Scared to death by the restrictions on resale pts thread

[ShellyLynn3630]

Thank you for this very interesting and informative thread. I agree with most of what's been said about the complicated legal hurdles DVC would have to navigate to make such changes possible. DVC has been far too shrewd to implement such changes that would devalue its product in the many ways (legal, public relations, economic) by implementing such a plan.

However, by floating the rumor (which has been widespread and has caused panic among the many people who follow these things on the internet) DVC has accomplished that which would have happened with the changes - driving up interest in direct sales v. resales.

I think this sounds like the rumor a few years ago where everyone believed that DVC was going to restrict reservations for anyone but the owner so as to restrict rentals. That didn't happen except maybe for a small number of people.

Who did they restrict from renting out thier points?

 

[dmoore22]

If you believe these rumors then I've got an accident policy for sale that will protect you against anything. Lose an arm, we'll help you look for it.

 

[JandD Mom]

Who did they restrict from renting out thier points?

A couple of years ago there were rumors that first said you could not book a reservation for someone else, that the owner had to use it him/herself. Then the rumor evolved that you could book for someone else but renting wasn't allowed. Then it evolved some more that renting was allowed but you were not allowed to use DVC for financial gain (I forget the exact wording).

What I believe finally happened, is that some DVC owners with large amounts of points who had several rentals per year might have been restricted. There may have been a change in the DVC Condominium Rules but I am not clear on what actually happened. I know that the owner who rents out once in a while is not, and never was, impacted by this. But the rumor spurred lots of "I will get rid of my points if I can't rent!" posts.

 

[chalee94]

Being embroiled in a major lawsuit over changes...

they would not be "embroiled" in a "major" lawsuit- 1) the DVC contracts have little protection for the buyer in many areas and 2) many other timeshare companies have already set a precedent in differentiating between resale and direct sales.

it's not realistic to suppose that a change in direction by DVC which would disappoint many owners would have even the tiniest legal merit as a lawsuit (and most certainly not a "major" one).

DVC owners would be grouchy and would most likely find resale prices falling a bit further...but all this imaginary lawsuit talk is nonsense. (and i suspect disney's PR machine will roll right over the disgruntled timeshare owners complaints.)

i hope disney maintains their distinctiveness and doesn't go down the road of other timeshares which sell for fractions of their direct sales prices...but it wouldn't shock me.

 

[Sammie]

I am not convinced they will make changes, however I am now convinced they can after speaking to a contact of mine.

And I agree with Brian, Disney if anything is very slow to do anything without checking every aspect of a legal situation.

DVC is very much invested in protecting their direct sales and if they feel this move would do that, then yes I could see it happening. Many of us have said repeatedly lately that DVC is focused on new sales and less about the existing membership.

This would simply continue in that line of action.

And actually DVC is not concerned with members wanting to sell their membership and get anything out of it, they want them to keep it. What better way to do that, than making resales less attractive.

Only time will tell.

 

[Brian Noble]

Not giving anyone any credit, and Disboards is not the only place where people get their information.

Allow me to elaborate. You said:

I agree with most of what's been said about the complicated legal hurdles DVC would have to navigate to make such changes possible.

Disney's lawyers are very very talented. This is the same company that essentially drafted the Florida legislation that was passed---with virtually no changes or even serious discussion---to give them their very own private government. Given the existence proof of other timeshare developers---with much less competent legal teams---doing similar things, there is literally no chance that Disney will find the legal hurdles difficult to manage.

You also said:

by floating the rumor (which has been widespread and has caused panic among the many people who follow these things on the internet) DVC has accomplished that which would have happened with the changes - driving up interest in direct sales v. resales.

The overwhelming majority of the people who go on the DVC tour have never once visited DISboards or any of the many (smaller) sites devoted to Disneyana. The people on this board are in the noise of the overall population of (potential) members.

 

[Dean]

Thank you for this very interesting and informative thread. I agree with most of what's been said about the complicated legal hurdles DVC would have to navigate to make such changes possible. DVC has been far too shrewd to implement such changes that would devalue its product in the many ways (legal, public relations, economic) by implementing such a plan.

However, by floating the rumor (which has been widespread and has caused panic among the many people who follow these things on the internet) DVC has accomplished that which would have happened with the changes - driving up interest in direct sales v. resales.

