

[SL6827]

Even though I no longer own, I still find it one of the most interesting parts of Disney and love to keep up with most of it's musing. It is sad though on it's direction.

 

[mkatsy]

I just don't see how DVCMC deciding to charge buyers/sellers a fee to handle the administrative work they are doing when someone is buying the product means they are not meeting a fiduciary duties to owners, when that is not something that is part of the operation and management of the resort, which is what is the responsilbity of the condo assocation.

Imagine you are buying a house and your realtor finds you the perfect place. When it comes time to negotiate with the seller, you find out the realtor also represents the seller. Keeping in mind that the commission (profit) depends on price, how confident are you that you are going to get the best deal? … because DVCMC represents both DVD and DVC, how confident are you that we got the best deal on the price to transfer title? DVCMC along with the HOA are charged with being good stewards of our money. I’m concerned that DVCMC and DVD fleeced DVC on this “deal” and I will be elated if I’m proven wrong,

 

[Sandisw]

Imagine you are buying a house and your realtor finds you the perfect place. When it comes time to negotiate with the seller, you find out the realtor also represents the seller. Keeping in mind that the commission (profit) depends on price, how confident are you that you are going to get the best deal? … because DVCMC represents both DVD and DVC, how confident are you that we got the best deal on the price to transfer title? DVCMC along with the HOA are charged with being good stewards of our money. I’m concerned that DVCMC and DVD fleeced DVC on this “deal” and I will be elated if I’m proven wrong,

That is completely different IMO because they are doing the same work for each party.

This appears to be charging a fee for the handling of what comes after the sale is completed.

And, that is not the responsibility of the association. The association is responsible only for the managing of the operation of the resort and implementing the vacation plan.

That is all we hired DVCMC to do.

The system was built to have DVCMC manage the operations of the resort and the vacation plan and be the business who also handles the sales and transfer process for DVD.

We all went in knowing that and agreeing to that set up.


I think that is were we differ because my opinion on whether the amount is a good one or not is irrelevant.

As I said, it comes down to are they allowed to charge a CAF?

If the answer is yes, then the next question is whether there is a cap, by law, on the fee they are charging.

If the answer is no, then they get to set the amount, whether owners think it’s a fair deal or not because this fee is not for something they are doing in their duties on behalf of the association.

I do think it’s a steep price. If it ends up including the $150 for estoppel, then I think $350 doesn’t sound out of line.

If they aren’t allowed to charge it or it turns out that they can’t charge more than a certain amount, then it’s an issue.

What they have a fiduciary responsibility to us is in making sure the decisions they make on our behalf under the property management agreement and in running the vacation plan is in the best interest of the membership as a whole.

 

[mkatsy]

That is completely different IMO. In the example, each is a party of the transaction.

DVD is not charging the fee…DVCMC is charging the fee for the when they are doing when it comes ti processing a resale.

That has nothing to do with their duties they perform for the association.

Unless they are prohibited by law to charge this amount, it doesn’t matter whether we got the best deal or not.

They get to decide what to charge for the service. But, the system was built to have DVCMC manage the operations of the resort and the vacation plan and be the business who also handles the sales and transfer process for DVD.

I guess where we differ is that this is a business situation and I am not bringing subjectiveness to it.

So, are they allowed to charge a CAF?

If the answer is yes, then the next question is whether there is a cap, by law, on the fee they are charging.

If the answer is no, then they get to set the amount, whether owners think it’s a fair deal or not because this fee is not for something they are doing in their duties on behalf of the association.

I do think it’s a steep price. If it ends up including the $150 for estoppel, then I think $350 doesn’t sound out of line.

If they aren’t allowed to charge it or it turns out that they can’t charge more than a certain amount, then it’s an issue.

What they have a fiduciary responsibility to us is in making sure the decisions they make on our behalf under the property management agreement and in running the vacation plan is in the best interest of the membership as a whole.

By charging an excessively high transaction fee DVCMC is trying to snuff out the competition for their other client (DVD) and in the process it is going to hurt the value of our real estate which is directly in conflict with what we hired them to do.

