New $500 Resale DVC Transfer Fee

[Sandisw]

Maybe I'm the only one who is confused. I'm not a Florida lawyer. In the jurisdictions I am familiar with, consumer protection is apparently stronger, so a fee like this, implemented after the initial sale of a property, would have to meet quite a high standard (probably staying close to the actual costs).

I'm just puzzled that a generic clause like this allows them to raise any fee they like. If this is the case, I'm surprised it hasn't been misused by other, less reputable timeshare companies. I suppose many services could be 'improved' with an 8x markup to boost profits.

From the information I have gotten from those in that field, as I mentioned, given that this charge is to buyers as closing, the POS may not even play a role.

So, this clause may not even be relevant to the specific case but some wondered if the POS even addressed additional fees above and beyond what we pay DVCMC.

And this exists.

Now there are certain fees that are capped by condo laws…why estoppel is $150 as that is the limit.

I certainly believe that DVC will push limits when it comes to interpreting the contract and their actions.

I just don’t see anything that makes this CAF fit that situation.

 

[walt34]

So, this clause may not even be relevant to the specific case but some wondered if the POS even addressed additional fees above and beyond what we pay DVCMC.

And this exists.

And I find this worrying. Why regulated precisely which cost can and cannot be part of the dues if Disney can just come up with new charges as they like.

Now there are certain fees that are capped by condo laws…why estoppel is $150 as that is the limit.

But it makes little sense to regulate one fee by law, if timeshare operators can just come up with a new, unregulated fee that can't be avoided.

 

[Sandisw]

And I find this worrying. Why regulated precisely which cost can and cannot be part of the dues if Disney can just come up with new charges as they like.

But it makes little sense to regulate one fee by law, if timeshare operators can just come up with a new, unregulated fee that can't be avoided.

The fee we pay them for managing the program is dictated to the property management agreement we have with them and the duties we gave them to run the program which are defined in the contract in both the DVC Resort Agreement and DVC Memberhip Agreement…may be included in other aspects.

Those documents do not include the duties when it comes to sales, which includes direct and resale.

That is something DVCMC does outside of managing the program for the owners.

Yes, it’s the same company, but there are different duties they have that keep it separate.

I think that the reason that it’s regulated in one and not the other, based on all my reading, is this current CAF is not a fee to the seller in order to sell…which is what is limited and what would have to be defined in the contract.

This is not that. It is a fee charged to a buyer as part of their purchase.

Obviously, it can be negotiated but it’s not a fee DVD or the board are requiring a seller to pay in order to sell…which is what the law limits.

It certainly is a clause that allows for new fees which many, including me, didn’t realize was written like tha, but it is there and I since these POS documents are approved by the FL timeshare bureau…it has to have some legal basis to it.

 

[disneylandtour]

Here is the clause. This is from RIV, p.35 but it has been found in other resorts POS as well.

This is a very general statement that there is no fixed guaranty of costs for existing owners to manage and run the resort. I'll put this up front--personally, I think that the $500 will likely stand in Florida and SC. Less sure about Calif and Hawaii. But this clause doesn't really speak to the new $500 fee, as the costs in this specific clause are all directed toward the person who has already purchased points (percentage of a unit) for management of the resort. This new fee is directed toward others who are in the process of purchasing. Here's where this is tricky: the $500 lowers the value, via resale sale, of a contract for existing owners by charging new owners a transfer fee. If there is a lawsuit, I think it would be directed that DVD created a situation that lowered the value of the property (points) for existing owners, but that change wasn't covered in this clause as this clause is about funds required from current owners, not prospective owners, for management. Honestly, if DVD needed more money, I think it would've been far smarter and cleaner to simply up everyone's dues by five or ten cents per point. I'd say that this current action actually invites a legal challenge in certain states, which then would become a class action suit. But you know, we'll see in a few years.

 

[disneylandtour]

Someone should check the AUl and VGC contracts to see if that same clause is there?

I don't think this clause will matter in the AUL and VGC contracts because the fee is not paid by current ow. ers. It's outside of that.