I think this sounds like the rumor a few years ago where everyone believed that DVC was going to restrict reservations for anyone but the owner so as to restrict rentals. That didn't happen except maybe for a small number of people.

Other top companies have made more drastic changes including Starwood (Westin), Marriott and Bluegreen. I also see no legal roadblocks to most of the possibilities. The ONLY ones I see problems with are restrictions associated with use of the club itself and home resort priorities.

Not giving anyone any credit, and Disboards is not the only place where people get their information. There are other boards, they just aren't discussed here because they get blocked out.

As to the lawyers, you misunderstand the intent of the post. It's all about PR and creating that which is magical. Being embroiled in a major lawsuit over changes in one of their brands is not something Disney would take lightly since it would not help future sales or value. I am sure their lawyers have it, more than the thread posters do, but it's Disney PR that would have to manage the fallout.

I think you give Disney lawyers far too little credit in heading off such issues and members far too much credit in actually pursuing such a legal action EVEN if they had grounds.

If you believe these rumors then I've got an accident policy for sale that will protect you against anything. Lose an arm, we'll help you look for it.

They may or may not happen but given that the rumors come from credible sources and are c/w what others in the industry (including other top names) are doing, to say there is no chance they could happen is far fetched. I'd say about 50/50 that something will happen in the next few years and I'd be willing to put any amount of money you want if you give me 10 to 1 odds and a 5 year 2 month window (31 Jan, 2016).

 

[JandD Mom]

The ONLY ones I see problems with are restrictions associated with use of the club itself and home resort priorities

Ummm, I think we are talking about the same thing. THOSE are the major issues. Also changing these restrictions retroactively for folks who brought via resale years ago is also a major problem.

Disney's lawyers are talented and capable, but lawyers are not magicians. I do agree that members are not likely to sue, on their own. But there are also very talented and capable lawyers in Florida and other places that are able to mobilize and recruit members when they hear of a potential violation of the timeshare laws and the POS. If I recall, there was such a legal action a few years back having to do with the offer to members to extend the termination date of their ownership in OKW. Disney ended up having to reapportion fees charged to members who did not extend. Or is my memory inaccurate?

 

[Chuck S]

Ummm, I think we are talking about the same thing. THOSE are the major issues. Also changing these restrictions retroactively for folks who brought via resale years ago is also a major problem.

Disney's lawyers are talented and capable, but lawyers are not magicians. I do agree that members are not likely to sue, on their own. But there are also very talented and capable lawyers in Florida and other places that are able to mobilize and recruit members when they hear of a potential violation of the timeshare laws and the POS. If I recall, there was such a legal action a few years back having to do with the offer to members to extend the termination date of their ownership in OKW. Disney ended up having to reapportion fees charged to members who did not extend. Or is my memory inaccurate?

I don't think there was any legal action in the OKW extension. My understanding is that there was a question filed with the FL Timeshare board, and DVC responded that contibutions to the OKW reserve fund for OKW owners that did not extend their contracts will be adjusted. No adjustment has so far been made. When the reserve fund begins projections for work/rehabs beyond 2042, then the adjustment will be made.

As far as RCI/II or any other organized trade venue, there is no guarantee. The POS states something to the effect that DVC will try to always have an agreement negotiated and in place, but that there is no guarantee that there WILL be one.

 

[Dean]

Ummm, I think we are talking about the same thing. THOSE are the major issues. Also changing these restrictions retroactively for folks who brought via resale years ago is also a major problem.

Disney's lawyers are talented and capable, but lawyers are not magicians. I do agree that members are not likely to sue, on their own. But there are also very talented and capable lawyers in Florida and other places that are able to mobilize and recruit members when they hear of a potential violation of the timeshare laws and the POS. If I recall, there was such a legal action a few years back having to do with the offer to members to extend the termination date of their ownership in OKW. Disney ended up having to reapportion fees charged to members who did not extend. Or is my memory inaccurate?

I think this is an unlikely approach that has not been part of most of the credible rumors. While it may be the one that gets most people's attn, these are options that I don't think are a risk for the very reason you and I think they wouldn't hold up legally. As for changing retroactively, I think that's unlikely if current owners are grandfathered but it's not a legal issue. Plus it's reasonably possible that no current members would have these options going forward without additional costs or purchases.

