If
DVC designed the
point charts at CC with the cabins allowing them to sell more points, and then knowingly sold a large number of small contracts, fully aware that it would create an inventory problem, could that be considered fraudulent? Are there any requirements that they balance the structure of the contracts they sell with what they can reasonably accommodate?
A very difficult case to assert and the reason is the statutes that apply to timeshares. As long as Disney could show it is in compliance with the timeshare statutes addressing occupancy of rooms, it would have a strong argument against any claim of wrongdoing.
A key statute is the one-to-one ratio rule in creating a timeshare resort, Fl Stats 721.05 (26):
“’One-to-one use right to use night requirement ratio’ means that the sum of the nights that owners are entitled to use in a given 12-month period shall not exceed the number of nights available for use by those owners during the same 12-month period. No individual timeshare unit may be counted as providing more than 365 use nights per 12-month period or more than 366 use nights per 12-month period that includes February 29. The use rights of each owner shall be counted without regard to whether the owner’s use rights have been suspended for failure to pay assessments or otherwise."
The problem with the one-to-one rule is that it creates an overall rule applicable to the resort as to the "availability" not actual use of rooms for an entire year, and does nothing to address variances in actual occupancy, room sizes, or seasons. The probable reason none of those issues are addressed in that particular one-to-one rule is that it was created when timeshares were all sold as set weeks in a particular unit and thus there was no issue of variances in demand for room sizes or times of year. At the time, each room would have 51 owners each owning a different week.
Disney’s point system, under which the total points applicable to the resort do not exceed those that could be used to reserve every room for the entire year, technically complies with the “availability” concept of the statute even if there are large variances in demand for each size room and time of year.
To add to the defenses that DVD would assert are the warnings it gives in the POS documents. It tells purchasers about the point system, that all reservations are done on a first-come first-served basis, and due to variances in demand that may occur during the year, there is no guarantee the purchaser will actually be able to get the reservation he wants.
That does not necessarily rule out a possible claim, including because it appears no one has ever actually pursued a claim of a developer’s knowingly setting up a resort and sales program to effectively oversell studios, and thus the outcome is unknown, but a stronger claim would be one with more definite claims of misrepresentation, such as the sales force actually telling low-point purchasers that they could easily get studios year-round at the 11-month window.