ROFR. Where did this come from?

[disneycrazed139]

ROFR certainly is a good thing if you already own and aren't looking to buy a resale. I fully understand the purpose of keeping the value high and, in the end, "ownership" reverts back to Disney anyway, so it's obviously in Disney's interest as well as owners'.

But...how exactly did ROFR come into existence? Do other timeshare developers exercise ROFR? Is this a common thing or just a Disney thing? If I was a developer could I just decide I wanted to have the power of ROFR? IMO--It's kind of like deciding that you are going to be king.

I remember when I first understood what it was, I thought it was the strangest thing and, even though I am sort of glad it exists, since I have no intention of buying a resale now and am glad it keeps the value high, it doesn't quite sit right with me.

 

[JudyS]

ROFR is not that uncommon in real estate. Certainly, a developer is entitled to do that. (There may be some states that don't allow it, but I don't know of any offhand.)

Most developers don't bother with a ROFR clause because their resorts aren't worth much, and the last thing they want to do is buy a unit back and have to sell it again!

There is one resort in Florida (I forget which one) that is making problems with its ROFR clause. They are not actually buying the units back, but they are demanding a commission to let the deal go through. My guess is that isn't legal and they will eventually ahve to stop.

 

[Pa@okw95]

Don't forget we don't really own anything but points at DVC. They don't want the points being sold for way less than they could sell them for and the market would drop at SSR and other new resorts because they would be under cut by outside sales from members. The only difference between points at SSR and the points I bought in 95 at OKW are two, the price and the 11 month window--at the 7 month window all points are worth the same. People are now paying almost twice as much for their points as the first owners did back in 92 and all they really are getting is a 4 month window. DVC has to keep the prices up with ROFR cause what else do they have to sell but points?

 

[Dean]

It is a common clause in timeshares but most don't get that agressive with it. It's intended to make sure there are no fire sales to keep prices high and make the difference between resale and retail close enough that people will just buy from the developer instead. It is not used to buy low and sell high as the spread in no where near enough in most cases for the company to truly make any money. The spread would likely have to exceed $20 pp just for the company to break even.

BTW, there are other ploys developers use to force some to buy from them. One is to block certain exchanges so if one wants a resort, you have to buy there. With II, it's a regional block where if you own within a certain radius, you can't trade in. With RCI, it's a 1 in 3 or 1 in 4 where you can only trade to a single resort every 3 or 4 years, with variations. Some also have difficult or exorbitant transfer fees to make it essentially impossible to sell. Some block resales to current owners. Westgate has hit this arena big time. They've told resale companies they can't resell. Then when they backed off, they demanded half the commisions for the resale even though they didn't do anything and have no agreement stating this. Most of their contracts don't even give them persission to have ROFR or an exclussive resale arrangement but they are pressing on. Expect a big legal battle and for Westgate to lose. But in the mean time, the owners who want to sell or have pending sales contracts, will be the losers.