To my knowledge, there was not any legal action on the OKW fees or the millennium points issue (2000 points for 1996 free pases) either. It was postulated there was a threat of such for both and apparently the Disney legal dept advised there was no legal basis and they made changes without any lawsuit. As I read the POS and FL statues 718 & 721, the only things I see as issues are what I mentioned above and I don't think these are really on the table for that very reason. Now what they could do would be to create a VIP system where some got perks and preferences over others but I doubt they'll go that exact route. They could also exclude future resorts from any current members if they chose.

 

[Lil' Grumpy]

i think the "hub" is the bottom line. not for me, but
for disney. all the rumors are the spokes leading out
& going in circles. however, i don't think the business
end, are missing all, the trends & how they can effect
their incomes, including potential incomes.

this ship has more than one hole. therefore, i think it
is self evident , that dvc has many, many changes
they can make.

i also think there are many here, using the owners lack of
knowledge to take advantage.

we knew about resales, & that is why i asked our guide specfic
questions on how they could effect us. we didn't buy ssr resales,
because that wasn't where we wanted to stay. we brought our
points for blt & would be fine with staying there for all our
years. we didn't buy to rent out points [ something i think
many here are doing on the side], * buying
extra points with this as a primary objective instead of
meeting their vacation needs. or to resale for a profit. what
we brought, is a room for our desired location,for 2 weeks
X the length of our contact.

oh, buying for resale profits? if one is familiar with blt, &
disney , then buy as soon as they come out, then used &
wait until disney jack up the prices, then resale your
interests for profits + free vacations.

since reading here, many talked about buying the cheap resales
with the purpose of cashing them in for rooms @ blt/akl /beach
club...so forth. that's a real problem because they are planning
this all the time. with so many for going their home resort,
the system will not have enough rooms available.if your
interest is ssr, then the system won't have enough rooms
when everybody trying just for blt or beach club. disney can
see this trend too, and @ some point will want to redirect
back to the intended purposes. mandatory home stays q 2
years, and/or taking away resale options , or combination
there of.

and with ssr requiring more points for their rooms, then
it is pretty obvious they will be wanting to go for any
other resorts @ 7mos..

i also like to see some internal auditing. i think some of the
dvc people are here too, and pulling punches,by creating their own
benefits, for example- buying/using different family names.


oh, you're right..i don't see why owners would trashed their
homes over renters. not to mentioned wanting to pay more
dues.

 

[NewDCLGuy]

I think you give Disney lawyers far too little credit in heading off such issues and members far too much credit in actually pursuing such a legal action EVEN if they had grounds.

I'm surprised at the faith many of you show in Disney and their lawyers. Every day companies - many with great lawyers - do dumb and illegal things. If we look at the biggest structural change DVC has made - the OKW extension - it had problems that required Disney to promise the timeshare board it would fix. The president of DVC apologized to members for the way it was structured and promised to never do something similar again. This is not a company that is perfect!

The legal basis is simple. Florida law requires the managers of the resorts act as a *fiduciary* to the owners. Fiduciary is in the law, not just my word. It has very strong and powerful legal ramifications. In particular, I don't see how DVCMC could make a change that harms owners (though destroyed resale value) and benefits Disney.

 

[Chuck S]

I'm surprised at the faith many of you show in Disney and their lawyers. Every day companies - many with great lawyers - do dumb and illegal things. If we look at the biggest structural change DVC has made - the OKW extension - it had problems that required Disney to promise the timeshare board it would fix. The president of DVC apologized to members for the way it was structured and promised to never do something similar again. This is not a company that is perfect!

The legal basis is simple. Florida law requires the managers of the resorts act as a *fiduciary* to the owners. Fiduciary is in the law, not just my word. It has very strong and powerful legal ramifications. In particular, I don't see how DVCMC could make a change that harms owners (though destroyed resale value) and benefits Disney.