 

[Sandisw]

By charging an excessively high transaction fee DVCMC is trying to snuff out the competition for their other client (DVD) and in the process it is going to hurt the value of our real estate which is directly in conflict with what we hired them to do.

I have to disagree with this. The value of our timeshare isn’t guaranteed so they were never hired to protect that.

There is no expectation that moves they or DVD make must protect the value of our timeshare.

We won’t see it the same because unless there is evidence that they can’t do this, I will accept it even if I think it stinks or their motive , besides making a hefty profit, has a side effect to the resale process.

And I still lean they are doing it to make the money so they don’t have to take it out of the current revenue they are getting.

While I agree it’s high, I personally wouldnt consider it excessively high.

ETA: And I don’t think there is anything wrong with being annoyed at DVCMC for charging this…assuming it doesn’t turn out to be something that can’t do…so please don’t interpret my opinions as such.

I simply am looking at it only from the standpoint of whether they are allowed to do it. And so far, I haven’t found anything yet to say they can’t…we shall see how they explain it.

 

[mkatsy]

I have to disagree with this. The value of our timeshare isn’t guaranteed so they were never hired to protect that.

There is no expectation that moves they or DVD make must protect the value of our timeshare.

We won’t see it the same because unless there is evidence that they can’t do this, I will accept it even if I think it stinks or their motive , besides making a hefty profit, has a side effect to the resale process.

And I still lean they are doing it to make the money so they don’t have to take it out of the current revenue they are getting.

I have to disagree with this. The value of our timeshare isn’t guaranteed so they were never hired to protect that.

There is no expectation that moves they or DVD make must protect the value of our timeshare.

We won’t see it the same because unless there is evidence that they can’t do this, I will accept it even if I think it stinks or their motive , besides making a hefty profit, has a side effect to the resale process.

And I still lean they are doing it to make the money so they don’t have to take it out of the current revenue they are getting.

While I agree it’s high, I personally wouldnt consider it excessively high.

ETA: And I don’t think there is anything wrong with being annoyed at DVCMC for charging this…assuming it doesn’t turn out to be something that can’t do…so please don’t interpret my opinions as such.

I simply am looking at it only from the standpoint of whether they are allowed to do it. And so far, I haven’t found anything yet to say they can’t…we shall see how they explain it.

We will have to agree to disagree on the motive for DVCMC new fee. However, what is not open to interpretation is Florida state law regarding the role of a timeshare management company. The management entity must act in the best financial interest of the timeshare owners, like a trustee. Hiring a management company is not like hiring a landscaper or an exterminator. The management company has a duty to protect.

 

[Sandisw]

We will have to agree to disagree on the motive for DVCMC new fee. However, what is not open to interpretation is Florida state law regarding the role of a timeshare management company. The management entity must act in the best financial interest of the timeshare owners, like a trustee. Hiring a management company is not like hiring a landscaper or an exterminator. The management company has a duty to protect.

It does but where in the timeshare law does it say the managing entity must protect resale value?

It has to make sure that it’s protecting the interests of the owners for the product they bought So, yes, they need to make sure that the decisions they make support the POS.

The statute I found indicates a managing entity can charge a transfer fee.

What I am still trying to discover is what the $150 cap that has been mentioned can be applied to.

As I said, as long as it stands up to the legal rules it needs to, then it meets the standard it needed to meet.

ETA: If we find out that charging this fee is going to go toward hiring more staff to process the transfers in timely manner so that the other CMs can provide better service to the membership and owners can get access to their membership sooner, then in that sense, it is acting in the best interests of owners.

 

[mkatsy]

It does but where in the timeshare law does it say the managing entity must protect resale value?

It has to make sure that it’s protecting the interests of the owners for the product they bought So, yes, they need to make sure that the decisions they make support the POS.

The statute I found indicates a managing entity can charge a transfer fee.

What I am still trying to discover is what the $150 cap that has been mentioned can be applied to.

As I said, as long as it stands up to the legal rules it needs to, then it meets the standard it needed to meet.

