question about Disney and ROFR

[snap21]

We have a few questions that we would like to see answered if you can. My e-mail address is MD-Couch@wiu.edu Let me set up the situation. My wife's cousin (my cousin-in-law, if you will) wants to sell us her DVC membership at OKW. She has 190 points per use year. She wants to sell it to us for $9500. This most likely will cause Disney to use the ROFR clause. Now on to the questions.

1. Does Disney have to see an official dollar value? Can we say that for sake of argument we would like to buy the membership at $75 a point which would come out to $14, 250 and then she would say give us a rebate or do a gifting so that it would take the deal back down to the $9500 that she would like to sell us? Would we then have to pay the closing costs on $14,250 instead of $9500?

2. Is there a way that we can get around this so that we can buy into OKW. This is the only resort that we like and would love to have ownership in this one. I know we could get a great deal by buying into Vero Beach but I like the idea of the 11 month window.

I hope you can help. Many thanks in advance.

Mike and Vicki

 

[Dean]

You could do it with a rebate but there are ethical and legal considerations that make it a problem. You could trade something of value like a car in addition to money but DVC will require a value put on that item. There is a provision of transferring DVC contracts to family by bypassing the ROFR issue or at least getting a blanket waiver if I understand correctly. I don't know the ins or outs or how close the family member must be in the family tree to qualify. I'd contact DVC member administration and ask them what the requirements are.

 

[CarolMN]

My understanding is that closing costs are not related to the price of the contract. It is a set fee per contract. If I am wrong, someone will correct me.

As Dean suggested, I think you should have your cousin-in-law contact MS (actually probably Member Accounting) and ask if there is any special way to transfer a contract to a family member without having Disney exercise it ROFR.

 

[Jimbo]

I certainly don't see anything legally wrong with scenario #1. My son just bought my mother-in-law's house from her for $10,000 under market value, which was her gift to him. The realtor suggested that he pay full value for the house, and that she should then give him the $10K as a separate transaction after the fact. There were advantages to having a higher reported price in his case, just as there is in yours.

I don't see anything ethically wrong either, as long as your cousin-in-law is aware that she's getting less for her contract than she could, and is OK with that

 

[Dean]

Membership administration is who deals with this type of issue.

 

[Dean]

Originally posted by Jimbo
I certainly don't see anything legally wrong with scenario #1. My son just bought my mother-in-law's house from her for $10,000 under market value, which was her gift to him. The realtor suggested that he pay full value for the house, and that she should then give him the $10K as a separate transaction after the fact. There were advantages to having a higher reported price in his case, just as there is in yours.

I don't see anything ethically wrong either, as long as your cousin-in-law is aware that she's getting less for her contract than she could, and is OK with that

Frankly I don't care but the issue as I understand it is that if one submits a higher price than actually paying under the ROFR, it is fraud. I guess the ethical issue would be the deciet involved. Still it's done all the time and there are ways to make it legal. FredS was addressing this issue very strongly a couple of days ago.

 

[CarolA]

I happen to know someone who did something simular. They gave points to a friend. (You can do that, just like you can leave them in a will to anyone not just a realtion. In my will, mine go to an unrelated family). Disney does charge a fee for changing the names, but that is all they really did. The receiving friend subsequently gave the original owner a gift of cash.

 

[msdis]

Not to argue the ethical/legal areas here but another thought for consideration for both parties involved only because I experienced it this year. The IRS requires such transactions to be reported. The seller must state their purchase price and selling price in the event there are capital gains. They obviously could care less if you have a loss but must report it just the same. If the cousin inflates their selling price to aviod the FROR they may indeed shoot themselves in the foot as far as the IRS is concerned, and god forbid they ever audit either or both parties for verification. If it is given as a gift, there will still need to be consideration given as far as gift limits are concerned and fair market value. Sorry if this seems a little out there but I just wanted to present some other angles.
I would definately buy it, what a great opportunity, but I advise caution in HOW you do it.
Also you would need to get someone familiar with timeshare closings and Fl. law to do the deal for you, and I suspect you can get it done a lot cheaper than the resale companies we are all familiar with, charge.