Pretty simple, really, DVC's legal fiduciary responsibility in no way extends to guaranteeing, supporting, or even considering resale value to owners. The fiduciary law deals with dues, resort management spending money on "frivolous" items (like free dining), proper investment or the reserve funds, etc. It has no bearing at all on any resale value, real or perceived. If that were the case, all the other timeshares that sell for pennies on the dollar resale vs. direct would be in violation, with action already having been established by the state timeshare board. The FL timeshare board sees the value of timeshares in their use, their maintenance, and management...not in supporting an owners investment by supporting resale values. In other words, making sure our physical purchase and use of it is maintained and the buildings are adequately maintained in a manner similar to what was represented at purchase, not that we will get a good price if we decide to sell.

 

[dmoore22]

The legal basis is simple. Florida law requires the managers of the resorts act as a *fiduciary* to the owners. Fiduciary is in the law, not just my word. It has very strong and powerful legal ramifications. In particular, I don't see how DVCMC could make a change that harms owners (though destroyed resale value) and benefits Disney.

It should be so simple but it isn't. In addition to sales locations in the obvious places, ie. Florida, California, and Hawaii, DVC also has Disney Vacation Club Authorized Regional Independent Sales Advisors in other states including New York and Illinois. As a result DVC will have to navigate the regs of the individual states in which they do business. Arizona and Illinois have been particularly aggressive in the enforcement of the regs regarding timeshare sales within their states. Then there's the interstate commerce clause.

 

[Sammie]

In other words, making sure our physical purchase and use of it is maintained and the buildings are adequately maintained in a manner similar to what was represented at purchase, not that we will get a good price if we decide to sell.

That is exactly what DVC told me when I questioned this rumor.

 

[Dean]

I'm surprised at the faith many of you show in Disney and their lawyers. Every day companies - many with great lawyers - do dumb and illegal things. If we look at the biggest structural change DVC has made - the OKW extension - it had problems that required Disney to promise the timeshare board it would fix. The president of DVC apologized to members for the way it was structured and promised to never do something similar again. This is not a company that is perfect!

The legal basis is simple. Florida law requires the managers of the resorts act as a *fiduciary* to the owners. Fiduciary is in the law, not just my word. It has very strong and powerful legal ramifications. In particular, I don't see how DVCMC could make a change that harms owners (though destroyed resale value) and benefits Disney.

I think you confuse DVC, which is required to act in the best interests of the membership as a whole, and DVD which is the sales side and controls all of the other perks and does not have the same fiduciary responsibility, actually essentially none. Even the RCI and other contracts are with DVD, not DVC. Plus as Chuck points out, there is no obligation for anyone on other perks. Ultimately all DVC is required to do is to enforce the POS and even that can change.

 

[NewDCLGuy]

Pretty simple, really, DVC's legal fiduciary responsibility in no way extends to guaranteeing, supporting, or even considering resale value to owners. The fiduciary law deals with dues, resort management spending money on "frivolous" items (like free dining), proper investment or the reserve funds, etc. It has no bearing at all on any resale value, real or perceived.

Chuck, I'm no expert on timeshare law, so can you help me understand how we know this. My simple reading of the law is pretty clear. It says that, "The managing entity shall act in the capacity of a fiduciary to the purchasers of the timeshare plan." Period. I see nothing there that says it has to act as a fiduciary on some matters, but is free to follow self interest on others.

Is there some other law, or judicial ruling that modifies the law, and lets the managing entity off the hook or some issues? Why would be believe they don't have to be a fiduciary?

If that were the case, all the other timeshares that sell for pennies on the dollar resale vs. direct would be in violation, with action already having been established by the state timeshare board.

I don't know much about timeshare law, but I do know a bit about fiduciary responsibilities. The fact that something does to pennies on the dollar doesn't mean the fiduciary obligation has been breached. The obligation isn't to protect resale value. The obligation is to act strictly in the other party's best interest, without any consideration as to how the actions will benefit the fiduciary. And for the life of me I don't see how hurting resale values for the purpose of helping direct sales meets the test.

The FL timeshare board sees the value of timeshares in their use, their maintenance, and management...not in supporting an owners investment by supporting resale values. In other words, making sure our physical purchase and use of it is maintained and the buildings are adequately maintained in a manner similar to what was represented at purchase, not that we will get a good price if we decide to sell.

