Owner obligations in case of major resort damage or expenses

[wbl2745]

I originally posted this in the VGC thread, but the question is actually broader than that. I've wondered what obligations of DVC members would be if there were to be severe damage or a large judgement against a resort? For example, what if there were an earthquake in the LA area that seriously damaged the VGC? Would the owners, meaning those who have purchased points at VGC, be responsible for funding major repairs? Could we see $50 per point "maintenance" charges or special assessments to rebuild a destroyed building? What if there were a huge multi-million dollar judgement against a resort?

I guess this goes back to who owns the building and the land. I should probably look at the paperwork, but aren't we actually "lease holders" rather than "owners"? If we were "owners" then our points couldn't expire.

Quoting DVCGeek who responded to the original thread:

We own an interest in units that make up a leasehold condominium, IIRC. When it comes to damage in particular I'm not entirely sure what that means, assuming the member (or 'guests' using their points) did NOT cause it. I HOPE DVD (or some division of the Mouse) maintains insurance for things like fire, flood, earthquake, etc. so we wouldn't have to pay for major damage out of a special dues assessment, but I'm not 100% sure how that works and my paperwork is at home... Don't know if I would find something that I could understand even if I was looking for it though!

Any thoughts on this?

 

[chalee94]

yep - DVC maintains insurance at some level on the resorts but if major damage did occur, a large special assessment is not out of the question. owners could be liable.

IIRC, VB was hit by major storm and nearly had to have a special assessment but insurance wound up covering it.

it's a risk you take when you "own" a piece of the magic...

 

[DebbieB]

It is in the paperwork that they do have to maintain insurance. However, they are not obligated to rebuild. They could take the insurance proceeds and distribute it among the owners and that would be it. You would be out of DVC. I don't have my paperwork in front of me but in the case of major damage where a resort is closed they could also prevent owners from booking elsewhere during that time. They did not inact that when VB was closed for a month or two a few years ago. It's something to consider when selecting a home resort. DVC could also take a resort out of the DVC system or sell it and you would only be able to book at your home resort or possibly exchange into the others like you would with RCI.

 

[wbl2745]

It is in the paperwork that they do have to maintain insurance.

And from the original thread:

Earthquake is not mentioned. Earthquake insurance is expensive with high deductibles, so only 12% of California homeowners have coverage.

I wonder if VGC maintains earthquake insurance. Having lived in California previously, if an earthquake occurs you better hope there's a fire too or else you have no coverage unless you carry earthquake insurance, which is pricey.

However, they are not obligated to rebuild. They could take the insurance proceeds and distribute it among the owners and that would be it. You would be out of DVC.

Is there such a thing as "Time Share Owners Insurance" to cover any special assessments or the loss of the ownership due to catastrophic events?

 

[Chuck S]

Honestly, if there is an earthquake strong enough to destroy or severely damage VCG, there wil be a lot more to worry about than the loss of your timeshare. California building codes, and Disney in general, mandate strong, earthquake resistant buildings. I've been through several eathquakes growing up in CA. Damage is usually pretty localized near the epicenter.

 

[DebbieB]

I stayed at Paradise Pier a couple of years ago and watched the VGC construction. They definitely used superior construction, supports were covered in rebar. The insurance requirements should be listed in the public offering statement.

 

[NewDCLGuy]

For what it's worth, the legal mumbo-jumbo that came with my VGC purchase claimed that it isn't located in a seismic hazard zone. And if you look at earthquake maps, it seems Disneyland is in one of the more stable parts of the area. Which I'll admit isn't saying much. But it beats being right on top of the major faults.

 

[wbl2745]

I grew up in the San Francisco Bay Area and also lived for a while down the street from Disneyland. I've been through several earthquakes down there and for the most part there was no problem, just some rolling and rumbling. In 1994 during the Northridge earthquake I was in San Diego with my family. We were on the 9th story of the hotel and eventhough the earthquake was 100 miles away in Los Angeles the room swayed back and forth.

I agree that building codes in California are very tough and should be able to stand most everything. We lived in Fremont, California, near San Jose during the Loma Prieta earthquake in 1989, which was 7.0 and about 40 miles from our home. Although there was a lot of damage in the Bay Area, it was mostly older buildings and construction.

I suppose I was just wondering what would happen if there was large uncovered damage to VGC or a large legal judgment against it.

 

[Dean]

Ultimately the owners are responsible. If a resort or portion thereof were damaged or destroyed, the owners would be responsible. If there is insurance money, it will go to pay the debts and rebuild or distribute to now former owenrs as applicable. If more money is needed the owners will pay that including the possibiltity of a special assessment. With DVC, if a rebuild is planned, those points are still usable with the club per club rules. As soon as a decision is made not to rebuild a given resort or portion thereof, those members cease to be members of the club. IF there is insurance money leftover, that will be distributed to the owners affected using the % of their ownership in the affected resort or section. VB narrowly avoided a SA a few years ago due to the hurricanes.