Should OKW 2042 dues be different to OKW 2057

[Sandisw]

It seems like the easiest way for Disney to do this would be to refund the 2042 contracts at the end of their 2041 use year with a portion of whatever is left in the reserve funds. For example, if there is $40 Million in the reserve fund, and there are 7.67 million points at OKW, then members with 2042 contracts should be refunded $5.21 per point they own at the start of 2042. That money would then be replaced when Disney sells contract extensions at whatever price per point they are offering.

My guess is that Disney is eventually going to offer contract extensions for all owners at a certain point again, not at the price offer before ($15 per point) but perhaps at say $40 per point which would still. Assume they do this in 2037 I bet 90% of owners would do it rather than lose their timeshares in 5 years.

it is amazing to think that in 2042 BRV, BCV, BWV, as well as VB and HHI will drop off the booking window, and even if they come back (and they will except HHI and VB) those that have bought resale since 2016 will be unable to book them.

Except why offer an extension for something they are being given back for free?

Many 2042 owners signed quit claims. According to the post regarding settlement, Disney will pick up fees until 2057 for those who don’t want to continue the contract beyond 2042.

 

[CarolMN]

However, I have been paying (and will have paid) the same dues as other BLT owners would through 2042, including who elect to keep their contracts through the end (2057). Am I due some kind of dues adjustment because I decide to end my contract early (by selling) since the argument is presumably on paying into reserves that would not longer benefit me when I am no longer an owner? How is this different from current OKW 2042 owners who decided to purchase contracts that end in 2042 instead of 2057?

It's not different. In both cases, any right to an "adjustment" transferred to the person who purchased the contract. In the case of the OKW 2042 contract, the "right" was transferred to Disney when the extension expired.

 

[KAT4DISNEY]

Except why offer an extension for something they are being given back for free?

Many 2042 owners signed quit claims. According to the post regarding settlement, Disney will pick up fees until 2057 for those who don’t want to continue the contract beyond 2042.

It's not different. In both cases, any right to an "adjustment" transferred to the person who purchased the contract. In the case of the OKW 2042 contract, the "right" was transferred to Disney when the extension expired.

I may be misinterpreting but both of these responses would have to be based on the thought that Capital projects are only funded at the time they occur which is not correct. How I interpret the settlement is that 2042 expiration owners capital contributions will receive a subsidy prior to 2042 for any projects that are scheduled after 2042. As there wouldn't be any collection from them from 2042-2057 it's the only possibility. And that does make it different from an owner who sells prior to expiration.

 

[CarolMN]

I may be misinterpreting but both of these responses would have to be based on the thought that Capital projects are only funded at the time they occur which is not correct. How I interpret the settlement is that 2042 expiration owners capital contributions will receive a subsidy prior to 2042 for any projects that are scheduled after 2042. As there wouldn't be any collection from them from 2042-2057 it's the only possibility. And that does make it different from an owner who sells prior to expiration.

My point is that if there is a case/right, it was transferred by a sale to the new owner. That is true in both situations.

 

[Sandisw]

I may be misinterpreting but both of these responses would have to be based on the thought that Capital projects are only funded at the time they occur which is not correct. How I interpret the settlement is that 2042 expiration owners capital contributions will receive a subsidy prior to 2042 for any projects that are scheduled after 2042. As there wouldn't be any collection from them from 2042-2057 it's the only possibility. And that does make it different from an owner who sells prior to expiration.

If I understand things, all those 2042 contracts that are not owned by the original owners are extended to 2057 via the quit claim deed signed by them at the time.

So, those contracts owned by resale owners get to stop paying in 2042 because someone else comes in as an owner to finish it out..that being DVD.

In that way, I see it as buying something that allowed them out in 2042 vs being an owner to 2057 and having to pay for expenses until the end..almost like a gratuitous transfer the original owner decided to do.

Obviously I could be wrong in my understanding. It’s those original owners who never signed and never paid who may have a reason to expect differently.

 

[kilik64]

I know dvd when they rofr a okw 2042 and then resell it direct its extended to 2057 at that point, but I wonder what is going to happen once they get a glut of points in 2042. Fire sale at that point on direct? Wouldnt they rather have someone else paying the MF instead of them on all those points? Would anyone even want a contract thats only good for 15 years at that point?

 

[Brian Noble]

Would anyone even want a contract thats only good for 15 years at that point?