 

[Sandisw]

This is a very general statement that there is no fixed guaranty of costs for existing owners to manage and run the resort. I'll put this up front--personally, I think that the $500 will likely stand in Florida and SC. Less sure about Calif and Hawaii. But this clause doesn't really speak to the new $500 fee, as the costs in this specific clause are all directed toward the person who has already purchased points (percentage of a unit) for management of the resort. This new fee is directed toward others who are in the process of purchasing. Here's where this is tricky: the $500 lowers the value, via resale sale, of a contract for existing owners by charging new owners a transfer fee. If there is a lawsuit, I think it would be directed that DVD created a situation that lowered the value of the property (points) for existing owners, but that change wasn't covered in this clause as this clause is about funds required from current owners, not prospective owners, for management. Honestly, if DVD needed more money, I think it would've been far smarter and cleaner to simply up everyone's dues by five or ten cents per point. I'd say that this current action actually invites a legal challenge in certain states, which then would become a class action suit. But you know, we'll see in a few years.

That is why I have said I am not even sure this clause is relevant but there is clause that gives them abilities to charge fees which some were wondering.

It’s a buyers fee and it seems, from what I have seen, the brokers are including it as that.

I think resale value would be something that would have a really hard positon to take legally for owners given the contract mentions it isn’t something to be expected.

I mean, even ROFR decisions can play a role in impacting it.

If DVd stopped that completely, like the did in 2022, values would go down.

But, it will be interesting if someone finds something in HI or CA timeshare statutes that would prevent DVC from charging a buyer for properties located there.

I only own in FL so all my research and work is related to properties there!

 

[disneylandtour]

That is why I have said I am not even sure this clause is relevant but there is clause that gives them abilities to charge fees which some were wondering.

It’s a buyers fee and it seems, from what I have seen, the brokers are including it as that.

I think resale value would be something that would have a really hard positon to take legally for owners given the contract mentions it isn’t something to be expected.

I mean, even ROFR decisions can play a role in impacting it.

If DVd stopped that completely, like the did in 2022, values would go down.

But, it will be interesting if someone finds something in HI or CA timeshare statutes that would prevent DVC from charging a buyer for properties located there.

I only own in FL so all my research and work is related to properties there!

It would be in this: California Vacation Ownership and Time-Share Act of 2004. There's a clause in that that requires disclosure of all potential fees and fee categories. Again, this would only apply to VDH and VGC.

 

[Genie+]

That is why I have said I am not even sure this clause is relevant but there is clause that gives them abilities to charge fees which some were wondering.

I think this clause could still potentially come into play?

If someone tries to pushback saying while technically the fee goes to the buyer, it still affects the seller. Then Disney still has the argument that the seller/owner was never necessarily protected from this anyway?

And other parts of our contracts explain that business decisions made by Disney (and related others) don’t necessarily have to protect the interests of DVC owners either, whether that’s in salvage values of resale or the $pp we can get for our points on the rental market.

The contracts cover Disney from many angles.

Most of the fine print from Disney is the same - technically leaves themselves plenty of room even though in practice they don’t use all of it.

Really the best protection I feel I have is that Disney/DVC will continue to act reasonably because it is in their own best self interest. Because if I solely relied on the fine print in all my interactions with Disney? There’s a bunch of things they could do that I’d be very unhappy about. I could show up for a week in my bucket list bungalow and they can cancel every fireworks and show that month, and technically I’d have zero recourse. I can come up with a thousand scenarios like this, where Disney technically could because they left themselves the room in the fine print, but does not do in practice. It’s always going to balanced by the need to maintain positive consumer perception.

 

[mkatsy]

I think this clause could still potentially come into play?

If someone tries to pushback saying while technically the fee goes to the buyer, it still affects the seller. Then Disney still has the argument that the seller/owner was never necessarily protected from this anyway?

It absolutely has the potential to affect the seller. If I sell a contract I want my name off that account. If anything goes wrong at the title company, am I going to have to go pay the $500 to get my name off the account? Disney should be willing to release a member for free with proof of sale, and just suspend that account until the new owner gets their act together. we shall see … eventually there will be a hiccup in the process.

 

[Sandisw]

It absolutely has the potential to affect the seller. If I sell a contract I want my name off that account. If anything goes wrong at the title company, am I going to have to go pay the $500 to get my name off the account? Disney should be willing to release a member for free with proof of sale, and just suspend that account until the new owner gets their act together. we shall see … eventually there will be a hiccup in the process.

From the information out there, the payment happens at closing so there is no way a seller gets stuck.