Again, not being an expert, I have to ask for help here. Does the timeshare board publish something that says this? Is it in the law somewhere I'm missing? The law I see gives the board power to oversee whether or not the management entity is meeting it's fiduciary obligation.

 

[NewDCLGuy]

I think you confuse DVC, which is required to act in the best interests of the membership as a whole, and DVD which is the sales side and controls all of the other perks and does not have the same fiduciary responsibility, actually essentially none.

Dean, let me make sure my memory is right. Do I have the basic facts below correct?

- "DVC" includes both DVD and the DVC Management Corp.

- The DVC Management Corp is the managing entity - what I believe has a fiduciary obligation under Florida law. They set the rules on booking windows, etc. within the DVC resorts themselves. I think changes to those rules are the ones that scare people the most... and are the ones least able to be manipulated for DVC's benefit.

- While DVD is free to give out whatever perks they want, they do have a critical roles as the proxy voter for the membership. And in that voting role, they do have a fiduciary obligation, don't they?

When it comes to deals between the different arms of Disney, it's hard for members to understand exactly who does what. As I've said, I don't know much about timeshare law but do know a thing or two about fiduciary obligations. And this sort of internal dealing between fiduciary and non-fiduciary arms of the same entity are the ones that get the most scrutiny by regulators and courts. If the DVC Management Corp agrees to implement a deal created by DVD, it better be prepared to show that it agreed to implement the deal based on an evaluation that doing so benefits the members as a whole, without any consideration to how it benefits Disney. If there is discoverable evidence that DVD salesmen requested the changes to improve sales, but burden on DVCMC as a fiduciary is off the charts. Assuming DVCMC really does have the fiduciary obligation I think.

 

[dmoore22]

Here's the long form and link to Florida Statutes


CHAPTER 721
VACATION AND TIMESHARE PLANS
PART I
VACATION PLANS AND TIMESHARING
(ss. 721.01-721.32)
PART II
VACATION CLUBS
(ss. 721.50-721.58)
PART III
FORECLOSURE OF LIENS ON TIMESHARE INTERESTS
(ss. 721.80-721.86)
PART IV
COMMISSIONER OF DEEDS
(ss. 721.96-721.98)
PART I
VACATION PLANS AND TIMESHARING


http://www.flsenate.gov/Statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0721/0721.html

 

[Dean]

Dean, let me make sure my memory is right. Do I have the basic facts below correct?

- "DVC" includes both DVD and the DVC Management Corp.

- The DVC Management Corp is the managing entity - what I believe has a fiduciary obligation under Florida law. They set the rules on booking windows, etc. within the DVC resorts themselves. I think changes to those rules are the ones that scare people the most... and are the ones least able to be manipulated for DVC's benefit.

- While DVD is free to give out whatever perks they want, they do have a critical roles as the proxy voter for the membership. And in that voting role, they do have a fiduciary obligation, don't they?

When it comes to deals between the different arms of Disney, it's hard for members to understand exactly who does what. As I've said, I don't know much about timeshare law but do know a thing or two about fiduciary obligations. And this sort of internal dealing between fiduciary and non-fiduciary arms of the same entity are the ones that get the most scrutiny by regulators and courts. If the DVC Management Corp agrees to implement a deal created by DVD, it better be prepared to show that it agreed to implement the deal based on an evaluation that doing so benefits the members as a whole, without any consideration to how it benefits Disney. If there is discoverable evidence that DVD salesmen requested the changes to improve sales, but burden on DVCMC as a fiduciary is off the charts. Assuming DVCMC really does have the fiduciary obligation I think.

DVC is management of the timeshare and DVD is the sales arm. DVD controls all the exchange type perks including DC, DCL, RCI, etc. In addition, per the POS, members have signed away their rights to vote for all but things that would significantly and obviously affect a majority of the membership in a negative way.

As to fiduciary responsibility, realize that this refers to management of the timeshare, something that they do fairly well, IMO. They are not involved in sales or resales, this is DVD's area which is technically and legally separate. They can't be responsible for something not under their control. In addition, the POS clearly states that one should not buy with the expectation of resale or rental and they are required by state law to include such language. You actually need to read both statuetes 718 & 721 to get a full picture. In addition, there are a number of individual rules that come under the statutes.