Seller used points AFTER estoppel

[mustinjourney]

This is kind of scaring me...We are in the ROFR process for a resale now and we have a line in our contract that states: "IF THERE ARE LESS POINTS THAN WHAT IS STATED IN THIS CLAUSE AT TIME OF TRANSFER, THERE WILL BE AN $18 PER POINT COMPENSATION FROM SELLER TO BUYER OR BUYER MAY CANCEL THE CONTRACT. " Hopefully, that would protect us from some sort of similar situation.

That protects you pretty adequately. If less points, then the escrow agent withholds the appropriate amount and you get a refund.

You essentially are doing a leaseback to the original owner.

 

[mustinjourney]

If the deal has already been funded, even if the clause about compensation for missing point is there, wouldn't it be difficult to collect the compensation from the seller?

The title company "shouldn't" release funds to seller until the process is finished. However, I've seen reports where that isn't the case.

Keep in mind that an escrow agent has a fiduciary duty to both parties, so to me, if they release the funds without verifying the transfer actually took place, then they have breached their fiduciary duty.

 

[mustinjourney]

Query. How does Disney behave when they take a contract via ROFR? Do they pause the owner's account during estoppel period?

If this same situation happened to Disney, what would they do?

 

[andrea7884]

I had this very discussion with the broker that we bought our first contract about what guaranteed that the points that were stated for sale would actually be in the account after the closing. He assured me that in his 13 years or so of reselling DVC that the estoppel process protects against this very thing, apparently it doesn't.......

This is kind of scaring me...We are in the ROFR process for a resale now and we have a line in our contract that states: "IF THERE ARE LESS POINTS THAN WHAT IS STATED IN THIS CLAUSE AT TIME OF TRANSFER, THERE WILL BE AN $18 PER POINT COMPENSATION FROM SELLER TO BUYER OR BUYER MAY CANCEL THE CONTRACT. " Hopefully, that would protect us from some sort of similar situation.

I wish we had a clause like that! Ours said that cancelling the contract was the sole and exclusive remedy available to te buyer if the seller didn't fulfill their end of the contract. It did say that any closing costs incurred by the buyer would be paid by the seller in that case. But it seems like the realtor really doesn't want to cancel the deal, yet also doesn't want to offer compensation.

 

[andrea7884]

The title company "shouldn't" release funds to seller until the process is finished. However, I've seen reports where that isn't the case.

Keep in mind that an escrow agent has a fiduciary duty to both parties, so to me, if they release the funds without verifying the transfer actually took place, then they have breached their fiduciary duty.

I called the title company two weeks ago and they said funds had not been released. I asked them to note on the file that seller had broken the contract and that a cancellation may be forthcoming. Hopefully they don't release the funds until the transfer is actually complete!

 

[Dean]

Legally in the state of Florida once the deed is recorded they are the owner, and Disney must record them as the owner of record if they received the documentation. It is the obligation of the attorney who handled the transfer to make such notification. Now if Disney had the notification sitting in a pile of items waiting to be processed that is their problem. If the Attorney was negligent in making the notification in a timely manner then he/she is on the hook. Either way, it is not the buyers issue.
There is nothing that says that Disney can sit on the notification and negate their responsibility to the new owner regardless of whether he bought direct or resale!

There are several components here. DVC can't transfer until the conditions have been met AND they have been notified. They'll need a reasonable amount of time to transfer the title. In the timeshare world, a couple of weeks is more than reasonable. Regardless of the reason or opinions on the process, they did the buyer a favor in this situation. They could have just completed the process and the buyer would have had no reasonable options. I think people sometimes get too wrapped up in the real estate aspect of DVC, there's more to it. Any real estate rules don't necessarily override the other components.

DVC is just the manager of the point system that represents the deeded property and maintains the property for the owners. They do not transfer ownership of the deed, the former owner is the only one who can transfer the deed to a new owner, DVC has no say in this! I can't believe they think they can hold up the transfer of the property, it has already happened and been recorded. This is the whole point of having a deeded interest in the resort that you bought at, because no matter what DVC does they can't take it away from the owner who has a deed.

But they can refuse to acknowledge the new owner unless all conditions have been met, they hold the cards here.

 

[Dean]

I called the title company two weeks ago and they said funds had not been released. I asked them to note on the file that seller had broken the contract and that a cancellation may be forthcoming. Hopefully they don't release the funds until the transfer is actually complete!

That's great news.

 

[andrea7884]

I had this very discussion with the broker that we bought our first contract about what guaranteed that the points that were stated for sale would actually be in the account after the closing. He assured me that in his 13 years or so of reselling DVC that the estoppel process protects against this very thing, apparently it doesn't.......

My realtor assured me that points were frozen at estoppel. I too asked what would happen in this case and was told it was a non issue because it was administratively impossible. It's become apparent that he doesn't really have a lot of knowledge and/or lies frequently.

 

[Dean]

The title company "shouldn't" release funds to seller until the process is finished. However, I've seen reports where that isn't the case.

Keep in mind that an escrow agent has a fiduciary duty to both parties, so to me, if they release the funds without verifying the transfer actually took place, then they have breached their fiduciary duty.

