Opps, Rofr Got Me

[Mike]

Originally posted by rphjr
Also, this whole thing about ROFR. Once the seller has a signed contract and Disney matches the offer to buy it themselves, isn't the seller legally bound to sell it to Disney. Could Disney force the sale to them and not even let the seller consider a counter offer?
I think if the deal is so good to Disney they'll buy it for sure. Anyone else think that the seller would be legally bound to sell it to DVD?

I don't think so. They entered into an agreement with the original buyer. Disney is just exercising their ROFR but I don't think the seller is legally obligated to sell to them.

 

[rinkwide]

The reality is DVD can't solicit to buy resale contracts by themselves. So, since a seller can't get to RoFR without a willing buyer, I think it's inappropriate for them to accept payment from Disney without giving the buyer a second chance. When we made our recent resale offer it was contingent on the fact that we could renegotiate if RoFR was exercised. Since it takes two to tango, I think that's only fair.

 

[Mike]

Originally posted by rinkwide
When we made our recent resale offer it was contingent on the fact that we could renegotiate if RoFR was exercised.

I think that is an excellent idea. kudos

 

[jel0511]

Originally posted by rinkwide
The reality is DVD can't solicit to buy resale contracts by themselves. So, since a seller can't get to RoFR without a willing buyer, I think it's inappropriate for them to accept payment from Disney without giving the buyer a second chance. When we made our recent resale offer it was contingent on the fact that we could renegotiate if RoFR was exercised. Since it takes two to tango, I think that's only fair.

I have to agree that was a WONDERFUL idea!! I only let my broker know after the fact we were interested in a counteroffer. If my current contract gets eaten up and we can't counter, I'll definately use that strategy on my next contract!!!!

 

[Beca]

Originally posted by rinkwide
When we made our recent resale offer it was contingent on the fact that we could renegotiate if RoFR was exercised. Since it takes two to tango, I think that's only fair.

I agree with Mike...this confirms what I have suspected all along...you are a very smart (and funny btw!!) person!!!

Wow...I think others should definitely follow this idea...maybe resale agents should start putting that in, considering DVC's new "commitment" to buying back sold put resorts!!

But, now I wonder...what would happen if you did not get a chance to re-negotiate? If the contract is not yours, how can you force it? By backing out of the contract that you don't have anyway? Was there any consequence listed with this contingency, or is it just the fear of a lawsuit (or the current owner's good ethical values) that keep that clause in check? Just curious, because it IS a really good idea!!!



Beca

 

[Dean]

Most brokers have a percentage with a minimum. I think 12% is not that uncommon but 10% is more so. Minimums in the $995 range are the norm. I've seen $795 but it's been a few years. The issue with a resale and ROFR is the broker will usually make a little more if you increase the price as compared to the possibility of two slightly lower commissions. DVC doesn't have to let you do the counter offer but they have done so thus far. If you think about it, the reason for ROFR isn't to get the points but keep the prices high. Plus they know if they buy it back, they may see the same buyers name come across their desk again.

However, if DVC chose, they could take the contract and prevent any second offers. And the seller and buyer have a contract, with ROFR, that contract is executed per agreement and the seller would certainly have no obligation to entertain a counter offer. But they should be another $250-500 in their pocket.

 

[Shamus]

Originally posted by Dean
If you think about it, the reason for ROFR isn't to get the points but keep the prices high.

DEAN,

I would agree that Keeping prices high is a benefit provided by ROFR, however as with most ROFR contracts this one provides DVC with two key advantages: First it allows them to "control" ownership. (Control within the bondries of the law). Second it allows them to be strategically placed for future financial gain on the contract. (and yes keeping prices high only adds to this gain).

I just believe that these two resons would be consider more primary then keeping the prices high for benefit of selling new contracts.




As to Contigency clauses for ROFR counteroffers:
If I was selling and the buyer asked for a counter offer contingency, that buyer best be at least giving me my asking price. Cause I now know that they are holding back and are somewhat willing to pay more.

If the asking price is met, a Contingency is a great idea for both parties as long as the buyer can absorb the potential delay. So I would include a very short period for submission of counteroffers.


SHAMUS

 

[rinkwide]

Originally posted by Beca
...what would happen if you did not get a chance to re-negotiate?...Was there any consequence listed with this contingency?

Well, I have these really long pins and a voodoo doll...

Basically it was a verbal agreement since, if the seller really wanted to, they could take Disney's money and run. I suppose the threat of a lawsuit might give them some pause to think (but I wouldn't have pursued that). Most sellers will be accomodating because it's a no-lose situation. They know it might take a while longer to close but there would be some financial benefit as a result.

As for the idea of the seller perceiving that you're holding back on your offer:

Disney may artificially raise the going rate of resales without notice (as witnessed in the last few days). I think any seller can understand that an offer that is fair-market value today may not be in a couple of weeks when it's RoFR time. If that's the case then you both have simply agreed to make the necessary adjustments to get the deal done.

 

[Dean]

Originally posted by Shamus
DEAN,

I would agree that Keeping prices high is a benefit provided by ROFR, however as with most ROFR contracts this one provides DVC with two key advantages: First it allows them to "control" ownership. (Control within the bondries of the law). Second it allows them to be strategically placed for future financial gain on the contract. (and yes keeping prices high only adds to this gain).

I just believe that these two resons would be consider more primary then keeping the prices high for benefit of selling new contracts.