ETA: If we find out that charging this fee is going to go toward hiring more staff to process the transfers in timely manner so that the other CMs can provide better service to the membership and owners can get access to their membership sooner, then in that sense, it is acting in the best interests of owners.

Ok … but how many clerks does $2.4 million buy? … meh, they just need to cough up the receipts that justify their fee ~or~ I stand my assertion that they are using an excessively high fee to devalue the competition’s real estate.

 

[walt34]

Ok … but how many clerks does $2.4 million buy? … meh, they just need to cough up the receipts that justify their fee ~or~ I stand my assertion that they are using an excessively high fee to devalue the competition’s real estate.

Or, the other way around, how much administrative work can changing one contract realistically cause? It either takes 20+ hours, or they need lawyers or dentists to do it or there is a very generous markup.

Making resale less appealing seems to be the most plausible explanation here.

 

[zavandor]

Some additional information relating to my previous post on the possible illegality of the transfer fee. I have been trying to find any agency or other rulings on the application of §718.112(2)(i), prohibiting transfer fees for resales or leases of condo interests unless the declarations, bylaws, or articles of incorporation, provide that the association is required to approve any such transaction and the amount of the transfers fees to be charged are expressly stated in one of those governing documents. I have not found any specific court case rulings but there is a ruling by the Florida condominium, timeshare, and mobile homes agency that is instructive.

In Potts v. Shell Island Beach Club Association, Inc., Case No. 2009-02-0900, the Florida Condominiums, Timeshares, and Mobile Homes Agency ruled on which statute applied to a claim for timeshare condominiums, the timeshare statute or the condominium statute. §718.112 has many different provisions applicable to condominiums and specifically states as to a few of the things in the statute, such as whether the association can prohibit proxy votes for issues to be determined at annual meetings and who could actually vote at meetings, that the statute expressly provided that those sections did not apply to timeshare condominiums. The agency ruled that the exceptions for timeshare condominiums applied solely to the specific sections in the statute that provided for that exception and only the condominium rules applied to any other sections in the statute. The Transfer Fees section of the statute does not provide any exception for timeshare condominiums, and thus it should apply to timeshare condominiums.

Of additional note, the §718.112 statute was in existence in 1990 and had the provision relating to transfer fees and provided that they could not be charged at all unless the association or managing entity was required in the POS documents to approve any resales. The statement in the declarations, declaring that DVC retains no right to approve any resale, started with the original declarations for OKW, i.e., the DVD lawyers at that time appear to have been aware of the statute and a conscious decision may have been made to put that statement into the declarations to show DVC was not going to charge any such fees.

There is another related Florida statute. §689.28, which states:

“INTENT.—The Legislature finds and declares that the public policy of this state favors the marketability of real property and the transferability of interests in real property free of title defects or unreasonable restraints on alienation. The Legislature further finds and declares that transfer fee covenants violate this public policy by impairing the marketability and transferability of real property and by constituting an unreasonable restraint on alienation regardless of the duration of such covenants or the amount of such transfer fees, and do not run with the title to the property or bind subsequent owners of the property under common law or equitable principles.”

It thus generally declares that transfer fees are presumed improper. However, it allows homeowners’, condominium, mobile home or property owners associations to charge such fees “if the declaration, covenant, or law applicable to the association” allows it, indicating that the charge can be made only if allowed by law or it is expressly set out in the POS documents, which appears to mean that DVC must first adopt an amendment to such documents to allow any such fee, which may require the owners' actual vote.

One change to my prior post. That $100 fee limit stated in §718,112(2)(i) that can be charged for any transfer fees applicable to resales, if any fee can actually be charged, is now $150 as there is an inflationary adjustment to be made every 5 years, and one appears to have been made this year.