They can't freeze the account until they have the deed in hand but when they take it ROFR it's different because they have the deed in hand and control much earlier in the process.

 

[andrea7884]

There are several components here. DVC can't transfer until the conditions have been met AND they have been notified. They'll need a reasonable amount of time to transfer the title. In the timeshare world, a couple of weeks is more than reasonable. Regardless of the reason or opinions on the process, they did the buyer a favor in this situation. They could have just completed the process and the buyer would have had no reasonable options. I think people sometimes get too wrapped up in the real estate aspect of DVC, there's more to it. Any real estate rules don't necessarily override the other components.

But they can refuse to acknowledge the new owner unless all conditions have been met, they hold the cards here.

The transfer happened AFTER they were notified, when we were in the "pile on the desk" phase.

 

[mustinjourney]

The transfer happened AFTER they were notified, when we were in the "pile on the desk" phase.

You're lucky the escrow agent hadn't sent funds yet to the seller.

On one of the other boards, a seller reported that he got his check and still had access to the points a week or two after deed was recorded. He noted that if a seller was dishonest or not paying attention, it would be easy to use the points.

He was honestly shocked that his points weren't frozen.

 

[mustinjourney]

The transfer happened AFTER they were notified, when we were in the "pile on the desk" phase.

Has the agent heard back from the seller at all? Did they do this by accident? If they did it on purpose, then you ought to look into contacting the police department where they live and report it as fraud/theft.

There's at least $3000 worth of value in those points. That's not a small amount.

Also--had the points already been banked? Or were they 2015 UY?

 

[johnsgrl]

There are several components here. DVC can't transfer until the conditions have been met AND they have been notified. They'll need a reasonable amount of time to transfer the title. In the timeshare world, a couple of weeks is more than reasonable. Regardless of the reason or opinions on the process, they did the buyer a favor in this situation. They could have just completed the process and the buyer would have had no reasonable options. I think people sometimes get too wrapped up in the real estate aspect of DVC, there's more to it. Any real estate rules don't necessarily override the other components.

Actually Florida laws on timeshare sales are the final remedy, corporate policies don't override laws. While a couple of weeks may seem reasonable to you, I haven't found anything in writing that gives them a pass on this one. According to OP, they had the deed sitting in a pile on someone's desk, and the conditions had been met and they had been properly notified. The problem occurred after everything had been done properly because they did not record it in a timely manner. I don't disagree that it was in the buyers interest to raise the red flag, however the refusal to talk to the new owner and claiming she somehow lost rights as a resale buyer is slimy. Ultimately, the fault is on the seller for accessing the points but Disney procedures allowed it to happen.

 

[ziravan]

I called the title company two weeks ago and they said funds had not been released. I asked them to note on the file that seller had broken the contract and that a cancellation may be forthcoming. Hopefully they don't release the funds until the transfer is actually complete!

Bingo.

You're in the driver seat. As long as you don't sign the amendment, you're holding up the money.

Nobody gets paid until you get satisfaction.

 

[andrea7884]

Has the agent heard back from the seller at all? Did they do this by accident? If they did it on purpose, then you ought to look into contacting the police department where they live and report it as fraud/theft.

There's at least $3000 worth of value in those points. That's not a small amount.

Also--had the points already been banked? Or were they 2015 UY?

The agent has been speaking with the seller. There have been a few different versions about what happened to the points, but the most recent one (which sounds plausible to me) is that RCI called the sellers and asks them to bank the points, so they did. To me, this sounds ignorant and boneheaded but not malicious. At the same time, I don't really know for sure because the agent keeps telling me different stories, so he might just be searching for an explanation that makes sense to me. It was probably a mistake, but an expensive one for us if we just sign the waiver, and a mistake that they signed a legal contract promising not to make.

I'm not trying to take advantage of them, I think the situation sucks for them too, but I want to get the same value that we originally negotiated.

 

[Matty B13]

If DVC won't release the access to the points in the contract, who pays the MF? The previous owner or the owner on the deed? I wonder how DVC would answer this conundrum......

If the funds haven't been released then I would send a bill to the previous owner for the points, and then take it out of the escrow funds.

 

[Matty B13]

The agent has been speaking with the seller. There have been a few different versions about what happened to the points, but the most recent one (which sounds plausible to me) is that RCI called the sellers and asks them to bank the points, so they did. To me, this sounds ignorant and boneheaded but not malicious. At the same time, I don't really know for sure because the agent keeps telling me different stories, so he might just be searching for an explanation that makes sense to me. It was probably a mistake, but an expensive one for us if we just sign the waiver, and a mistake that they signed a legal contract promising not to make.

I'm not trying to take advantage of them, I think the situation sucks for them too, but I want to get the same value that we originally negotiated.

I would sign a waiver, but with a $3000 signing fee.......

 

[PSUDinsey]

RCI nor II has ever cold called me about my points. I get letters monthly asking to bank or renew for longer but they have never called me in roughly 10 years.

 

[Matty B13]

Just wondering? Did you go through one of the regular brokers of timeshares?

 

[andrea7884]

I would sign a waiver, but with a $3000 signing fee.......

Haha! I like it!