Resale MF question...

[Shadyluv]

I just want to understand what is customary for a resale...

I know Disney charges January - December for Maintenance Fees and if you buy from them for a mid-year use year (say June) you pay a prorated MF, but when you buy a resale whats normal? Do you pay the entire MF (i.e. Points * MF) or is it like Disney where you pay the prorated amount?

Thanks!
Liza

 

[Delaware Mike]

I just want to understand what is customary for a resale...

I know Disney charges January - December for Maintenance Fees and if you buy from them for a mid-year use year (say June) you pay a prorated MF, but when you buy a resale whats normal? Do you pay the entire MF (i.e. Points * MF) or is it like Disney where you pay the prorated amount?

Thanks!
Liza

In a resale scenerio, the reimbursement or payment of MF depends completely upon whatever is negotiated between buyer and seller.

That being said, it seems most resale contracts include some sort of MF reimbursement.

 

[ammo]

It seems *customary* to pro-rate MFs between buyer and seller based on point usage. That is, if you buy a 200-point contract and the seller has used 160 points from the current year, you would generally reimburse the seller for MFs on the 40 points that you will be able to use. But as Delaware Mike points out, everything is subject to negotiation.

 

[fefferdilly]

I threw out my first offer on recent resale purchase as follows: seller paying all 2007 MF's, the $ per point and agreement on who was going to pay commissions -- all at once. The offer was accepted, seller paying all 2007 MF's, even though I was getting all the 2007 points. I did consult the charts listed in these threads for what offers had recently passed ROFR so that I did not lose my good deal to Disney. I had a very motivated seller, probably would have taken a lower $/pt offer BUT I kept the price per point 1 dollar/pt above recent contracts that Disney exercised ROFR. I passed ROFR quickly. Good Luck on your purchase.

 

[Dman67]

I threw out my first offer on recent resale purchase as follows: seller paying all 2007 MF's, the $ per point and agreement on who was going to pay commissions -- all at once. The offer was accepted, seller paying all 2007 MF's, even though I was getting all the 2007 points. I did consult the charts listed in these threads for what offers had recently passed ROFR so that I did not lose my good deal to Disney. I had a very motivated seller, probably would have taken a lower $/pt offer BUT I kept the price per point 1 dollar/pt above recent contracts that Disney exercised ROFR. I passed ROFR quickly. Good Luck on your purchase.

I did something similar on my contract that is currently in ROFR. I split the closing costs with the seller. The seller has not used any of his points awarded for this year so I get the '06 points and the '07 points. The seller has been paying the dues for 2007 on a monthly basis so I stipulated in the contract that I would begin paying the dues for 07 on May 1st. So basically I got the whole lot of points for this year at a reduced maintenace fee rate. Most likely the same situation as FerferDilly...the seller was anxious to sell.

Go ahead and see what the seller is willing to do. If he wants out bad enough he may bite on an offer that is more in your favor than his. Just remember to keep the price per point high enough to pass ROFR. Check this post (http://www.disboards.com/showthread.php?t=720134) for the latest prices that Disney has executed ROFR on.

Good luck!

 

[Delaware Mike]

... But as Delaware Mike points out, everything is subject to negotiation.

Just remember that ol' saying, "First comes birth, then comes death....everything else is negotiable."

Strive to the middle with the seller.

Good luck!

 

[BabyElephant]

Maybe this is a stupid question and I can assume what the answer is from the responses here. I just want to be sure. My question is Does Disney charge the new owner MF fees (assuming the previous owner paid in full in Jan). So, if the previous owner had already paid the MF, as the new owner Disney would not charge me MF until next Jan, correct?

 

[LisaS]

Maybe this is a stupid question and I can assume what the answer is from the responses here. I just want to be sure. My question is Does Disney charge the new owner MF fees (assuming the previous owner paid in full in Jan). So, if the previous owner had already paid the MF, as the new owner Disney would not charge me MF until next Jan, correct?

If you purchase points at a sold-out resort from Disney, you pay pro-rated maintenance fees the first year, starting from the day you get the points. So if you purchased in late September and Disney had you set up in their system with the points in your account by Oct 1st, you would owe 92 days' worth of dues for 2007. They won't bill you for the dues until you close on your contract which takes several weeks.