Also, there has been mention that perhaps the $500 fee created is to cover the necessary costs DVCM will incur to provide all the things it needs to provide relating to completing a resale. As I noted before, the timeshare statute, even if it applied, requires the managing agency to provide a number of verifications and documents relating to any sale, and DVCM is allowed to charge $150 maximum for doing that. The information and documents DVCM has to provide is basically all the information it needs to collect and provide for any resale, and under the statute it is not entitled to charge more than $150 for all that work. My sense is the $500 charge it has created means that DVCM has built in a profit amount and that its main purpose is to further reduce resales, AND, like so many fees that Disney has created in the past, it is likely that DVCM intends to raise it annually as the years pass. In other words, the future may be that selling will usually be an act that produces a loss.

Thank you. Your posts are always illuminating

 

[zavandor]

ETA: If we find out that charging this fee is going to go toward hiring more staff to process the transfers in timely manner so that the other CMs can provide better service to the membership and owners can get access to their membership sooner, then in that sense, it is acting in the best interests of owners.

I don't agree with this statement.

They either have a fiduciary duty toward the members, in which case, if they are allowed to charge a fee, it should be only to cover expenses.
Or they don't, in which case if the law doesn't prohibit it, they can charge whatever they want (even 10K).

But one cannot claim they are acting in the interest of the membership when they stand to gain a couple of millions per year doing this (assuming 500K is more than enough to hire a few CM to handle the transfers)

 

[Carouselofplanning]

I don't agree with this statement.

They either have a fiduciary duty toward the members, in which case, if they are allowed to charge a fee, it should be only to cover expenses.
Or they don't, in which case if the law doesn't prohibit it, they can charge whatever they want (even 10K).

But one cannot claim they are acting in the interest of the membership when they stand to gain a couple of millions per year doing this (assuming 500K is more than enough to hire a few CM to handle the transfers)

Exactly correct. Having a fiduciary duty doesn’t mean “protect resale value”. But if their MOTIVATION is to harm it by charging an arbitrarily high amount per transaction for a straightforward clerical function they are not acting in best interest of their membership. You can’t have a nefarious motive and claim you’re acting as a fiduciary. The totality of the behavior suggests this is precisely what’s going on here.

 

[BeachClub2014]

I love this thread!

It has been seriously entertaining to read everyone's comments, especially the hyperbole. Let's recap a few of the finer points summarized below:

• DVC (I use this generically because all of the incestuous companies involved are too hard to track) is likely breaking Florida law through this new fee
• The $500 fee is clearly excessive and just a money grab
• DVC lawyers (if they were involved at all in this decision) are incompetent
• DVC management is incompetent for either not checking with their lawyers or not listening to them
• This new fee is a manifestation of DVC just being greedy
• DVC is breaking its fiduciary responsibility to members/owners
• The fee was implemented because of nefarious motives
• DVC is trying to kill off the resale market, and this is another tool to do so
• The fee is unfair to resale buyers
• DVC is trying to snuff out the competition
• DVC is always trying to screw over its customers

Did I miss any themes?

Edited to add (can't believe I forgot these):

• DVC is becoming another slimy timeshare company, just like all of the rest
• This move takes DVC one step closer to becoming just like Vegas

 

[mkatsy]

I love this thread!

It has been seriously entertaining to read everyone's comments, especially the hyperbole. Let's recap a few of the finer points summarized below:

• DVC (I use this generically because all of the incestuous companies involved are too hard to track) is likely breaking Florida law through this new fee
• The $500 fee is clearly excessive and just a money grab
• DVC lawyers (if they were involved at all in this decision) are incompetent
• DVC management is incompetent for either not checking with their lawyers or not listening to them
• This new fee is a manifestation of DVC just being greedy
• DVC is breaking its fiduciary responsibility to members/owners
• The fee was implemented because of nefarious motives
• DVC is trying to kill off the resale market, and this is another tool to do so
• The fee is unfair to resale buyers
• DVC is trying to snuff out the competition
• DVC is always trying to screw over its customers

Did I miss any themes?

in the absence of cussing and personal attacks it can sometimes be a long dramatic ride from point A to point B … polite discourse is not for the weak, or those short on time.

 

[BeachClub2014]

in the absence of cussing and personal attacks it can sometimes be a long dramatic ride from point A to point B … polite discourse is not for the weak, or those short on time.

Truer words have never been spoken.......