Question on resale and dues

[Boardwalk III]

Hi all,

I am looking at buying a resale through the Timeshare Store and have a question:

The resale has 20 points left in current use year, but I am told I still would need to pay all dues for current use year. Is this reasonable? The way they explained it is that dues are actually paid a year in advance, so for example, the dues you pay in your current year are actually for the following year's points. I'm about to make an offer ($70 per point) but need to know if I should be negotiating on these dues!

Thanks!!

 

[CarolMN]

First of all, who pays the dues is completely negotiable between the buyer and the seller.

DVC dues are paid based on a calendar year, not use year. When/If you buy from Disney, you pay "prorated" dues. For example, if you signed the purchase agreement on April 1, 2003, you would pay 9/12 of the 2003 annual dues, even though you would get all of the 2003 UY points as well as the 2002 (previous) use year. Annual dues are due each year in January for that year. You can opt to pay them monthly for the year if you allow Disney to debit your checking acccount directly.

It's kind of hard to give an opinion on a "neutral" position on dues without knowing the use year month. IMHO, a "neutral" position for a resale (assuming all 2003 points are available), would be to pay a portion of the 2003 dues based on when you agree to buy. (That's how Disney does it). I would not pay dues on the 20 points left in the current use year - I would tell the seller that the value of those points was included in the offer. If I could use the current year points before they expired, I would probably add $200 to my per point offer price for those points ($10/point times 20 points). If I couldn't use the points before they expired and the banking deadlines were already passed, I would offer nothing for them.

Keep in mind that this is JUST MY OPINION. If the seller doesn't agree, you won't be able to make a deal. Others will have different opinions. FWIW, I've heard that many of the brokers don't really understand how Disney does DVC dues. They are different that most timeshares.

Good luck with your negotiations!

 

[Boardwalk III]

Sorry I didn't include use year - it is December - does that change your thinking one way or another? The broker told me that if I negotiated on closing costs or dues, Disney would take that into account and it would increase the chance that Disney would use their ROFR and buy it back (which I am obviously trying to avoid!)

 

[CarolMN]

Actually it does - mainly because you are getting so few current use year points. If I understand correctly, there are only 20 points left in the 2002 use year. They expire 11/30/2003. You will get the entire allotment of 2003 use year points on December 1, 2003. I would consider that the dues the seller paid in January 2003 covered 11 months of the 2002 use year points and 1 month of the 2003 use year points. I don't buy the broker's assertion that that the dues are paid in advance - that's not how the seller paid when he bought from Disney.

With a December use year, you will be able to bank the 20 current use year points after closing if you can't use them before 11/30/2003. I would offer to reimburse the seller for the 11 months of dues he paid on the 20 current year points plus 1/12 of the dues he paid on all the points (for the one month of the 2003 use year in the 2003 calendar year). As far as I'm concerned, the seller used all but 20 of the current use year points and he should pay the dues on them.

Can't advise about Disney's ROFR. Offer what you are willing to pay/think is fair and see what happens. $70/point seems to be in the ballpark for what Disney has let go through, but you never know. There will always be another contract, so unless this one is absolutely perfect for you, don't let the broker pressure you.

Again, please keep in mind that this is just MY OPINION.

Good luck!

 

[Boardwalk III]

Thank you so much for the info - I forgot to mention that I already own direct from Disney but this is my first resale. The dues thing just didn't sit right with me either!

Although the contract is exactly what I want, I really don't want to pay dues on points that have already been used! Your reasoning gives me a good basis for my negotiations - thanks again!

 

[disneyberry]

i don't think that is very reasonable.
that is, if you're only looking at the dues.

you need to look at the entire package to evaluate whether it's a fair asking price.


anyway, i posted a thread a while back asking a similar question.
basically, i learned that Disney is different from other timeshares.

they definitely charge dues by the calendar year, NOT the use year.

this means, whatever dues the seller paid "in advance" at the beginning of this year is actually:

11 months of dues on 2002 allocation points.
AND
1 month dues on 2003 allocation points.

in theory, if you are getting 20 points from the 2002 allocation, you should only be paying for those 20 points for 11 months.
ok, i just reread Carol's post, and yeah... what she said

 

[Boardwalk III]

Just an update - just had an offer accepted for $71/point with no dues payment at all. Wish me luck on the ROFR wait!

Thanks to everyone for their advice!

 

[CarolMN]

I'm betting that Disney will not buy it back.

Good luck and let us know how it turns out!

 

[Boardwalk III]

Thanks Carol - I'm hoping so!

 

[ClarabelleCow]

Maybe I am confused, but in January, 2003 the seller was sent a bill for his 2003 dues, the ones he will receive in December. You pay per callendar year, so the dues on the twenty points would have already been paid in January 2002. Am I wrong?