It will be part of the contract and if there was a negotiation with the sellers it’s dedicated from their proceeds.

If it is the buyers side, then they will have sent t in with the final funds.

The only way the contract doesn’t close is if the buyer backs out which can happen now. This fee isn’t going to change that.

 

[mkatsy]

From the information out there, the payment happens at closing so there is no way a seller gets stuck.

It will be part of the contract and if there was a negotiation with the sellers it’s dedicated from their proceeds.

If it is the buyers side, then they will have sent t in with the final funds.

The only way the contract doesn’t close is if the buyer backs out which can happen now. This fee isn’t going to change that.

I have every confidence that the handful of title companies frequently mention here will do an excellent job managing this new fee. They are popular because they are competent, professional, and accurate. As we often say, the timeshare world is much larger than the small niche that exists here. There are D.I.Y. folks that don’t even use a title company. There are unscrupulous title companies here in Orlando, we just don’t hear their names because nobody that posts here is naive enough to do business with them. These are the transactions that potentially are vulnerable to mistakes with the new transfer fee.

 

[DonMacGregor]

Ok, I read all 851 posts and while I don’t have a dog in the fight (my recent resale purchase was sent in 12/30), most of my curiosities have been addressed one way or another. Except one.

How, exactly, does the $500 fee lower the value of a resale contract? If I’m going to sell one of my resale contracts, why would I need to lower the price by $500? It’s not like the buyer is going to find another contract without the $500 fee. He might find one listed at a lower per-point cost, but that possibility already exists today. If a seller with a contract listed at market value decides to lower their per-point cost to lure a seller, that’s on them, and it already happens. If no one lowers their price, the market price remains stable.

Every single resale contract will cost the buyer $500 more, without exception. If they don’t want to pay it, they simply won’t buy ANY contract. If the buyer says “Well, I am going to have to pay Disney $500 more in closing costs so you’ll need to lower your price, I’m simply going to say “Cool, go find a contract without the $500 fee.”

Even on small 25-50 point contracts, where the pro-rata share of the $500 is significantly higher, if a buyer wants a small contract, they’re going to pay the fee.

On larger contracts, say 150 to 200 points, the pro-rata share, per point, of that fee starts to become de minimis. $2.50 per point is well within the standard deviation of the current pricing, and sellers make concessions well above that every day to sell contracts. For a 300 point contract? Gimme a break.

Regardless, with the fee applied as closing costs on every single resale contract, the playing field remains level. A rising tide lifts all boats, as JFK would say.

 

[disneylandtour]

Every single resale contract will cost the buyer $500 more, without exception. If they don’t want to pay it, they simply won’t buy ANY contract.

This is the answer above. The $500 fee will push some buyers to a direct sale. And will cause some not to buy. Maybe this is 5-10% in resale, not a large percent, but any change in demand (lower) should have a corresponding affect on price and/or sales.

 

[Dodgerburt8]

This is the answer above. The $500 fee will push some buyers to a direct sale. And will cause some not to buy. Maybe this is 5-10% in resale, not a large percent, but any change in demand (lower) should have a corresponding affect on price and/or sales.

Yes, lower demand equals lower prices that sellers can charge. The 500 fee is essentially a tax that will (if only by a small amount) reduce overall demand for resale contracts. That absolutely hurts sellers.

 

[DonMacGregor]

This is the answer above. The $500 fee will push some buyers to a direct sale. And will cause some not to buy. Maybe this is 5-10% in resale, not a large percent, but any change in demand (lower) should have a corresponding affect on price and/or sales.

So you think that in the absolute worst-case scenario (25-point resale contract), a potential buyer is going to be pushed to spend several thousand dollars more (because you can’t buy 25 points except as an add-on, and direct points are +/- twice the cost of a resale point) in order to avoid the $500 fee?

Let’s take an example (and it’s not going to be VB because those are like junk bonds and don’t represent the real market). The cheapest WDW resale points that can still be purchased direct (big maybe) are OKW and a 25-point contract will run you something around $110 per point, or around $2,700. The absolute cheapest direct contract you can purchase today is going to run you $225 per point with 100 points minimum (we’re talking about new members, no add-on incentives or 25 point add-ons). That’s $22,500. Versus $2,700 plus $500?