If not, the 2042 resort resale values are in trouble sooner than most people think.

 

[Ruttangel]

So, I think we are saying the answer is potentially a yes but only for owners that have never signed a quitclaim.
But, legally those owners have a bigger grievance as they are able to stay until 2057 and not much DVD can do about it as the implied lease was extended.

WHAT A MESS!

 

[Sandisw]

So, I think we are saying the answer is potentially a yes but only for owners that have never signed a quitclaim.
But, legally those owners have a bigger grievance as they are able to stay until 2057 and not much DVD can do about it as the implied lease was extended.

WHAT A MESS!

Which is why I don't think you will ever see another extension offered in the manner it happened with OKW.

 

[KAT4DISNEY]

If I understand things, all those 2042 contracts that are not owned by the original owners are extended to 2057 via the quit claim deed signed by them at the time.

So, those contracts owned by resale owners get to stop paying in 2042 because someone else comes in as an owner to finish it out..that being DVD.

In that way, I see it as buying something that allowed them out in 2042 vs being an owner to 2057 and having to pay for expenses until the end..almost like a gratuitous transfer the original owner decided to do.

Obviously I could be wrong in my understanding. It’s those original owners who never signed and never paid who may have a reason to expect differently.

If that were the case then the agreement from DVD never would have been necessary. They were never going to be sending bills to 2042 owners after the expiration. So I'm saying that interpretation is not likely the case. There will be a subsidy prior to January 2042 if any of the capital expenses being collected are for projects where the work will be done after January 2042.

 

[KAT4DISNEY]

My point is that if there is a case/right, it was transferred by a sale to the new owner. That is true in both situations.

True that after Jan 2042 that DVD will be paying for any dues on points they take back and haven't resold but as I responded to Sandi if that were just the case there would never have been need for a court filing and an agreement. That was to make certain that there wouldn't be funds collected thru Jan 2042 for projects that would be done after that date. Thus the referenced subsidy from DVC/DVD or whomever. Someone selling BLT in 2050 just sells the same as anybody selling now does. We're all turning over what we've paid into capital reserves when we sell while the real estate interest still has years to go.

 

[Sandisw]

If that were the case then the agreement from DVD never would have been necessary. They were never going to be sending bills to 2042 owners after the expiration. So I'm saying that interpretation is not likely the case. There will be a subsidy prior to January 2042 if any of the capital expenses being collected are for projects where the work will be done after January 2042.

I think I get what you are saying now. It will be interesting how they set up refurbs then.

 

[LAX]

In essence that is exactly what owners should expect. There shouldn't be any continued capital contributions say for new roofs in January of 2060. Or 2059 or 2063 etc.

In the instance where you voluntarily decide to sell BLT in 2042 the thought would be that capital reserves are part of what you are selling. You've made the choice to be paid by someone else to take over the ownership. 2042 OKW owners are just done with nothing to sell. If you held onto BLT until 2060 then you'd be comparable to what should have happened with all OKW owners. And in that instance would you want to be paying for project that would be done at BLT in say 2065?

I understand the claim about not paying for anything that is due to be performed/maintained after expiration of the contracts. Let me try to explain my point using a very simplified (perhaps oversimplified) example.

20 year contract starting in 2020 and expiring in 2040 with the following due structure.
Y1: $10 (10%=capital reserve=$1)
Y2: $11 (10%=capital reserve=$1.1)
Y3: $12 (10%=capital reserve=$1.2)
Y4: $13
Y5: $14
Y15: $24 (10%=capital reserve=$2.4)
Y20: $29 (10%=capital reserve=$2.9)

Unless there is an adjustment to the amount of capital reserve being collected towards Y20 or major projects are done in Y20, there will be capital reserve left in the bank by the time the contracts end. Thus, when I make my dues payment in Y20 (one without any change to the amount collected), where will that capital reserve go?

Now going back to the OKW2042 situation, unless DVC decides to make adjustment to dues being collected shortly prior to 2042 (for those without extension), wouldn't it be similar to someone deciding to sell at Y15 and with all that capital reserve already paid benefiting only those owners who decide to keep their contract all the way to Y20? Part of my point is that it's too early to "cry foul" because no one knows how DVD would handle this mess.

LAX

 

[Sandisw]

I understand the claim about not paying for anything that is due to be performed/maintained after expiration of the contracts. Let me try to explain my point using a very simplified (perhaps oversimplified) example.