 

[RobDoc]

Originally posted by ClarabelleCow
Maybe I am confused, but in January, 2003 the seller was sent a bill for his 2003 dues, the ones he will receive in December. You pay per callendar year, so the dues on the twenty points would have already been paid in January 2002. Am I wrong?

The dues are for the calendar year- regardless of the use year. In this case, the explanations above are correct- the 2003 dues cover from Jan 1- November 30 on the 2002 Use Year dues and Dec 1- Dec 31 for the points to be received in Dec. If points from 2003 had been borrowed already- there would be no points until Dec. 2004 for use- but the new owner would pay full dues in jan 2004.

Disney handles it's sales exactly this way. If you purchased a new contract today with a Decemebr Use Year, you would get all 2002 points and pay dues prorated from tomorrow (9 months) for the year- even though you will get 2 years worth of points in this calendar year.

It sounds like the seller was very reasonable and the dues won't be an issue at all in this case.

Enjoy!

 

[Dean]

The neutral position on this situation of a December use year, 20 2002 points available and all 2003 points available is that the buyer should pay little if any dues. Max for a neutral situation is 1/12 of the yearly total plus a small extra for the 20 points.

As Doc said they are paid on a calendar year basis. Any broker who tells you that the dues paid in Jan is for the points you get in December is either misinformed or misleading you. Either way they are wrong. To their defense, this is how the rest of the timesharing world operates so only the ones that specialize in DVC should be expected to know better as no broker or agent can know all about everything. I'm sure they don't want to try to explain to an seller that they just paid the dues last month but they shouldn't expect that money back as that would decrease the likelyhood the seller would accept an offer and the broker would potentially lose the sale.

One should look at the overall package for any resale and not worry about every little detail of how this dollar fits where. Put another way, don't lose a great resale quibbling over minor details.

 

[Boardwalk III]

Thanks everyone again for the input/explanations!

Just to clarify, yes, the dues should have been paid in January of this year but apparently hadn't been. Since the seller had used virtually all the points (except 20) I felt it wasn't right for me to pay $600 in dues for points I couldn't use.

I do agree, however, that I should pay something for 1/12 of December's points as well as for the 20 points not yet used. To compensate for this, I offered $71/pt vs. asking price of $70 point. This gave back the seller that dues difference and also hopefully priced the contract high enough so that Disney won't use ROFR (keeping my fingers crossed on that one!)

As far as the broker goes, he is from one of the major firms and has a good reputation - I honestly feel he is misinformed, not trying to mislead me. He has been a pleasure to deal with in all other respects. I did attempt to explain my reasoning on the dues.

I do agree with Dean that one should look at the overall cost and make a decision based on how much you are willing to pay. This was the exact amount of points I wanted at the right property with the same use year as my other contract, so I probably would have even gone a little higher if I had to!

 

[FredS]

Originally posted by Boardwalk III
Thanks everyone again for the input/explanations!

Just to clarify, yes, the dues should have been paid in January of this year but apparently hadn't been. Since the seller had used virtually all the points (except 20) I felt it wasn't right for me to pay $600 in dues for points I couldn't use.......

As far as the broker goes, he is from one of the major firms and has a good reputation - I honestly feel he is misinformed, not trying to mislead me. He has been a pleasure to deal with in all other respects. I did attempt to explain my reasoning on the dues.

FWIW, I don't think that the broker has to be either misleading you or misinformed. This is one of those areas which seems to be taken two completely different ways. My belief is that the dues paid in January of whatever calendar year are for the points received that calendar year. This whole pro-rated thing based on the time of the contract, as done by Disney when you purchase, is well and good and doesn't cost Disney a dime. However, for private resales, if I was a seller (which I don't anticipate ever being!) that had paid dues for year 20XX but had not used any points alloted for that year I would definitely expect to be reimbursed for them. Everything is technically negotiable, but I think it perfectly fair and logical that whomever uses the points pays the dues on them.

 

[Dean]

Originally posted by FredS
FWIW, I don't think that the broker has to be either misleading you or misinformed. This is one of those areas which seems to be taken two completely different ways. My belief is that the dues paid in January of whatever calendar year are for the points received that calendar year. This whole pro-rated thing based on the time of the contract, as done by Disney when you purchase, is well and good and doesn't cost Disney a dime. However, for private resales, if I was a seller (which I don't anticipate ever being!) that had paid dues for year 20XX but had not used any points alloted for that year I would definitely expect to be reimbursed for them. Everything is technically negotiable, but I think it perfectly fair and logical that whomever uses the points pays the dues on them.

Fred, I don't see how you can take that position when our guidebook clearly states the dues are by calendar year backed up by the fact DVD prorates the dues the first year. I think with this info the onus is on you or the broker to proved otherwise and I don't see any info to suggest your position.

 

[FredS]

Well, Dean, back at ya. I don't see how your statement supports your position at all. As I said, Disney prorates because it is no skin off their nose. I think it is a marketing strategy that costs them little.