DVC will make precious little when they buy then resale, even with a $20 pp spread between the price they buy at and the current retail price. If not, DVC would buy all resales at such a price rather than only a portion of them. The sole reason for ROFR is to protect DVD's interest. It just so happens that there are also benefits for current owners. There are a few disadvantages as well but not many.

 

[DebbieB]

The right of first refusal contract reads:

>>>If DVD elects to exercise its right of first refusal, DVD shall notify PURCHASER in writing of such election, and the purchase by DVD shall be closed on or before the proposal closing date. If DVD fails to notify PURCHASER of its election to exercise its right of first refusal prior to the proposed closing date, PURCHASER may proceed to close the transaction with the third party upon the original terms and conditions offered by or to the third party. DVD's right of first refusal is a covenant that runs with the land and shall always be a requirement binding on any successor in title to PURCHASER.<<<

PURCHASER (their capitalization) refers to the original member buying the contract, which would be the seller of the resale. I'm not a lawyer, but I think if DVD wanted to just close on the contract, they would not be required to allow a counteroffer ("the purchase by DVD shall be closed on or before the proposal closing date"). I'm not sure how putting a counteroffer clause in the resale contract would affect this, but it may be contrary to the seller's original contract with DVD.

 

[Beca]

Originally posted by DebbieB
The right of first refusal contract reads:

>>>If DVD elects to exercise its right of first refusal, DVD shall notify PURCHASER in writing of such election, and the purchase by DVD shall be closed on or before the proposal closing date.

That is really interesting. Is there a clause in the contract that says that closing must take place at least 30 days out? I was just wondering because DVC has 30 days to exercise ROFR...and, if they cannot exercise it and close it before a closing is scheduled, do they forego their option to purchase? It is very interesting wording.



Beca

 

[LisaSt]

DebbieB that reads to me like DVD has the last say no matter what you try and write into your deal with the seller etc.

 

[tguy47]

Your contract is almost identical (ours had 4 less banked points) to one we got in March for VWL and passed ROFR "easily" (within a week). Some objective evidence that Disney is raising their bids.

 

[rinkwide]

Disney can determine the price but whether a DVC contract is actually sold or not is completely up to the seller.

Two different resale agents explained that the seller may terminate the agreement at anytime during the process, regardless of an exercised RoFR. The seller can simply state they have decided to withdraw their intent to sell the contract in question thus freeing them to renegotiate. As a result, DVD cannot force the seller to complete the buy-back.

 

[Dean]

Originally posted by DebbieB
The right of first refusal contract reads:

>>>If DVD elects to exercise its right of first refusal, DVD shall notify PURCHASER in writing of such election, and the purchase by DVD shall be closed on or before the proposal closing date. If DVD fails to notify PURCHASER of its election to exercise its right of first refusal prior to the proposed closing date, PURCHASER may proceed to close the transaction with the third party upon the original terms and conditions offered by or to the third party. DVD's right of first refusal is a covenant that runs with the land and shall always be a requirement binding on any successor in title to PURCHASER.<<<

PURCHASER (their capitalization) refers to the original member buying the contract, which would be the seller of the resale. I'm not a lawyer, but I think if DVD wanted to just close on the contract, they would not be required to allow a counteroffer ("the purchase by DVD shall be closed on or before the proposal closing date"). I'm not sure how putting a counteroffer clause in the resale contract would affect this, but it may be contrary to the seller's original contract with DVD.

Legally DVC could just buy it back and move on. And DVC is the only system I know of that will even cosider a second chance. I'm surprised they do just from the cost and aggravation factor if nothing else.

 

[FLYNZ4]

Originally posted by Dean
Legally DVC could just buy it back and move on. And DVC is the only system I know of that will even cosider a second chance. I'm surprised they do just from the cost and aggravation factor if nothing else.

Dean,

The way that I read the paragraph in question is that if DVC exercises their ROFR, then they must complete the purchase within the original scheduled completion date. In other words... it puts restrictions on DVC. It is not clear to me that this removes any rights of the seller to cancel the sale. I would think that the seller would have the same provisions (if any) to stop the sale to DVC, as to an individual.

/Jim

 

[lenshanem]

Don't you have enough points yet, nuthut?

I was thinking the same thing...

 

[LisaSt]

Can you ever really havew enough points. Our family would like to reach 1000 points but even with that many is it really enough especially if we want to do an extended family trip.

 

[Dean]

Originally posted by FLYNZ4
Dean,

The way that I read the paragraph in question is that if DVC exercises their ROFR, then they must complete the purchase within the original scheduled completion date. In other words... it puts restrictions on DVC. It is not clear to me that this removes any rights of the seller to cancel the sale. I would think that the seller would have the same provisions (if any) to stop the sale to DVC, as to an individual.

/Jim

Actually the restriction is on the seller. It says you must submit it with a closing date at least 30 days away. It does not say DVC only has 30 days. And while it's likely the seller could cancel the sale, nothing stopping them from doing so except they'd still be on the hook for the commissions if they did as there would be a valid contract in place.

 

[luvindisneyworld]

Originally posted by LisaSt
Can you ever really havew enough points. Our family would like to reach 1000 points but even with that many is it really enough especially if we want to do an extended family trip.

But some people use most of their points to tie up prime times and rent at a ridiculous rate.Some people are trying to make a business out of it.