20 year contract starting in 2020 and expiring in 2040 with the following due structure.
Y1: $10 (10%=capital reserve=$1)
Y2: $11 (10%=capital reserve=$1.1)
Y3: $12 (10%=capital reserve=$1.2)
Y4: $13
Y5: $14
Y15: $24 (10%=capital reserve=$2.4)
Y20: $29 (10%=capital reserve=$2.9)

Unless there is an adjustment to the amount of capital reserve being collected towards Y20 or major projects are done in Y20, there will be capital reserve left in the bank by the time the contracts end. Thus, when I make my dues payment in Y20 (one without any change to the amount collected), where will that capital reserve go?

Now going back to the OKW2042 situation, unless DVC decides to make adjustment to dues being collected shortly prior to 2042 (for those without extension), wouldn't it be similar to someone deciding to sell at Y15 and with all that capital reserve already paid benefiting only those owners who decide to keep their contract all the way to Y20? Part of my point is that it's too early to "cry foul" because no one knows how DVD would handle this mess.

LAX

I think this is sort of my original thinking. The current contracts that end in 2042, don't really end in 2042. They really end in 2057. Those who bought on the resale market have their ownership of that contract end, but since the original owner signed a quit claim deed with DVD that starts in 2042, that contract just continues until the end of 2057, with DVD now picking up the cost of it.

I think that in 2042 (but not sure about the legal aspects of it) that those original owners who still own, did not pay for the extension, and did not sign a quit claim deed will indeed be allowed to keep the contract until 2057 for only the cost of dues (which will include the capital reserves) if they want it and if not, sign the quit claim deed back to DVD then.

As you say, until we get closer to the end, we have no idea. But, I do think all of this mess does support they will never attempt it with any other resort by simply extending the ground lease first.

 

[LAX]

I think this is sort of my original thinking. The current contracts that end in 2042, don't really end in 2042. They really end in 2057. Those who bought on the resale market have their ownership of that contract end, but since the original owner signed a quit claim deed with DVD that starts in 2042, that contract just continues until the end of 2057, with DVD now picking up the cost of it.

I think that in 2042 (but not sure about the legal aspects of it) that those original owners who still own, did not pay for the extension, and did not sign a quit claim deed will indeed be allowed to keep the contract until 2057 for only the cost of dues (which will include the capital reserves) if they want it and if not, sign the quit claim deed back to DVD then.

As you say, until we get closer to the end, we have no idea. But, I do think all of this mess does support they will never attempt it with any other resort by simply extending the ground lease first.

That's probably the cheapest option for DVD to handle this mess, especially if the number of such owners is small. Even if the number is substantial, the risk of a legit lawsuit would probably just end up "costing" more.

LAX

 

[KAT4DISNEY]

I understand the claim about not paying for anything that is due to be performed/maintained after expiration of the contracts. Let me try to explain my point using a very simplified (perhaps oversimplified) example.

20 year contract starting in 2020 and expiring in 2040 with the following due structure.
Y1: $10 (10%=capital reserve=$1)
Y2: $11 (10%=capital reserve=$1.1)
Y3: $12 (10%=capital reserve=$1.2)
Y4: $13
Y5: $14
Y15: $24 (10%=capital reserve=$2.4)
Y20: $29 (10%=capital reserve=$2.9)

Unless there is an adjustment to the amount of capital reserve being collected towards Y20 or major projects are done in Y20, there will be capital reserve left in the bank by the time the contracts end. Thus, when I make my dues payment in Y20 (one without any change to the amount collected), where will that capital reserve go?

Now going back to the OKW2042 situation, unless DVC decides to make adjustment to dues being collected shortly prior to 2042 (for those without extension), wouldn't it be similar to someone deciding to sell at Y15 and with all that capital reserve already paid benefiting only those owners who decide to keep their contract all the way to Y20? Part of my point is that it's too early to "cry foul" because no one knows how DVD would handle this mess.

LAX

I'm not aware that anyone is crying foul yet, just questioning. And it seems like the answer was figured out way back when the extension was done and someone did file a case. DVC said they wouldn't be charging 2042 for capital expenditures beyond then. The point is likely more to remind DVC as that was a long time ago and the people involved are possibly/probably not there or definitely won't be there in the years prior to 2042.

When you sell any condo that has been collecting reserves it's up to you to negotiate any reimbursement from the new owners or just look at it as a sunk cost. It's a private transaction so up to you to account for as you wish. Very different from the expiration of ownership.