As a practical matter, you pay dues in January for the points you receive that year. Period. (Simply because you buy a resale in February has no bearing on, for example, getting points in March use year. I don't see where Disney characterizes dues paid in January 2003 are for 10 months in 2002 and two months in 2003 or whatever the convoluted formula that is occasionally posted.) What is significant is whether those points for that year are all available, or if the seller has borrowed them, or if there are banked points from a previous year. All of the resale brokers I spoke with interpreted it that way, and I think it makes perfect sense. Again, all things are technically negotiable, but as a general rule whomever gets to utilize the points is responsible for the dues on those points.

To characterize someone who interprets it differently as being either uninformed or misleading doesn't seem the right course, particularly when that is disparaging to their reputation as a broker.

 

[Caskbill]

Interesting...

I had always interpreted the dues the same way as FredS does.

In January of year 20xx you pay the dues on the points that will be allocated to you that year, whether it's February, April, August, December or whatever.

Under this interpretation, come Jan 15th, 2041 EVERYONE will be paying their <b>last</b> year's dues for the points they will receive during that calendar year on their use year month.

The way others are interpreting it is that EVERYONE will pay full dues on Jan 15, 2041 and additionally, on Jan 15th, 2042, those with February use years will owe 1/12th of their annual dues, even if they had already used all the points during 2041.

Likewise, those with December use years will still owe 11/12th of their dues on Jan 15th, 2042.

You get an annual point allocation, and you get an <U>annual </u>dues. It seems more logical to me that those annual dues would be for that annual point allocation, and not for xx% of your previous point allocation and yy% of the next point allocation.

I can see the case for both interpretations.

It all depends on how DVC will end. If those with December use years will have until Nov 30, 2042 to use their points, even though the whole program ends on Jan 31, 2042, then paying 11/12 ths of their dues on Jan 15, 2042 seems logical based on a calendar year.

Has anyone ever received anything from Disney that states it one way or the other?

 

[Dean]

Originally posted by FredS
Well, Dean, back at ya. I don't see how your statement supports your position at all. As I said, Disney prorates because it is no skin off their nose. I think it is a marketing strategy that costs them little.

As a practical matter, you pay dues in January for the points you receive that year. Period. (Simply because you buy a resale in February has no bearing on, for example, getting points in March use year. I don't see where Disney characterizes dues paid in January 2003 are for 10 months in 2002 and two months in 2003 or whatever the convoluted formula that is occasionally posted.) What is significant is whether those points for that year are all available, or if the seller has borrowed them, or if there are banked points from a previous year. All of the resale brokers I spoke with interpreted it that way, and I think it makes perfect sense. Again, all things are technically negotiable, but as a general rule whomever gets to utilize the points is responsible for the dues on those points.

To characterize someone who interprets it differently as being either uninformed or misleading doesn't seem the right course, particularly when that is disparaging to their reputation as a broker.

Fred, as usual we disagree. My calendar has 12 months Jan-Dec but maybe you use a different one. See Doc's post.

 

[FredS]

Originally posted by Dean
Fred, as usual we disagree. My calendar has 12 months Jan-Dec but maybe you use a different one. See Doc's post.

??? I still do not understand what you are saying. The sarcasm is not helpful, as I would like to make sure this is clear. Like Caskbill indicates, it seems clear unless there is some odd proration which will occur at the end of the DVC term. Yes, my calendar has twelve months, from January to December. That is support for what I am stating, that dues are for the CALENDAR YEAR, not part of one year and part of another. I don't know how to explain it more clearly. Obviously I am far from the only one who interprets it this way.

BTW, you point out each and every time I post anything that does not 100% support what you have said, which puzzles me, as I do not understand why you are so defensive. In this instance, I am simply trying to point out that there are people, including myself, who interpret the dues on points as previously described in this post, and that I think it unfair to tell a newbie that the broker is either, in essence, dumb or crooked. I would hope that you are familiar with the concept that reasonable people can disagree.

 

[Dean]

Originally posted by FredS
?BTW, you point out each and every time I post anything that does not 100% support what you have said, which puzzles me. I do not understand why you are so defensive. In this instance, I am simply trying to point out that there are people, including myself, who interpret the dues on points as described in this post, and that I think it unfair to tell a newbie that the broker is either, in essence, dumb or crooked. I would hope that you are familiar with the concept that reasonable people can disagree.

Fred, I was thinking the same about you. I don't think I'm defensive, just correct and I stand by the interpretation as well as my assessment of how the information is handled by brokers. I didn't say anyone was stupid, merely misinformed, as that is the definition of the word ignorant. You are certainly welcome to your opinion but don't be surprised if I post mine each and every time this one comes up as it's something I feel strongly about and feel many people have been overcharged for whatever reason. If you want to disagree and post such, go for it. I'd sure like to see some material from DVC that would suggest otherwise, if you have something I'm unaware of I'd love to know.