Disney acquires points at sold out resorts when they exercise ROFR. I suspect most resale agreements specify that the buyer will reimburse the seller for maintenance fees so when Disney becomes the buyer through ROFR, they would refund the full year's dues to the seller. When they resell the points, they get only part of the year's dues back due to pro-rating the dues. If the agreement stated that the seller pays the maintenance fees for the current year, then Disney wins: they get to keep the dues already paid by the seller and they get paid again for part of the year when the points are resold. On the other hand, if the points aren't resold until the following year, then they miss out on part of the next year's dues. So... sometimes Disney wins and sometimes not. But regardless of what happened with any particular set of points that Disney is reselling, the new buyer gets the same deal: pro-rated dues the first year based on when they get the points.

 

[ammo]

I was recently told by a resale agent that Disney accelerates the MFs when contracts are sold through the resale market. That is, the seller must pay the entire current year's fee before the sale, and any reimbursement would have to come from the buyer. As a result, the buyer would not pay any MFs directly to Disney until his or her first full year as an owner (no prorated dues for the year of the purchase).

Does anybody know if this is true?

 

[Dean]

I was recently told by a resale agent that Disney accelerates the MFs when contracts are sold through the resale market. That is, the seller must pay the entire current year's fee before the sale, and any reimbursement would have to come from the buyer. As a result, the buyer would not pay any MFs directly to Disney until his or her first full year as an owner (no prorated dues for the year of the purchase).

Does anybody know if this is true?

That is not accurate, Disney requires the dues be paid for Jan of that year. The only exception is that they will allow you to spread your payment over 12 months with a direct debit from your checking account but you are still responsible. If you sell, you, the seller, is still responsible for those dues you have not yet paid for that year. Assuming a situation that does not include the debit situation I just described, any dues paid at closing will actually go back in to the sellers pocket.

As noted, all is negotiable. The neutral position is you pay for the months you get the points. This is exactly how DVC charges on a new purchase other than they will give you a pass on past months prior to your purchase as an extra. DVC charges on a CALENDAR year NOT USE year basis. The idea that "you get the points you pay the dues" is absolutely wrong showing a lack of understanding of the way DVC charges the maint fees. Say you buy an August use year with 2007 points intact but nothing until then, the neutral position on dues would be 5 months or 5/12 of that years fees. Unfortunately most sellers take the position that if you get the points, you pay the fees.

Here is a quote from one of the DVC Member Admin people on this subject.

No, they pay a full year of dues. 12 months from January 1 to December 31 for every year and all years thereafter. The only time they would have paid a partial year is the year they bought from us because we prorated the dues for that year from the day they purchased through 12-31. The dues were still based on calendar year which is 12 months. They are NEVER assessed based on Use Year. Just forget about their Use Year and points, that has absolutely nothing to do with dues.

 

[ammo]

Dean, thanks for the helpful information. Was the agent correct that the buyer of a resale contract would not pay any MFs directly to Disney until the January after the sale? In other words, would the reimbursement to the seller be the only dues paid by the buyer in the (calendar) year of purchase? Thanks!

 

[Dean]

Dean, thanks for the helpful information. Was the agent correct that the buyer of a resale contract would not pay any MFs directly to Disney until the January after the sale? In other words, would the reimbursement to the seller be the only dues paid by the buyer in the (calendar) year of purchase? Thanks!

That is correct for the reason I stated. They are technically due in Jan and anyone who is paying by the 12 months debit is still responsible for those dues. They won't allow closing without it being caught up. So ignoring the debit situation, you would pay the next dues in Dec/Jan after closing.

This has implications on resale. Maybe you get banked, current and next years points and paying for the entire year is very reasonable. But maybe you buy a stripped contract. Say you were buying my BWV contract which is Dec use year and has no current or 2007 points remaining and only a portion of the 2008 points. Even if you didn't pay for any dues in 2007 you'd still be overpaying on dues when you paid the 2008 Calendar year dues.

 

[LisaS]

I was recently told by a resale agent that Disney accelerates the MFs when contracts are sold through the resale market. That is, the seller must pay the entire current year's fee before the sale, and any reimbursement would have to come from the buyer. As a result, the buyer would not pay any MFs directly to Disney until his or her first full year as an owner (no prorated dues for the year of the purchase).

Does anybody know if this is true?

Yes, I meant to put that in my answer above! I described what happens if you buy directly from Disney but left out what happens if you buy resale. When a contract is sold on the resale market, if the owner was paying the dues monthly then the dues for the remaining months of the year must be paid to Disney before the contract can change hands. The buyer and seller can negotiate whether the buyer will reimburse the seller for any dues paid for the current calendar year as part of the purchase agreement.

The new owner will not be billed for dues from Disney until the start of the next calendar year because the dues will have been paid in full for the current calendar year by the seller prior to closing.

 

[ammo]

Thanks LisaS and Dean! It is nice to be able to confirm what the agents are saying.