 

[howardlee2]

ok so what will actually happen to those of us who purchased OKW 2042 through Disney in the 1990s? will they allow us to continue to use and pay dues or take it all back?

 

[npatellye]

ok so what will actually happen to those of us who purchased OKW 2042 through Disney in the 1990s? will they allow us to continue to use and pay dues or take it all back?

No one knows. I’m not even sure Disney knows yet.

 

[chalee94]

ok so what will actually happen to those of us who purchased OKW 2042 through Disney in the 1990s? will they allow us to continue to use and pay dues or take it all back?

Did you sign the quitclaim back in 2008 or so? If you did, they will take it back in 2042 as agreed.

If you refused to sign the quitclaim back in 2008, then Disney still has to decide whether their extension via special assessment was legally justified (in which case they will use legal means to deny your ownership interest by 2042, and probably before they begin to subsidize dues for 2042 owners) or else they will concede that they overstepped and allow the non-signers to keep OKW ownership through 2057.

But they pushed pretty hard during 2008 and such to get people to sign away their rights to the extension or else pay for it. I doubt there are that many owners who were that motivated to push back.

 

[chalee94]

I understand the claim about not paying for anything that is due to be performed/maintained after expiration of the contracts. Let me try to explain my point using a very simplified (perhaps oversimplified) example.

20 year contract starting in 2020 and expiring in 2040 with the following due structure.
Y1: $10 (10%=capital reserve=$1)
...Y15: $24 (10%=capital reserve=$2.4)
Y20: $29 (10%=capital reserve=$2.9)

Unless there is an adjustment to the amount of capital reserve being collected towards Y20 or major projects are done in Y20, there will be capital reserve left in the bank by the time the contracts end. Thus, when I make my dues payment in Y20 (one without any change to the amount collected), where will that capital reserve go?

You still seem to missing the point that there won't be those capital reserves in the final years. That is in the contract.

They are currently including estimated major repairs and updates for BLT in the dues using estimated lives for large capital costs for things like replacing the roof. So for example, if they put a 15 year roof on BLT in 2046 which will need to be replaced in 2061, that estimated cost won't be billed to the BLT owners those final 15 years.

(You don't seem to have an accounting or legal background, but I'm assuming it's at least clear that a "capital reserve" means they are estimating ahead of time for large future anticipated costs. They don't just raise the dues to pay for a new roof when they put it on. They use estimated lives to spread those large costs over time.)

You can type an example that assumes that they would bill for capital reserves at the end of the contract life, but that doesn't mean that it makes any sense. They don't have the legal right to bill BLT (or other DVC) owners for anticipated capital expenditures that benefit Disney after contract expiration.

Now going back to the OKW2042 situation, unless DVC decides to make adjustment to dues being collected shortly prior to 2042 (for those without extension), wouldn't it be similar to someone deciding to sell at Y15 and with all that capital reserve already paid benefiting only those owners who decide to keep their contract all the way to Y20?

You still don't get the difference between the personal choice of choosing to sell at any given point and what DVC has the contractual right to charge as part of annual dues. There is no logical comparison at all here.

You can ask for reimbursement of whatever costs you like when you try to sell your contract, but you'll get what the buyer is willing to pay. OTOH, if DVC attempts to violate their contractual obligations to owners (as with the recent point chart debacle), then there are legal and government regulatory remedies available if they aren't willing to meet the required stipulations.

Part of my point is that it's too early to "cry foul" because no one knows how DVD would handle this mess.

Except that DVC92 and others "cried foul" back in 2007-2008 because this issue was predictable. That is why the Disney legal counsel addressed the issue back then. If you don't understand, that is fine (although actually reading the contracts before you sign is a wise idea) - but this is how RTU timeshares work. In the next few years, DVC is going to have to adjust dues for OKW-2042 owners or they will get a call from the FL regulators. They created this mess in the first place and need to have a plan to deal with it.

DVC's Old Key West Extension Ordeal | The DIS Disney Discussion Forums - DISboards.com

I do know that at least one OKW owner did get a concession from DVC that payment into the Capital Reserve fund (for all owners) will be curtailed at some point near the end so that owners without the extension are not contributing any more $$ into the fund for dates beyond 1/31/42. So, according to that, those who expire 1/31/42 will have lower dues at some point than those who own the extension.

Stay Tuned.