Even if you go to Riviera pricing at 100 points, resale is going for $130 per point, or $13,000 plus the $500. Direct is still going to cost you $23,500. Do we really think that $500 is going to send people flocking to direct versus saving $10k?

 

[Dodgerburt8]

So you think that in the absolute worst-case scenario (25-point resale contract), a potential buyer is going to be pushed to spend several thousand dollars more (because you can’t buy 25 points except as an add-on, and direct points are +/- twice the cost of a resale point) in order to avoid the $500 fee?

Let’s take an example (and it’s not going to be VB because those are like junk bonds and don’t represent the real market). The cheapest WDW resale points that can still be purchased direct (big maybe) are OKW and a 25-point contract will run you something around $110 per point, or around $2,700. The absolute cheapest direct contract you can purchase today is going to run you $225 per point with 100 points minimum (we’re talking about new members, no add-on incentives or 25 point add-ons. That’s $22,500. Versus ?2,700 plus $500?

Even if you go to Riviera pricing at 100 points, resale is going for $130 per point, or $13,000. Direct is still going to cost you $23,500. Do we really think that $500 is going to send people flocking to direct

I’m not sure it sends them to direct as much as it just puts downward pressure on them buying in at all. I suspect it’s a small effect but that would depend on the elasticity of demand. All else equal less demand equals lower prices.

 

[Sandisw]

I’m not sure it sends them to direct as much as it just puts downward pressure on them buying in at all. I suspect it’s a small effect but that would depend on the elasticity of demand. All else equal less demand equals lower prices.

I just cant imagine that anyone contemplating a DVC purchase is walking away for $500.

 

[disneylandtour]

So you think that in the absolute worst-case scenario (25-point resale contract), a potential buyer is going to be pushed to spend several thousand dollars more (because you can’t buy 25 points except as an add-on, and direct points are +/- twice the cost of a resale point) in order to avoid the $500 fee?

Let’s take an example (and it’s not going to be VB because those are like junk bonds and don’t represent the real market). The cheapest WDW resale points that can still be purchased direct (big maybe) are OKW and a 25-point contract will run you something around $110 per point, or around $2,700. The absolute cheapest direct contract you can purchase today is going to run you $225 per point with 100 points minimum (we’re talking about new members, no add-on incentives or 25 point add-ons). That’s $22,500. Versus ?2,700 plus $500?

Even if you go to Riviera pricing at 100 points, resale is going for $130 per point, or $13,000plus the $500. Direct is still going to cost you $23,500. Do we really think that $500 is going to send people flocking to direct versus saving $10k?

5-10% of buyers, yep. Let’s take that 25 point example at a different resort. Poly. About $180pp. Plus $20pp extra now for the $500 fee. But for $35pp more, you can use those points at all resorts and, if you don’t have it, a step toward a blue card. And closing costs are lower, thereby lowering the delta. It’ll shift some purchases.

It’ll affect smaller (50-ish) point resale contracts at the higher resale resorts currently for direct sale. Just basic economics. Maybe won’t sway you. Or most buyers. Maybe it won’t affect the 300 point resale contracts much. But will affect some others. That’s the basis of pricing strategies.

 

[juliebee]

So you think that in the absolute worst-case scenario (25-point resale contract), a potential buyer is going to be pushed to spend several thousand dollars more (because you can’t buy 25 points except as an add-on, and direct points are +/- twice the cost of a resale point) in order to avoid the $500 fee?

For instance, a Poly resale contract for 25 points would average $171 (per Fidelity's low point contract stats) plus the $500 fee-- $4775 plus standard closing costs

Direct 25 points at Poly would be $235 currently $5875 plus standard closing costs and you would get the points immediately and in the use year you want and can be used anywhere.

In my above response in a different thread, I made the point that for a 25pt Poly contract it would "only" be $1100 more for a direct contract. So for those small contracts, the $500 fee could make a difference for some purchasers.

 

[Dodgerburt8]

I just cant imagine that anyone contemplating a DVC purchase is walking away for $500.

I mean look at the response to Disney offering an additional $1000 in direct incentives in a given cycle. Sales fluctuate by 10 percent or more. Luxury goods are generally very price elastic. I’m not saying it’s going to kill the market, but it would be really abnormal if the $500 price increase didn’t impact sales a little.